Newsletter Archive

Expanding market access for better prices

Heart to Heart, March 2010 Connections

Things in life just keep getting bigger from the size of fast food value meals to the square footage of homes. Even the average yield producers coax from their fields continues to increase each harvest. To keep pace, HOIC/SCE will soon begin construction of a 50 car unit train loading facility along the Iowa Interstate Railroad in Newton. In addition, new grain dryers will be built in Story City and S14.

“This are strategic, proactive moves,” says Jim Magnuson, HOIC/SCE general manger. “Increased yields, new markets for grain and the ability to dry grain in wet years are trends that will not go away. This is a perfect opportunity to position our company for the future.”

Increasing yields increases need for new market access
A quick study of yield trends point to the need for increased storage capacity and the ability to supply new markets. Recent history shows yields have been steadily improving. It’s a trend that is expected to continue. Today’s producers have technology on their side, allowing for better fertilization practices and access to better seed genetics, according to Dennis Janssen, Southeast Region Seed Sales.

“Seed companies continue to develop better performing varieties,” says Janssen. “There’s also a push to boost corn yields to 300 bushels per acre by 2030. In my opinion, that’s a strong possibility.”

While that may seem like the distant future, Scott Stabbe, HOIC/SCE Grain Merchandiser, points out a two percent yield increase can bring an additional 200,000-400,000 bushels to the cooperative at harvest. Increasing yields put more pressure on receiving, drying and storage capacity on the farm and at commercial elevators.

“We’ve already seen years of increased yields,” says Stabbe. “We know we need to keep up with our producers by providing additional facilities and markets for their grain.”

Construction of the facility, at the Iowa Interstate Railroad switching yard in northeast Newton, is expected to begin this spring. The facility will feature a highly automated receiving and load out system. Deliveries will be probed remotely before heading to the integrated scale and dump pit. Here, the load will be weighed, unloaded and re-weighed without leaving the scale. Producers will roll in and out in four to five minutes.

With an expected completion date this fall, the train loading facility will allow the Newton location to more efficiently handle grain and reduce the need to move grain by truck. More importantly, according to Nick Schechinger, Newton location manager, it will help producers capture better grain prices.

“This is a win-win for both the company and customers,” says Schechinger. “Rail access not only allows us to take advantages of spikes in prices, whenever that may be, but it also gives us other options in markets previously not available. In the end, that means higher average prices for our members.”

Keeping up with demand
While the need for capturing new grain markets continues, so does the need for efficient drying equipment. Coming off the two wettest growing seasons in years, both the Story City and S14 locations will receive a needed boost in drying capabilities.

In Story City, a new dryer will replace an aging unit that Stabbe notes has been in use since the 1970s.

“Not only will it run much more efficiently, it will produce fewer ‘bees wings,’” says Stabbe. “We want to be a good neighbor and look forward to running a cleaner, more efficient dryer in Story City.”

At S14, the dryer and a new 135,000 bushel wet holding bin will add convenience for customers delivering wet grain. Previously, wet corn was directed to the old Roland location where they could dump limited bushels.

Both dryers are identical to one built in Zearing last fall. Capable of handling 2,650 bushels an hour, both are expected to be complete by harvest.

Although it’s difficult to predict weather patterns, Brent Metzger, Northwest Region Seed Sales, says producers will always be in a battle against moisture. While some seed companies are working to develop seed varieties with better dry down, it won’t be able to overpower growing conditions.

“Growing conditions have the biggest impact on moisture levels,” he says. “Unfortunately, there is a delicate balance. While we are able to control many areas to improve plant health, we are essentially at the mercy of mother nature each year.”