From the January/February 2020 GRAIN JOURNAL.
Editor’s note: Sunny, cold, and windy. That’s the sort of day we’re having here at the Grain Journal office in Decatur, IL in mid-December, and that’s the sort of day in early March General Manager Gil Maier is having at Northern Star Farmers Cooperative in the fictional north central Iowa county seat of Monrovia. Like most grain cooperative managers, Gil has figured out that he needs even more on his plate, or his board of directors figured that, and now he’s overseeing the start of construction of a steel annex at the coop’s branch elevator in Pottawatomie.
“How about those Hawkeyes?”
Harold Ernst, the oldest son of Ernst & Sons Construction, LLC out of Fort Dodge, was providing some friendly needling for Gil Maier as they bent over a blueprint spread out on a card table set up in the coop’s conference room. Harold knew Gil was a “semi” alumnus at Iowa State University, having majored in agricultural economics for two years before dropping out to join the Army, and the coop manager was a loyal Cyclones fan to this day. Both the Cyclones and the University of Iowa Hawkeyes were having reasonably good years in men’s basketball, and both teams were headed for the NCAA tournament.
“You mean that team we beat by 30 points in the preseason?” Gil replied. “In Iowa City, no less?” he continued, twisting the proverbial knife. “With that power forward who’s 6 foot 7 and still can’t slam dunk?”
Harold smirked. “We’ll have a surprise or two for you in about a week’s time.”
Gil glanced over at Johnny Littlefeather, who recently was promoted from superintendent at Monrovia to operations manager over the entire coop. Johnny had played varsity basketball in high school in South Dakota but didn’t go on to college, so it was hard to say how he might have done there. The operations manager hadn’t reacted to the basketball talk, but he frowned and tapped his pen on the side elevation view of the four new tanks.
“Why no sidedraws?” he asked.
“Why no rail service?” Harold responded. Six years back, one of the big Class I railroads had bought out the shortline serving Pottawatomie and within 12 months had petitioned the Surface Transportation Board to abandon the rail line. No one could figure the logic, except that the rail siding there could accommodate only 25 railcars at a time, and the Class I railroads preferred to haul 110-car unit trains. A group of farmers had tried to sue the railroad, but the railroad had more and better lawyers.
“Rail service or not, we have had 200-plus bushels to the acre of corn up there the last couple of years, and we’re tired of putting grain on the ground,” Gil said. “We’ve got use for another million and a half bushels in steel tanks over there.”
“And you should have plenty of capacity to load trucks, even during harvest,” Harold commented. “We’re looking at a 10,000-bushel overhead surge tank and a big gravity spout off the new distributor. That should be more than enough.”
Farmer-members in the Pottawatomie area had been complaining for years about the long lines at the elevator during harvest, especially now with modern hybrid yields and most farmers hauling with semi-trucks.
So the plan was to add four 375,000-bushel tanks, probably more than necessary, but trend line yields suggested all of the space eventually would be used, and Gil’s experience told him it would happen sooner than anyone expected.
The tanks would be made with narrow corrugations, 90 feet in diameter, 62 feet tall at the eaves, and 85 feet tall at the peaks. While bigger tanks were available, these would be big enough to be very noticeable to village residents. One neighbor, a retired math professor at Iowa State University, was concerned that trees not be taken down near his property and expressed that during a zoning variance hearing, but Gil told him that he needn’t worry about his property, and in fact, the coop would be having some trees planted around the project to serve as a buffer. Also, the coop would pay a little extra to have silencers installed on the aeration fans to keep down the noise.
In addition to the tanks, the project would include a receiving pit, the third at the elevator, and a 20,000-bph leg housed in a support tower with switchback stairs so workers could get up to the receiving equipment at the top. An overhead 20,000-bph drag conveyor would take grain out to the new storage, while a second overhead conveyor could take it back to older sections of the elevator. The tanks would empty onto another 20,000-bph conveyor in an above-ground tunnel installed through the eight-foot concrete stem wall supporting the tanks running back to the receiving leg. All of this was intended not only for handling grain but also to relieve the truck backups that often disrupted traffic patterns through the village during harvest.
The idea was to have everything completed and operational in time for fall harvest. Odds of an on-time completion were improved because of two weeks of exceptionally warm weather starting the last week of February. That softened the ground enough that Killian’s Foundations, a local excavation and concrete subcontractor, was already out at the site digging pits for the tanks with a backhoe. The pits would be deep, down to the bedrock level, but plenty of pilings would be needed for the tanks given the soil type. Much of that end of Pottawatomie was in the Fox Creek flood plain and prone to flooding, on average, every other spring.
