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The local grain elevator closed. Now what?

Slideshow: As older elevators shut down across the Midwest, farmers have bought them and expanded their grain storage. Would it work for you?

7 Slides

At a Glance

  • The trend toward closing or privatizing older country elevators heats up.
  • As grain elevators close, some are purchased by local farmers.
  • The rising costs of new on-farm grain facilities and interest rates make new builds less attractive.

For decades, Dale Milstead drove by the Oakford Elevator on the commute from his home in Petersburg, Ill., to his farm in rural Oakford, Ill.

“When it sat empty, I’d drive by and think, ‘Boy, that’d be just about right for me,’” Milstead says. “I needed more grain storage — I always have.”

He recalls the construction of the elevator’s concrete silos in the mid-1970s, and the feed mill before that. He has memories of trucks lined up through town, waiting to dump grain. But as farming changed and grew to bigger farms, higher yields and more powerful equipment, the Oakford Elevator didn’t.

The facility changed hands several times and officially closed its doors in 2019. For a town with just over 200 residents and a handful of businesses, the loss of an elevator cuts deep, leaving behind towering concrete tombstones as a reminder of days gone by.

And then one day on Milstead’s drive, he spotted a sign turning into town: “For sale: grain elevator.”

Change on the horizon

The Midwestern countryside is dotted with decaying elevators that either have closed recently or are closing now. Others were sold to farmers or companies no longer interested in accepting commodity grain from farmers. As storage options shrink and bin construction costs soar, farmers like Milstead are left with unanswered questions about how and where to store their grain.

Related:What will a new grain bin cost?

Oakford locals recall the elevator was privately owned until FS purchased it in the 1970s, later becoming Prairieland FS and then Western Grain Marketing. James Hautala, WGM grain originator at the Atterberry, Ill., location, says most recently, WGM used Oakford as a storing house because of its proximity to nearby river terminals.

“The Oakford Elevator has kind of been lost to time,” Hautala says. “As farm operations and grain elevators have gotten bigger, these older country elevators have become obsolete. Farmers are willing to drive farther for better bids, and during harvest, they want to dump grain and get back to fields.”

The shift away from small, country elevators began 30 years ago in Illinois, notes Steve Myers, a farm manager with Busey Ag Services, LeRoy, Ill. “Weldon Farmers Co-op at Weldon, Ill., was purchased by ADM and run as an independent ADM full-service elevator at first. It evolved into a non-GMO facility for a few years, and for 2024, they shut the doors,” Myers says.

“The point is that when lots of improvements are needed or staffing could not be maintained apparently at an economical level, facilities close. The void is in those logistics,” he explains.

Not all smaller elevators have disappeared. Myers is aware of a couple of co-ops that have larger elevators but that are “hanging in there” with smaller local elevators, too. “Premier Co-op of Eastern Illinois and Alliance Grain near Gibson City [Ill.] are examples,” he says. “They continue on with both Cadillac-type and more economical facilities.”

In Indiana, Bruce Kettler makes similar observations. Former director of the Indiana State Department of Agriculture, which operates the Indiana Grain Buyers and Warehouse Licensing Agency, Kettler is now president and CEO of the Agribusiness Council of Indiana. The council’s membership includes many companies in the grain business.

“We’ve also observed the same trend,” Kettler says. “As smaller elevators aged, larger companies often bought them and operated them while they were still functional.

“But we haven’t seen these companies investing in major repairs or upgrades on these older, smaller facilities, and that’s not happening today, either. At some point, they often sell them to farmers or someone for a specific purpose. They don’t invest more money in them.”

Scott Docherty, WGM general manager, says closing the Oakford location came down to safety and efficiency.

“We have to become more efficient to stay competitive,” he says, explaining that highway access, proximity to residential areas, labor issues and access to utilities are all considerations when deciding which elevators close and which are expanded.

At a WGM strategic planning meeting in December 2021, Docherty says management identified six older locations out of 25 that they decided to close and sell, and Oakford was on the list. Instead, they plan to invest dollars to expand locations like the nearby Atterberry Elevator.

Grain elevator for sale

In 2022, WGM listed the Oakford Elevator for sale, starting a closed-bid process. They sold five other small elevators in the area at the same time — all to farmers.

Speculation grew around the community about what kind of shape the elevator was in. Did it run? Was it a money pit? Or was someone about to hit the jackpot?

Fortunately for Milstead, he’s also been a commercial electrician for over 40 years. With his farmer ingenuity and electrical experience, he was up to the challenge. He placed a bid, and within months learned that he was the lucky bidder. The Oakford Elevator was his.

“That’s the type of work I’ve done all my life, and I thought, ‘Surely, I can make her run,’” he says.

