Methods for assessing the likelihood of country grain elevator failure in the United States

Abstract

CHAPTER I. INTRODUCTION Backround Country grain elevators serve an important role in American agriculture. They provide producers and owners of agricultural commodities with warehouse facilities where they can store their grain. Many elevators also act as grain merchandisers, buying and selling grain in the open market. In addition to these important functions, grain elevators often sell farm supplies and provide other farm related services to their customers. The principal function of most country grain elevators is grain warehousing (storage). A study conducted by the National Grain and Feed Association indicated that 10,000 grain elevators, storing over sixteen billion bushels of grain, provided grain warehousing. Most of these elevators stored farmer owned grain. However, 70 percent of them also stored grain that was either owned by the Commodity Credit Corporation (CCC) or pledged to them as collateral for loans. The U.S. Department of Agriculture and many grain-producing states administer programs designed to ensure that producers and the Commodity Credit Corporation have safe and sound facilities to store their products. Grain accounts for nearly 90 percent of the commodities covered by these programs. In general, these programs set financial, bonding, recordkeeping, and operational requirements that elevators storing agricultural commodities must meet. The U.S. Department of Agriculture, under the U.S. Warehouse Act, administers a voluntary licensing and examination program for warehouses storing agricultural commodities. The program applies only to those elevators who voluntarily apply for and are granted a federal warehouse license. By holding a federal license, elevators assure their customers that they meet federal requirements for sound warehousing practices. They can issue federal warehouse receipts for grain storage and their depositors can use these receipts as collateral for operating loans. The primary objectives of the program are: (1) to provide a safe place for storing agricultural commodities, (2) to assure the integrity of warehouse receipts as documents of title, and (3) to set and maintain a standard for sound warehouse operations. The Department's Agricultural Marketing Service (AMS) administers this program to ensure that federally licensed warehouses meet these obj ectives. The Department of Agriculture also sets requirements for and examines non-federally licensed contract warehouses storing commodities owned by the Commodity Credit Corporation or pledged to the CCC as loan collateral. These requirements are similar to those of federally licensed elevators except bonding is not required by the USDA unless elevator net worth falls below the required amount. The Agricultural Stablization and Conservation Service (ASCS) along with the Agricultural Marketing Service administer this program. Many states have elevator licensing and examination programs. Unlike federal programs which are voluntary and focus on grain Item Farm Nonfarm Total

Expected returns from starting a large scale closed dairy cooperative under price and biological uncertainties

“…This section provides an overview of the derivation of the logit model and follows the work of McConnon (1989). Greene (1993)…”