DEFINITION of 'Public Elevator'

A grain elevator that, for an associated fee, stores the bulk grain of public clients. A public elevator allows farmers to store grain without having to build individual silos, and are typically found at transit points where grain is shipped to market. If the grain of each farmer is mixed together within the public elevator, it is impossible to tell the products of individual farmers apart. This reduces the competition between individual farmers, and the operator sells the grain at the best price he or she can get.

BREAKING DOWN 'Public Elevator'

A public elevator must be approved by an exchange to be considered a regular delivery location for futures contracts. This is primarily because commodity traders want to make sure that the public elevator is well regulated, and that unscrupulous elevator owners do not allow poor product to be mixed in with good product. It is often operated for a grain pool which is a farming co-operative.

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