What is 'Public Elevator'

A public elevator is 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. Public elevators are a large part of the farming industry and provide both revenue and jobs.

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, so the farm co-op owns the public elevator. Public elevators are not as commonplace as they once used to be because as America’s small farming population has dwindled, larger farms have taken their places. Thus, small-town public elevators are not as needed as they once were. Larger farm operations can afford to either purchase their own grain elevators or haul their grains to a nearby set-up.

Advantages of a public elevator

A farmer utilizing a public elevator is advantageous for several reasons. First, a public elevator allows the farmer access to commercial grade equipment without having to purchase the equipment for themselves. Secondly, the farmer is able to have access to experts who are able to maintain the correct chemical composition and exact settings necessary to ensure that the grain is kept at optimum temperatures for drying and storing. Additionally, there is no maintenance on the farmer’s end as far as equipment goes.

Disadvantages of a public elevator

Despite the many advantages of a public elevator, there are some considerations. For example, the price of a public elevator can be considerable for simply storing and drying grain. It’s usually a monetary amount per bushel and a farmer may be charged additional fees if the quality of a requested grain sample does not meet the public elevator standards. Public elevators may also be located at a distance that is considerable for a farmer, so it may not be convenient for the farmer.

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