AgDM newsletter article, July 1997

Increased farmer grain transportation capacity

Phil BaumelBy C. Phillip Baumel, Charles F. Curtiss Distinguished Professor in Agriculture and Professor of Economics, 515-294-6263, pbaumel@iastate.edu

A recent survey of 3,500 farmers indicates that farmer grain hauling patterns are changing. For example, semis haul more corn from farms than any other type of vehicle as shown in Table 1.  Semis and tractor-wagons haul almost the same percent of soybeans from farms.  Semis haul an average of about 37 miles per trip compared to 5 miles for tractor-wagons.

Table 1. Corn and soybeans hauled (miles per trip) by vehicle type (1994-95 crop year)                                  

Type of vehicle

Corn

Soybeans

Semis 37%

(37) 34%

(37)

Tandem axle truck

20 (11)

19 (12)

Single axle truck

11 (8)

12 (10)

Tractor-wagons

32 (5)

35 (5)

Where farmers haul their corn and soybeans is shown in Table 2.  Twenty-five years ago, almost 100 percent of the corn and soybeans were delivered to country elevators.  Now, only 70 percent of the corn and 74 percent of the soybeans are delivered to country elevators. The remainder  bypasses  country elevators on its way to other markets.

Table 2. Corn & soybean destinations (miles), (1994-95 crop year)

Destination

Corn

Soybeans

Country elevators

70% (8)

74% (8)

Processors

10 (50)

8 (32)

Mississippi River

10 (45)

9 (52)

Missouri River

5 (50)

4 (73)

Other

5 (9)

5 40)

On average, farmers haul their grain 8 miles to country elevators and 30-70 miles to other markets.  The large increase in the number of farmer-owned semis makes these longer distance deliveries possible.

The number of farmer-owned semis is expected to double by the year 2000 as shown in Table 3.  The number of wagons and single axle trucks are expected to decline sharply.

Table 3. Expected change in hauling vehicles, 1995-2000.                                          

Vehicle type

1995-2000 Percent change

Semis

103%

Tandem axle trucks

5

Single axle trucks

-31

Wagons

-18

Implications

Country elevators face the risk that farmers who own semis will increasingly bypass local elevators and haul their grain to more distant markets. Because elevators have high fixed costs, spreading these costs over large volumes of grain is important to their competitiveness.  So some elevators may not survive. 

If the number of elevators declines, the farmers not hauling to distant markets may not have access to higher priced markets.  This may especially impact small farmers and livestock producers who have only limited quantities of grain to sell.  These farmers may not have the volume to justify the purchase of a semi or the time to seek-out and monitor distant markets. 

One possible solution for these farmers to employ custom haulers.  Another is for several farmers to jointly own a semi.  In the case of joint ownership, one farmer could be designated to handle the marketing responsibilities.

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