“Anything else, Johnny?” Gil asked.
“That should be it for now,” the operations manager said. “I’ll be out at the site most days to check up on progress, see if you guys need anything from us.”
“Sounds good,” Harold said, starting to roll up his blueprints. “I’ll be heading over there now.”
Gil left the conference room, walking down the hallway toward the main reception area and his office. Connie Smith, recently promoted to office manager, met Gil outside his office. “It’s the railroad again,” she said. “They left a message on your voicemail.”
Gil frowned. He thought he knew who had left the message, and after he went into his office and closed the door, it turned out he was right. It was Elliott Godfrey, who handled grain service sales for the small regional railroad that served Northern Star’s headquarters elevator in Monrovia. Gil had a hard time getting along with Elliott; he found the salesman to be pushy, fond of high-pressure tactics, and not fond of listening to other people, the sort of sales guy you’d expect to find selling used cars on the south side of Chicago.
Elliott didn’t say what he was calling about, but Gil had a good guess. The Chicago, Dubuque & Western Railroad had a habit of imitating the big Class I railroads, clinging to the notion that it might one day become a Class I itself. Gil thought that very unlikely (as did most of the Class I railroads), but the CD&W’s CEO had that as a dream.
One step the CD&W was trying to take was to adopt a rail scheduling system called “precision scheduled railroading.” The idea had been invented and promoted by an executive for the Union Pacific Railroad. Since then, he had died, but the Class I railroads had taken up the idea in a big way.
Precision scheduled railroading involved shifting railroad assets – locomotives, covered hopper cars, personnel – away from current shipping patterns to encourage shippers to buy into larger numbers of unit trains, for example. So far, this appeared to have resulted in reduced service and longer turnaround times for grain shippers. The railroads responded that bugs were being worked out of the system, and eventually it would result in improved service for everyone who could make big freight buys. Like a lot of elevator managers, Gil was skeptical of this, especially with smaller shippers like Northern Star that couldn’t afford to schedule 30 or more round trips of 110 cars to the West Coast and back every harvest.
While precision scheduled railroading might be a profitmaker for the big railroads, Gil couldn’t understand what was in it for the CD&W. Shortlines and regionals didn’t have the longer routes by themselves to pull it off. But Elliott had been hinting that he had the connections with all of the western Class I’s to get them to allocate all of the shipping resources a little cooperative like Northern Star could want. Gil put him off, saying he needed to discuss the matter with the coop board.
Reluctantly, Gil hit speed dial for the railroad’s office in Dubuque. Part of him hoped that Elliott was out.
No such luck. “Hey, my man, Gillie!” boomed Elliott’s voice from the speaker.
Gil hated being called “Gillie” even more than he hated being called “Gilbert.”
“So did you have a chance to think about my proposal?” Elliott continued.
“Well, I have a number of questions,” Gil said. “The big one is, what do you want from us?”
“That’s the last thing you need to be asking,” Elliott said. “I can guarantee you that it will be fair. Haven’t I always been fair to Northern Star?”
Gil didn’t reply to that. “I can’t agree to anything unless I know what exactly I’m agreeing to,” he said.
Elliott was silent for a moment, which Gil knew to be unusual for him. “It’s the usual fee to the railroad, just like any other shipment where we connect to a Class I.”
“And...” Gil prompted. With Elliott, there was always an “and.”
“And there will be a nominal fee on top of that,” Elliott said. “You’ll receive the forwarding code for a bank account, where that payment goes.”
“In whose name?” Gil asked. “And where is this bank account?”
“It doesn’t matter,” Elliott said.
“Actually, it does,” Gil told the salesman. “My board wouldn’t agree to any deal under those terms.”
“Your board doesn’t have to know,” Elliott told Gil.
“And you and I would both be going to prison for bribery and embezzlement,” said Gil. “I sure hope we’re not cellmates.”
“There’s no call for that kind of talk,” said Elliott. “This is a perfectly legitimate deal.”
“And I’m saying no to that deal,” Gil told him. “I’ll take my chances with rail service. If need be, we’ll truck our grain to Mexico or Portland or wherever.”
“You’re really making a mistake passing up a deal like this,” Elliott said, raising his voice a little bit.
“What part of ‘no’ don’t you understand, Elliott?” Gil replied. “Why don’t you call back when you have something legal to discuss? We’ll call when we need some railcars. Or maybe we’ll build a new elevator on a different railroad. Our lender offers a pretty good line of credit.”
“Suit yourself,” Elliott said. “How long do you think you can keep that grain in storage before it starts to smell?”
— Ed Zdrojewski, editor