And he was right. After cleaning the ladybugs out of the starters and making electrical repairs, Milstead had the elevator running.

The purchase process included a lengthy contract and several deed restrictions, including that Milstead could only use the facility to store his own grain, rather than opening a commercial elevator. Noncompete clauses aren’t unusual in the sale of an elevator, but they do equate to one less storage option in the countryside.

“You’d think I was buying the Empire State Building after dealing with their lawyer,” Milstead says, laughing.

The facility has a 160,000-bushel capacity in seven concrete silos. It also has a pit, a grain leg, an office, a feed mill, and three 50-by-100-foot Quonset storage buildings — and Milstead acquired it all for a fraction of new build price. The additional storage allows him the opportunity to store and market his grain rather than sell at harvest.

“At my age, investment in new grain storage is pretty cost-prohibitive,” Milstead says. “It’s a long-term investment, and I needed something with a shorter-term payoff. I’m not going to be farming forever. I don’t have anyone to take over.”

The 2024 harvest will be the third one Milstead will store in the Oakford Elevator. It’s an investment he’d make again in a heartbeat.

“It fits me with the combine power I’m running with two combines,” Milstead says. “But there’s no way it could keep up as a full-blown country elevator.”

High bin costs grip farmers in storage vise

As first-generation corn and soybean farmers, John and Kristi Kretzmeier of Fowler, Ind., opted to use elevator storage, investing their earnings in other assets around the farm. They hired locals to haul their grain, and used forward contracts to execute a sound marketing plan — which worked well until neighboring elevators closed their doors.

After the 2023 harvest, it became apparent that Kretzmeier’s off-farm grain storage options were becoming fewer and farther between. He began to explore other options, like building his own grain handling facility.

“In our situation, we weren’t just looking at building bins,” he says. “We also needed infrastructure: a dryer, pit, leg, wet holding bins and everything that goes with a grain center on the farm.”

After doing his homework, Kretzmeier determined it could cost him as much as $9 to $10 per bushel of storage space to erect what he needed, starting from scratch. For the size of grain center that his operation required, his minimum investment would be roughly $5 million.

“Tack on the cost of 8% interest, and I figured it would take around 80 cents per bushel just to pay interest at the beginning,” Kretzmeier says. “Then, you have the cost in labor of filling and unloading the facility each fall, plus property taxes, propane costs for drying and electricity. It just wasn’t penciling out. We would rather invest money in other places where we might see more return.”

So, what are his alternatives? “We’re staying the course and not building grain storage now,” he explains. “We still have some off-farm storage available, and we will lean more heavily on forward-contracting and preharvest selling. If we want to participate in the market, we will look more closely at marketing techniques like options, as well.”

Those who decide to add bins or expand existing facilities may consider lower-interest loans available through the Farm Service Agency. While not as attractive as a couple of years ago, the April rate for a three-year loan at 4.375%, or 4.25% for loans up to 12 years, might still enable someone to swing a loan, vs. financing at regular commercial rates.

For a pricing breakdown of grain storage options, read What will a new grain bin cost?

About the Author(s)

Betty Haynes

Betty Haynes is the associate editor of Prairie Farmer. She grew up on a Menard County, Ill., farm and graduated from the University of Missouri. Most recently, Betty worked for the Illinois Beef Association, entirely managing and editing its publication.

She and her husband, Dan, raise corn, soybeans and cattle with her family near Oakford , Ill., and are parents to Clare.

Betty won the 2023 Andy Markwart Horizon Award, 2022 Emerging Writer, and received Master Writer designation from the Ag Communicators Network. She was also selected as a 2023 Young Leader by the International Federation of Agricultural Journalists.

Tom J. Bechman

Midwest Crops Editor, Farm Progress

Tom J. Bechman became the Midwest Crops editor at Farm Progress in 2024 after serving as editor of Indiana Prairie Farmer for 23 years. He joined Farm Progress in 1981 as a field editor, first writing stories to help farmers adjust to a difficult harvest after a tough weather year. His goal today is the same — writing stories that help farmers adjust to a changing environment in a profitable manner.

Bechman knows about Indiana agriculture because he grew up on a small dairy farm and worked with young farmers as a vocational agriculture teacher and FFA advisor before joining Farm Progress. He works closely with Purdue University specialists, Indiana Farm Bureau and commodity groups to cover cutting-edge issues affecting farmers. He specializes in writing crop stories with a focus on obtaining the highest and most economical yields possible.

Tom and his wife, Carla, have four children: Allison, Ashley, Daniel and Kayla, plus eight grandchildren. They raise produce for the food pantry and house 4-H animals for the grandkids on their small acreage near Franklin, Ind.

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