Mid Kansas Cooperative is about to break ground on a special elevator than can fill a rail car with 4,000 bushels of grain in three minutes — and it’s making other co-ops nervous.
MKC, a large co-op based in Moundridge, and CHS, a St. Paul, Minn., grain co-op and energy company so big that it’s traded on the NASDAQ, are building the shuttle loader in Milan, in western Sumner County.
They will break ground next week and plan to finish construction in time for the 2017 wheat harvest.
The facility will hold 7 million bushels and load 110 rail cars in seven hours. It will sit next to the BNSF main line so the cars can go directly to Mexico or to New Orleans for loading on ships bound for China.
The country has seen an enormous boom in the construction of shuttle loaders, which have facilitated the dramatic increase in U.S. grain exports over the past 15 years. MKC has one in Canton, near McPherson.
Erik Lange, vice president of eastern operations for MKC, said the co-op expects Sumner and Harper County farmers to supply the grain and would love to take grain from other elevators in the area.
Local co-ops in the area are nervously awaiting the new facility. Is it largely a customer or a competitor?
“It’s going to be competition, but how much is still to be seen,” said Curt Guinn, general manager of the Farmers Co-op in Wellington. “We have an elevator three miles from there in Mayfield.”
Mark Morlan, general manager of the Danville Co-op in Harper County said he, too, sees the new shuttle loader as competition, and he’s unhappy that he’ll be competing with his own co-op — CHS.
“We’re a member of CHS,” he said. “And they’re putting both of us at risk by overpopulating the area.
“We’ve done our research. There’s not enough grain for all us.”
Lange, of MKC, acknowledges that there is already sufficient grain storage for the area between Wellington and Harper.
“But as farmers continue to do a good job on increasing yields and production, in 10 to 15 years there will be plenty of room for all of the elevators in the region,” he said.
A co-op isn’t just a store that buys farmers’ grain and sells them goods. It is owned by its members who are also its customers. They receive a check once a year for any financial surplus based on the amount of business the farmers did with the co-op.
Farmers are often members of more than one co-op, giving them the option to deal with the one they like the best.
Local co-ops typically move grain by truck or by short-line railroad to terminal elevators in Wichita or other cities. Many co-ops have already merged, and most have talked about it, to gain efficiencies of scale.
Danville Co-op and Farmers Co-op already belong to Comark, a cooperative grain market entity based in Cheney that markets the grain for 12 co-ops in south-central Kansas.
Lange said it’s not certain that the MKC/CHS shuttle loader will always have the best prices to entice farmers.
“There might be times when the terminals in Wichita have the best prices, but there will definitely be times when the rail market to the East Coast, the West Coast or the Gulf Coast would have a price advantage,” he said.