Wheat cleaning practices of U.S. commercial elevators - report derived from survey of grain elevator managers by National Grain and Feed Association - U.S. Dept. of Agriculture, Economic Research Service report

Situation and Outlook Report: Wheat, Nov, 1991 by Brian Just, Kristi McComas, Mark Ash, Bengt Hyberg

Disposition of Wheat Screenings

The screenings and aspirated liftings generated by cleaning wheat can be an additional source of revenue to the elevator (2). About 87 percent of those screenings are sold to the livestock feed market. In the year surveyed, elevators were unable to sell or use only 1.7 percent of the supply of screenings. Elevators sold screenings throughout the year but the greatest amount was sold in August and September, after completion of harvest. The elevators that cleaned generally maintained sufficient storage space to hold 40 percent of their annual screenings production. The NGFA survey data indicates an average of $38 per short ton for wheat screenings. This price varied negligibly from month to month. At this relatively low price, most elevators sold screenings locally (about 70 percent were hauled less than 20 miles). However, only 7 percent of elevators that cleaned had pelleting equipment. This equipment likely belonged to elevators that also had a feed mill.

Reasons for Cleaning

There are many reasons for cleaning wheat. About 80 percent of the responding elevators that cleaned wheat rated "to avoid discount" of great importance in their decision (figure A-9). Reasons of lesser importance included: contracts specified low-dockage wheat; cleaning increased test weight and reduced transportation costs; cleaning conserved storage space; selling screenings added revenue; cleaning improved air circulation in bins which permits storage at a higher moisture content, thus reducing shrinkage and energy costs; and cleaning improved cargo uniformity within and between export shipments. So, why don't more elevators clean grain? Many cited economic reasons (1). Foremost among the reasons given was that investment in grain cleaners can be expensive and difficult to justify given their perception of a limited demand for cleaned wheat. At smaller country elevators there was a concern for recouping the equipment cost while at terminal and export elevators there was the high cost of retrofitting the facilities. Premiums paid for wheat of low dockage were nearly nonexistent. In many areas, dockage was an infrequent problem, occurring only when harvest conditions were poor. In addition, because country elevators usually cleaned grain upon receipt, they had less time at harvest to operate the cleaners, generally cleaning only the dirtiest wheat. Cleaning all grain that came in could slow throughput substantially. Other disincentives cited were the lack of a local market for screenings and difficulty handling and storing screenings (figure A-10). The feasibility of investment in additional capacity depends, in part, on the market offering elevators a more attractive economic incentive to clean grain than presently exists. [Figures A-1 to A-10 Omitted] [Tabular Data A-2 Omitted]

References

[1]Fridirici, R., H.L. Kiser, L.D. Schnake, and J.A. Wingfield. A View of the Economics of Removing Dockage from Wheat. Contribution No. 84-342-D. Kansas Agricultural Experiment Station, Manhattan, July 1984. [2]Kiser, Harvey L. Cleaning Wheat at a Country Elevator: A Case Study. Kansas Wheat Commission and Kansas Agricultural Experiment Station, Manhattan, December 1984. [3]Kiser, Harvey and David Frey. Dockage Treatment During the 1990 Kansas Wheat Harvest. Contribution No. 91-263-D. Kansas Agricultural Experiment Station, Manhattan, 1991. [4]Sosland Companies, Inc. 1991 Milling Directory. Merriam, KS: Sosland Publishing Co., 1991. [5]U.S. Congress, Office of Technology Assessment. Enhancing the Quality of U.S. Grain for International Trade, OTA-F-399, Washington DC, February 1989. [6]U.S. Department of Agriculture, Federal Grain Inspection Service. Report on the Effects of Including Dockage and Foreign Material as a Grading