Elevators file to discontinue business

Talk about it

The recent spike in grain elevators

discontinuing business across the state is no cause for alarm.

Instead, North Dakota Public Service

commissioner Bonnie Fetch said it is part of the normal ebb and flow of the business.

The closures are balanced, she said, by the opening elevators, like the ADM grain

elevator in Hebron, which has a pending application with the PSC and is scheduled to open this fall.

“It’s really not unusual this time of year for elevators to close for a variety of

reasons,” Fetch said. “We see it this time year because July 31 is the end of licensing and some elevators decide not to renew their licenses for the new period.”

As of June 30, Fetch said there were 390 grain elevators in operation throughout North Dakota.

Last month, O’Brien Seed Inc. in Rhame and Cow Chow Corp. in Regent, filed with the PSC to have their businesses

discontinued.

Their requests were presented to the PSC at the commission’s Aug. 1 meeting.

When contacted Monday by The

Dickinson Press, a representative from Cow Chow Corp. said the company “was not interested in talking about their decision.”

The number that is listed for O’Brien Seed Inc. is no longer in service, and the company could not be contacted.

Fetch, who is a newly appointed member to the commission, said any elevator that wishes to operate commercially in North Dakota needs to be licensed with the PSC after it is built.

Under state law, the PSC’s Licensing

Division is in charge of all of the licensing and bonding of elevators, facility-based grain buyers, roving grain buyers and hay buyers.

There entities serve as the initial market for much of the grain produced in North Dakota.

The PSC regulates the facilities to

“protect the people who sell grain to, or store grain in, the warehouses and is enforced within a framework that minimizes the possible negative economic impacts on related industries and individual entities that use them.”

When an elevator decides to close, the PSC requires licensed facilities to fill out a request form.

Elevators must provide the PSC with their contact information and data about the

facility’s grain inventory and outstanding warehouse receipts.

Sue Richter, PSC’s licensing division director who has been with the division for 27 years, said the steps depend on the

situation.

“If an elevator is already empty and has not been used in some time, they file a form with the PSC if they have no obligations to pay,” she said. “If the elevator still has

obligations, they are required to send a notice to farmers that they sold to another company or someone has taken over the business.”

Overall, Richter said the negative effects that farmers will feel when a grain elevator decides to close will be minimal.

“The most important effect on farmers is that licensed elevators file bonds to protect them in event of failure,” she said. “Some elevators close just because it’s a wise

business decision and they no longer need to operate. One company closed because there wasn’t enough business to support the cost.”

Harlan Klein, chairman of the board for Southwest Grain, said the impact of a

closure will often depend on where the

elevator is located in the state.

“If you get out in the southwest part of the state, it has a bigger impact,” he said. “If an elevator in the southwest part of the state closes up, there may not be many other

elevators nearby and that can leave a void. It may mean that farmers have setup to do their business in places that will require them to travel greater distances, which can be an inconvenience.”

Richter said when a licensed elevator stops operating anywhere in the state they are required to give farmers several options for what they can do with their grain.

The options could include having the

elevator operator return the grain to the farmers, the grain could be priced out, or farmers have the option to keep the grain at the facility until the elevator’s new owner is prepared to take over the facility.

With rules and regulations in place to

protect the farmers, Fetch said there is

really no reason for the PSC not to approve a request that is received by an elevator.

“Sometimes they have to iron out details, in terms of various payments they owe to producers or if someone else take over

operation,” she said. “We may have to wait until certain compliances are met to approve it, but I can’t think of an instance when the commission would refuse a request.”

Tags: grain, elevators