Aberdeen American News | By Ian H. Fennell | September 26, 2002
Grain elevators in Stratford, Hecla and Ellendale, N.D., are in the process of being sold by South Dakota Wheat Growers, co-op officials said Wednesday.
The elevators have been closed since late August and are expected to be sold to private producers in the next two to three weeks, according to Mike Trosen, director of operations for Wheat Growers.
"It's unclear if they'll be used commercially because they're being sold to producers for their own use," Trosen said. "I think it's safe to say that they'll have very limited commercial use in the future." He said it took Wheat Growers officials about a year to come to the conclusion that the elevators should be sold. "We did a lot of thinking about this and collected a lot of necessary market research before making the decision," he said. "Some people will never agree with it, but at the end of the day the board and management (of Wheat Growers) has an obligation to its members to make the tough business decisions necessary to keep the co-op financially strong." And according to Trosen, Wheat Growers is in excellent financial shape.
He said the co-op's 2002 dividends will be among the "largest ever" paid out and have been made possible by Wheat Growers' "excellent earnings." Trosen said that although the sale of the grain elevators is good economically for Wheat Growers, it's obviously going to be tough for the Stratford, Hecla and Ellendale communities.
"All three communities contacted us with their concerns about the sale of these facilities," he said. "In the case of Hecla, they were probably more vocal than the others because they had just lost their school. We heard everyone out, but the reality is that these (grain elevators) were no longer dynamic parts of these communities. They might have been a meeting place for local producers, but they didn't do a fraction of the business they used to." He continued, "Their economic impact has slipped away but their social impact has increased over the years because producers would congregate there."
Trosen said the fact that none of the elevators had rail access and most producers were already transporting their grain by tractor-trailer to larger rail-equipped facilities were among the reasons why Wheat Growers decided to sell them.
"All of these communities once had rail access, but not any more," he added.
Wheat Growers' rail-equipped elevators offer producers a better price for their grain because the co-op doesn't have to pay to have it trucked to such facilities. With Stratford, Hecla and Ellendale, Wheat Growers footed the bill for such transport, but passed on the expense by offering producers a lower overall price for their grain.
The rail-equipped elevators also provide producers with faster service than the older truck houses, such as those being sold.
Trosen would not specify how much money Wheat Growers expected to get or save in the long term by selling the grain elevators.
He said the elevators employed a total of six full-time workers, two of whom were laid off. One retired, while the three others were moved to jobs at other Wheat Growers' facilities.
The co-op purchased the Ellendale and Hecla elevators within the past five years but has owned the Stratford elevator for more than a decade, Trosen said.
Each of the elevators is more than 30 years old.
Trosen said the small number of producers who were using these elevators will be inconvenienced in that they'll have to drive farther distances to other Wheat Growers' facilities. He said those who took their grain to the Hecla and Ellendale elevators will now have the option of using the Aberdeen or Oakes, N.D., facilities. Those who used Stratford can dump their grain at the Mellette or Aberdeen elevators.
Trosen said producers will find they get more money for their grain at these rail-equipped facilities, but he's not sure if this will smooth over the situation because of the increased travel needed to get to them.
He said the small number of producers who used the elevators are likely "devastated" by the closings. But most weren't using these facilities and that declining business coupled with high operating costs, especially insurance, made selling them an attractive option.
"We want the communities to know that we didn't take this decision lightly or go into it blindly, but the declining business and cost structure of these facilities made it apparent they were no longer feasible," he said.
Wheat Growers is based in Aberdeen but serves an area as far south as Chamberlain and as far north as Oakes. Its easternmost community is Bristol and its westernmost is McLaughlin.
The co-op has about 250 employees and 5,000 members.Aberdeen American News:
