Semisequicentennial Transportation Conference Proceedings
May 1996, Iowa State University, Ames, Iowa

The Iowa Grain Flow Survey: Where and How Iowa Grain Producers Ship Corn and Soybeans

Jean-Philippe Gervais and C. Phillip Baumel

Department of Economics,
460 Heady Hall,
Iowa State University,
Ames, Iowa 50011.

Increased concentration in the railroad industry from mergers and buyouts has raised concern about the market power that the remaining railroads have over bulk commodity industries including coal, chemicals, and grain. Grain farmers appear to be less concerned about this increased concentration than grain shippers. A survey of 3,500 Iowa farmers on how and where they marketed their 1994–95 grain suggests reasons why farmers are less concerned than grain shippers. Almost 36 percent of the corn and soybeans sold off Iowa farms in 1994–95 was delivered in semi-tractor-trailer trucks. Over 29 percent of all corn and soybeans sold off of farms bypassed the local elevator and was delivered directly to processors, Mississippi River barge loading elevators, elevators on the Missouri River, and to other markets. The average distance corn and soybeans were delivered off farms in semis was about 59 kilometers compared to 7.9 kilometers in wagons and about 14 kilometers in single-axle trucks. The percent of corn and soybeans delivered by wagons and single-axle trucks declined as the number of hectares of corn and soybeans produced per farm increased; the reverse was true for semis. The percent of grain producers planning to own semis by the year 2000 is expected to double from 1995. Thus, any market power that railroads hold over grain producers is fading away as producers increase their transportation mobility.


The number of Class I railroads in the United States has declined from 77 (1) in 1969 to 9 (2) in 1995. Additional reductions are anticipated from current and expected merger proposals. This concentration in the railroad industry has raised concern about its impact on railroad market power and rates. This concern is greatest in the bulk commodity industries including coal, chemicals, and grain.

Agriculture and the grain industry have a long history of being suspicious of railroad market power. Grain elevators operators, who still have facilities located on a railroad line, perceive themselves to be captive to that railroad. Grain producers have expressed less concern about recent mergers. One hypothesis to explain this relative lack of concern is that farmers have more transportation mobility than ever before and therefore have reason to be less concerned.

There is little information on where and how grain producers ship their grain. A University of Minnesota study (3) examined how farmers in three Minnesota crop reporting districts hauled grain to town in the 1994–95 crop year. However, no other studies examining grain producer hauling patterns have been published.

To provide information on Iowa grain producer flows, Iowa State University, the Iowa Department of Transportation, the Iowa Department of Agriculture and Land Stewardship, and the Iowa

Agricultural Statistics cooperatively conducted a survey of how and where Iowa grain producers ship their 1994–95 corn and soybean sales. The producer grain flow survey data were collected by questionnaire from a random sample of farm operators maintained by the Iowa Agricultural Statistics. The 3,501 questionnaires were mailed by Iowa Agriculture Statistics on August 17, 1995. The single mailing yielded 1,510 useable responses; 42.8 percent of those sampled returned useable questionnaires.

GRAIN FLOWS

Table 1 shows the estimated bushels of corn and soybeans delivered from farms by vehicle types. Of the nearly 2 billion bushels hauled off farms, 35.8 percent was hauled by semis, 33.3 percent in wagons, and 30.9 in single and tandem axle trucks.

TABLE 1 Estimated Quantities of Corn and Soybeans Delivered from Farms, in Millions of Bushels by Mode of Transportation, Iowa, 1994–95

Vehicle Corn Soybeans Total
Wagon 498.1 165.6 663.7
Trucks
Single axle 171.7 52.1 223.8
Tandem axle 307.1 85.3 392.4
Semi 577.9 137.4 715.3
Total 1,554.8 440.4 1,995.2

Table 2 shows the estimated bushels of corn and soybeans delivered to each market accessed by Iowa grain farmers. Almost 71 percent of the corn and soybeans were delivered to country elevators. That means that over 29 percent of the sales bypassed country elevators and were delivered directly to other markets. About 10 percent of the corn and soybeans was delivered to processors, slightly over 10 percent was delivered to the Mississippi River, about 4.5 percent was delivered to the Missouri River, and 4.8 percent was delivered to other markets.

TABLE 2 Estimated Quantities of Corn and Soybeans Delivered from Farms, in Millions of Bushels by Destination, Iowa, 1994–95

Destination Corn Soybeans Total
Country elevators 1,085.3 328.1 1,413.4
Processors 160.9 33.7 194.6
Mississippi River 164.2 37.9 202.1
Missouri River 71.3 17.9 89.2
Other 73.1 22.8 95.9
Total 1,554.8 440.4 1,995.2

Table 3 shows the average distances that corn and soybeans were delivered to the five markets. Corn and soybeans were hauled an average of 12.1 km(7.5 mi) to country elevators, 51 km (32 mi) to 80 km (50 mi) miles to soybeans and corn processors, 72 km (45 mi) to 84 km (52 mi) to the Mississippi River, 80 km (50 mi) to 117 km (73 mi) to the Missouri River and 14 km (9 mi) to 64 km (40 mi) to other markets.

TABLE 3 Estimated Average Kilometers Corn and Soybeans were Hauled from Farms, by Destination, Iowa, 1994–95

Destination Corn Soybeans
Country elevators 12.1 (7.5 mi) 12.1 (7.5 mi)
Processors 80.0 (49.7 mi) 51.0 (31.7 mi)
Mississippi River 71.9 (44.7 mi) 83.8 (52.1 mi)
Missouri River 80.3 (49.9 mi) 117.3 (72.9 mi)
Other 15.1 (9.4 mi) 63.6 (39.5 mi)
Weighted average 28.4 (17.7 mi) 25.6 (15.9 mi)

Table 4 shows the average distances corn and soybeans were hauled by type of vehicle. Corn and soybean were hauled an average of 8 km (4.9 mi) in wagons, 13 km (8 mi) to 16 km (10 mi) in single axle trucks, 18 km (11 mi) to 19 km (12 mi) in tandem axle trucks and about 59 km (37 mi) in semis.

