1/ 2/ - 3/ 4/ Sample represents 27% of CCC Approved Country Warehouses in Ohio as of November 30, 1959. This direct cost Data taken from Study by Dr. John Sharp, Ohio Agricultural Experiment Station Unpublished Data revealed March 30 at "Town Hall" Meeting at Kansas City before USDA Negotiators. This Indirect Cost made up of .75¢ to reflect return on investment of handling equipment. April 28th UGSA Proposal was 5¢ for corn, 5.75 for wheat and soybeans, and - May 10, 1960 Mr. Al Laybourn National Grain & Feed Dealers Ass'n. 400 Folger Bldg. Washington, D. C. Dear Al: In connection with our conversation last week, I am going to attempt to give you our reaction to this new contract and rates as they affect us here in the Southwest and the old South. As you know, I said in Kansas City that if these rates and terms were put into effect it would break 25% of the warehousemen in this area. I was serious in that statement. The hardest hit warehousemen are those little country houses who deal directly with the farmers and who handle from 75,000 to 200,000 bushels of grain per year in average production years. These fellows are the backbone of the farm program as far as the farmers are concerned. They are the people who first handle the newly harvested crops. In regard to the old, established area differentials, we are certain that these are justified for several reasons; the most important of which is the problem of fumigation for which we allow .01 per bu. per year, and the matter of drying and conditioning which also ultimately involves quality deterioration. We have many years in the Southwest when the keeping quality of our grain makes it almost impossible to store for any length of time. Yet, when the grain is delivered to us it will grade to loan standards and therefore must be accepted for the loan. As a result of the final edict of the USDA, we have had twelve country houses offered to us for sale in the past four days. I believe that this is only the beginning, My thinking is that many will be forced to sell or close down as a result of this drastic measure on the part of the CCC. I am told that many bankers over this country are taking a new look at their warehouse company loans and that some of them are going to have to secure new capital or pledge some of their other assets to keep the loans from being called. With our storage rate down .0365 per bu. annually and our handling rate down .0225 per bu., some 1,200 of the approx: imately 1,500 warehousemen in this area are faced with a very serious financial problem. They may be able to make it through this coming contract year, but it is my considered opinion that, unless we are able to negotiate better rates for them for the ensuing years, we are sure going to see a lot of new faces and miss a lot of old faces in this industry as far as the Dallas commodity area is concerned. Hoping this will be of some value to you, I am, Sincerely MABlanton W. H. Blanton Blanton Grain Company Mr. L. A. Laybourn May 11, 1960 Country Elevator Committee Grain & Feed Dealers National Association 400-403 Folger Building Washington, D.C. Dear Mr. Laybourn: On behalf of the officers, directors, and members of our Association I want to register a protest at the way the negotiations of the Uniform Grain Storage Agreement have been conducted. Little is to be gained by reciting the history of the negotiations in years gone by. However, I cannot refrain from commenting that the negotiations for the '60 contract apparently have been marred by an invisible but ever present cloud of pressure that was ominous. The very title of the document under question suggests that it is an agreement. As the se deliberations come to a close with the final dotting of the i's and the crossing of the t's, I suggest that it might better be called the Uniform Grain Storage Disagreement. It is apparent that the negotiators on the part of government have little realization of the practicability of business operations as they pertain to the country elevator. If the officials that are hired by the federal government to write the contract are not conversant with operations and the storage of grain, and if they be further hindered by forces that are fostering their own political future, it bodes for a year of unfriendly relationship between Commodity Credit Corporation and the grain trade. This is not good. Probably the most controversial part of the contract has been the rates. All we read about in the press is the astronomical. amourt of the storage bill for the safe keeping of agricultural stocks. Of course it is a tremendous amount of money but that money is paying for a lot of economical storage. Let us not forget that every bushel of that grain is insured and the operator of the warehouse is bonded to perform the several duties required of him. When called upon to deliver the grain he is entrusted with, he delivers a like amount or pays the 58385 0-60- -36 difference either in kind or money. I do not believe that this can be said of government owned grain, in a government owned bin. It would be interesting to know just what it costs the taxpayer if all costs pertinent to the government's own storage were totalled. The negotiators on the part of government have, recommended a 19 per cent reduction in the rates for 1960. A few short months ago Department officials defended the rates of 1956.....saying that they were fair. I'd like to ask just what has changed the picture. What has happened that has made 16.425 suddenly become too much? Apparently little weight was given to the testimony, statements, and factual information given by qualified accountants at the Town Hall meeting in Kansas City on March 30 and 31. Why would 1000 grain men from all parts of the grain producing areas take their own time and pay their own expenses if they did not have a real stake in the outcome of the deliberations. The 13.1 cost figure developed by our survey was realistic if all factors that enter into the storage costs are considered. The returns by the Department of Agriculture failed to take into account risk, shrinkage, and quality deterioration. Thus far I have failed to see anyone put a dollar and cent value on "risk". Let us explore the question. The president of our Association has just had an experience that might well be worth repeating. Three years ago he put into storage 60,000 bushel of #2 yellow corn. Last week that corn was shipped on a CCC loading order. The corn was 13.5 moisture going into storage. The outturned moisture was 12.5. That shrinkage alone was 900 bushel. On today's market in the Chicago Board of Trade #2yc was selling for 1.21 3/4. In addition he had purchased bonds amounting to 20% per bushel or 1200.00. I make no estimate of the insurance cost because in our discussion he failed to take that into account. On the basis of the factual information that I have on this one loading order, T cen develop these figures and certainly they are not far removed from what may be termed normal. Grain stored 60,000 bushel #2 yellow corn |