SIC 4221
FARM PRODUCT WAREHOUSING AND STORAGE



This category includes establishments primarily engaged in the warehousing and storage of farm products. Farm product warehouses provide temporary storage for non-perishable agricultural products such as grain. Establishments primarily engaged in refrigerated warehousing are classified in SIC 4222: Refrigerated Warehousing and Storage.

NAICS Code(s)

493130 (Farm Product Storage Facilities)

Industry Snapshot

In 2001, there were 358 firms operating 552 establishments in this industry. Total employment was 5,459 with a payroll of more than $147 million. The industry had combined revenues of $636 million in 2002, down 7.6 percent from $688 million in 2001 and $647 million in 2000. The industry was served by the National Grain and Feed Association (NGFA), which worked to represent grain warehouse interests on the state and federal level, as well as conduct research to reduce industry costs and increase efficiency and reliability.

Background and Development

Warehousing was established as a significant link between producers and consumers by 1783, particularly at port cities. Before elevator mechanization, grain was stored and shipped in sacks or barrels. A chain-bucket system to move grain from bins into elevators was invented in 1785 and improved in 1843, achieving widespread use by the 1860s. Before modern roads and rail transportation, country storekeepers doubled as warehousers who traded commodities and offered credit. Transportation and storage improvements made it profitable to grow grains at greater distances from major markets, spurring the development of commodity exchanges.

The warehousing industry refined its basic function from simple storage and handling of bulk materials toward supplying the market with custom products; the baking industry launches 1,000 new products a year to satisfy demand for variety, quality, safety, convenience, price, and environmental compatibility. The shift demanded skillful management and specialized knowledge as warehousing evolved from high-volume processing to a transitional role in value-added product innovation.

Communication skills became more important as grain handlers linked producers and manufacturers. Computer-literate elevator personnel—fluent in crop varieties,

SIC 4221 Farm Product Warehousing and Storage

fertilizers, finance, marketing, and sales—offered a wider range of services to high-tech farmers and endusers. Growers delivered a variety of grains as raw materials for developing niche markets. In addition to cash crops such as corn, wheat, and soybeans, farmers produced barley, durum, rice, sunflowers, flax, edible beans, and other specialty crops. Advances in genetics and grain monitoring spurred demand for specialized end products. Crops were manipulated for food quality, protein yield, and mold resistance. Insects were detected by acoustic monitors. Nucleic acid probes discovered microbes, pesticides, and antibiotics.

Consumer demand is one of the most important factors that stimulates consolidation and vertical integration of the farm product warehousing industry. This development mirrors what occurred in other agriculture sectors such as pork, poultry, and vegetable processing. In the 1990s, per capita consumption of cereal and flour products was up 25 percent since 1968, while consumption of animal products expanded 1 percent. After four consecutive years of abundant harvests worldwide, the 1999 international demand for farm produce was weak, forcing farm prices to drop, domestically and on exports. Conversely, as demand waned, storage warehousing and insurance on agricultural products increased. Commercial storage of grain alone in 1999 was estimated at 8 billion bushels, with another 11 billion stored on farms. This was notwithstanding $53 billion in U.S. farm exports in 1998.

More than 9,000 elevators were in operation in the United States in 1982, dropping to fewer than 8,000 by the mid-1990s. The top 44 U.S. firms primarily in the farm product warehousing and storage business posted total earnings between $1 and $3 billion in the 1990s. In 2003, Westeel grain storage systems, popular in Canada and other countries overseas, were entering the U.S. market as a cost-effective alternative to on-ground grain storage.

In 2001, the industry leader was Federal Compress and Warehouse Company Inc., of Memphis, Tennessee, with $1.3 billion in revenues and 1,600 employees. Impact Cooperative Inc. of Frankfort, Indiana, had $413 in revenues and 200 employees. Richmond, Missouri-based Ray Carroll County Grain Growers Inc. had revenues of $256 million and 100 employees. Other leaders were Farmers Cooperative Compress of Lubbock, Texas, with $70 million in revenues and 300 employees, and Attlebury Grain Inc. of Amarillo, Texas, with $82 million in revenues and 100 employees.

Further Reading

Baker, Deborah J., ed. Ward's Business Directory of US Private and Public Companies. Detroit, MI: Thomson Gale, 2003.

National Agricultural Statistics Service, USDA. Available from http://usda.mannlib.cornell.edu/reports/nassr .

"National Grain and Feed Association." 9 March 2004. Available from http://www.ngfa.org/ngfaprofile.asp .

U.S. Census Bureau. Statistics of U.S. Businesses: 2001. 1 March 2004. Available from http://www.census.gov/epcd/susb/2001/us/US332311.htm .

——. Transportation Annual Survey. 8 March 2004. Available from http://www.census.gov .

U.S. Department of Labor, Bureau of Labor Statistics. Economic and Employment Projections. 11 February 2004. Available from http://www.bls.gov/news.release/ecopro.toc.htm .

"Westeel Names Commercial Grain Bin Distributor for U.S." Feedstuffs, 3 November 2003.

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