TABLE 4 Estimated Average Kilometers Corn and Soybeans were Hauled from Farms, by Mode of Transportation, Iowa, 1994–95

Vehicle Corn Soybeans
Wagon 7.9 (4.9 mi) 7.9 (4.9 mi)
Trucks
Single axle 13.0 (8.1 mi) 16.4 (10.2 mi)
Tandem axle 17.2 (10.7 mi) 19.9 (12.4 mi)
Semi 59.8 (37.2 mi) 58.9 (36.6 mi)
Weighted average 28.4 (17.7 mi) 25.5 (15.9 mi)

Table 5 shows the percent of corn and soybeans delivered by vehicle type for four groups of farms measured in hectares of corn and soybeans. The smaller farms hauled almost half of their corn and soybeans in wagons and less than one-fourth in semis. The use of wagons declined sharply as the hectares of corn and soybeans increased. On the other hand, the use of tandem axle and semi trucks increased sharply as the number of hectares of corn and soybeans increased.

TABLE 5 Estimated Percentage of Corn and Soybeans Delivered, by Type of Vehicle and Hectares of Grain Production, Iowa, 1994–95

Hectares of corn and soybeans per farm
Trucks

Wagon Single axle Tandem axle Semi
0-101 49.0 13.7 14.0 23.3
102-202 42.4 13.5 18.5 25.7
203-405 33.0 13.0 20.6 33.4
406+ 25.8 6.1 26.0 42.2

The respondents were asked to indicate the number of each type of vehicle they owned in 1995 and the number they expect to own in the year 2000. Table 6 shows the responses to that question along with the percent of corn and soybeans each group sold in 1995. In 1995, over 97 percent of the producers owned wagons and single axle trucks. This group sold 63 percent of the 1994–95 corn and soybeans. By the year 2000, about 70 percent of the producers

expect to own wagons and single axle trucks; this group sold only 40 percent of the 1994–95 crop.

TABLE 6 Percent of Corn and Soybeans Sold by Percent of Producers and Largest Size Vehicle Owned by Percent of Producers and Percent of Corn and Soybeans Sold, Iowa, 1995 and 2000


1995 2000
Largest vehicle owned* Percent of producers Percent of corn and soybeans sold in 1995 Percent of producers Percent of corn and soybeans sold in 1995
Wagon 76.2 44.6 55.8 30.4
Trucks
Single-axle 21.1 18.6 14.8 9.8
Tandem-axle 11.2 18.11 3.2 16.2
Semi 5.3 13.3 10.1 21.9
No response 15.4 5.4 35.1 21.7
*All trucks were assumed to be larger than wagons

In 1995, 5.3 percent of the producers owned semis and sold 13 percent of the corn and soybeans. By the year 2000, over 10 percent of the producers expect to own semis and this group sold almost 22 percent of the 1994–95 crop. Over 15 percent of the respondents did not answer the question for 1995 and 35 percent did not answer the expected ownership in the year 2000. The group not answering the 1995 ownership question sold 5.4 percent of the crop and the group not answering the year 2000 ownership question sold 21.7 percent of the 1994 crop. We do not know if the increase in no response was caused by uncertainty or expected exits from farming. Grain industry executives believe that most of the corn and soybean produced by the nonrespondents to this question will be hauled by semis because they either own no transport vehicles, use custom haulers, or their land will be operated by large producers who will own semis. If this is the case, the percent of corn and soybeans moving off farms would be 43.6 percent. This is likely a conservative estimate because it does not include the impact of continued consolidation of farms into larger operations that haul most of their grain in semis. Considering the impact of farm consolidation, up to half of all corn and soybean sales could move off Iowa farms in semis by the year 2000.

CONCLUSIONS

This is the first published report on how and where Iowa grain producers ship their corn and soybeans. Nevertheless, observations of grain producers shipments over time suggest that the following changes have taken place:

  1. Iowa grain producers are shipping increasing quantities of corn directly to corn processors, river markets and other destinations.
  2. The percent of total corn and soybean sales delivered to country elevators is declining.
  3. The current and expected shifts from wagons, and single axle and tandem axle trucks to farmer owned semis is dramatic. By the year 2000, up to half of the corn and soybeans could move from farms in semis. This shift means that grain producers have increased transportation mobility and market power.
  4. This increased transportation mobility gives grain producers with semis the ability to bypass the local grain elevator and the local railroad by hauling longer distances to another railroad or more likely to a corn or soybean processor or to the Mississippi River for export. This suggests that, contrary to conventional wisdom, grain producers will increasingly hold market power over the railroad. It is true that the railroad holds market power over the grain elevator. However, whatever market power the railroad once held over farmers is quickly disappearing.

ACKNOWLEDGMENTS

This project was funded by the Iowa Department of Transportation, the Iowa Corn Promotion Board, and the Iowa Soybean Promotion Board.

REFERENCES
  1. Association of American Railroads. Railroad Facts. Washington, D.C., 1970.
  2. Association of American Railroads. Weekly Railroad Traffic, various issues. Washington, D.C. 1995.
  3. A. Friesen, J. Fruin, and A. Messell. How Farmers Get their Grain to Town, Minnesota Agricultural Economist, No. 683, Minnesota Extension Service, University of Minnesota, Department of Applied Economics, St. Paul, Minnesota, 1996.

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