Feb 01, 2013

February/March 2013

Joint Venture Excedes Expectations

cover photo by Jackie Roembke

Mar 27, 2013

Food Fight

The 117th edition of the National Grain and Feed Association’s (NGFA) Annual Convention, held in San Francisco in mid-March, drove this sentiment home in its general sessions: While agriculture is one of the greatest growth industries, the coming years will be filled with the unique challenge of restoring the public’s trust in the food system. For those working and living agriculture, it should come as no surprise that much of the content presented by the event’s diverse set of speakers focused on the anti-biotechnology battle being waged in this country — specifically the one against genetically modified (GM) grains and food stuffs.

Largely driven by emotion and misinformation, the vitriolic arguments presented by biotech’s opponents run contrary to the extensive scientific research backing the legitimacy and safety of GM foods. Why then does this movement have such momentum? According to Chuck Policinski, Land O’ Lakes president and CEO, agriculture has failed to manage the public’s opinions on the food supply by not effectively telling its productivity story, the one only made possible through the use of biotechnology.

Let’s face it, the public has been conditioned to be suspicious of big business (often rightfully so) — and agriculture surely is not exempt from this scrutiny. Big is bad — and the consumers intrinsically question whether or not greed-driven corporations (and politicians) have their interests and well-being in mind.

California’s Proposition 37 (also known as “The California Right to Know Genetically Engineered Food Act”) highlights this movement. The statute would have called for the mandatory labeling of genetically modified consumer food products at the grocery store. While Prop 37 was defeated during the 2012 election by a narrow margin, the push certainly didn’t end in California. In fact, many states have proposed legislation and pending ballot initiatives in motion.

Do consumers deserve to know where their food comes from and how it is sourced? Absolutely. Should the industry be more transparent? I think so; however, acknowledging that the tide has shifted, perhaps it’s time to take the initiative and address the matter on its own terms.

Earlier this month, Whole Foods became the first major retailer requiring products containing GMOs to be labeled by 2018 — and, in time, other major retailers are likely to follow suit. Not knowing where the consumer’s interest in the supply chain will end, grain handling and feed manufacturing industries should keep a keen eye on this issue because we are, after all, ultimately one industry.

Policinski urges individuals and agribusinesses to actively engage with the public in real time via social media and that they reach out to their local and state politicians to tell the story about an industry revving up to feed a growing global population.

What are you doing to tell our story?

Mar 25, 2013

Getting the Measure of Mycotoxins

Getting the measure of mycotoxins is no easy task especially in the wide range of cereal crop commodities providing feed grain and the main ingredients of finished feed. Many field fungal pathogens and storage molds synthesize mycotoxins. Each group of fungi, including the aflatoxin-producing Aspergillus molds or the large number of Fusarium fungal pathogens delivering a broadside of Deoxynivalenol (DON), Zearalenone (ZEA), T-2 and HT-2 mycotoxins, has its own environmental requirements.

Each mycotoxin is the signature chemical and calling card left by a specific fungus or group of related fungi. Many of these highly versatile microbes "start life" as disease causing pathogens on cereal crops and subsequently extend into grain spoilage and mycotoxin contamination at any stage along the supply chain from on-farm storage to bags of finished feed.

Mycotoxins in the field

Field factors including fungicide treatment (by seed dressings or foliar sprays), fertilizer treatments and irrigation regimes, and the inherent disease resistance of the corn or wheat variety grown will play a part in the nature and magnitude of mycotoxin contamination. And watching over all this cereal agronomy is the weather as a wild card. The majority of cereal pathogens, and certainly Fusarium spp such as Fusarium graminearum responsible for wheat head blight and stalk and ear rot in corn, respond favorably to cool, cloudy, moist and humid conditions

Other fungal molds prefer it hot and dry. Classic case is the aflatoxin producing Aspergillus fungi, mainly A. flavus and A. parasiticus. They responded to the unprecedented high temperatures and accompanying drought experienced across the U.S. Corn Belt in 2012 with rapid growth rates and aflatoxin contamination in maize grain. Aspergillus spp are predominantly storage fungi and do not generally contaminate cereal grain prior to harvest. However, drought stress and insect damage often high in dry weather and drought stressed crops may allow infection by Aspergillus fungi and therefore aflatoxins production prior to harvest.

Mycotoxins moving into store

Mycotoxin first appears on the panicles of standing cereal crops, but cleaned grain arriving at the farm silo or loaded onto trucks for off-farm shipment is the first opportunity to test for what and how much mycotoxin is there. Getting the measure of mycotoxins from now on is a matter of what to test for, at what stage and how often.

Farmers and traders generally know the range of mycotoxins they need to test for in relation to the type of cereal and where grown. However, the appearance of one mycotoxin can often act as a "marker" for others because both are produced by closely related molds enjoying similar field conditions for infection and mycotoxin production. For instance, DON and ZEA will often occur together. These two mycotoxins are produced by Fusarium graminearum and also by a number of other closely related Fusarium fungi which infect a range of cereal crops.

Proper grain cleaning to remove all crop debris and especially the glumes (integuments surrounding small grain cereals like wheat) go a long way in preventing mycotoxin and fungal molds responsible from entering the post-harvest and processing stage. The extent to which mycotoxin making molds become active in store to contaminate grain, and subsequently animal feed, will depend on grain moisture content and the conditions of storage.

Maintaining the balance

Twelve percent grain moisture is generally given as the figure below which fungal mold activity ceases, but the situation is more complex than that. Moisture level within the grain and in the surrounding air is dependent on temperature because warmer air has a greater water holding capacity

Moisture inside the kernels of stored grain establishes an equilibrium level (balance) with the air outside, and the resulting relative humidity (R.H.) may be sufficiently high to encourage growth of deteriorative organisms including mycotoxin making fungi. Bacteria, fungal molds (including mycotoxin producers) and mites require a minimum R.H. of 90%, 70% and 60%, respectively. Insects depending on species need an R.H. level between 30% to 50%.

Grain storage specialists utilize this information to relate equilibrium moisture content of grain and R.H. of the surrounding air for a range of stored cereals. Relationships calculated for a range of cereals stored at a temperature of 25C are shown in Table 1. Grain moisture content in equilibrium with an R.H. of 70% (shown in bold type) is the figure beyond which the stored cereal grain becomes at risk of microbial damage and therefore mycotoxin contamination. In practical terms this means grain scheduled for storage at 25C should be dried to and maintained at that maximum moisture level. Equilibrium grain moisture contents and corresponding R.H. levels are recalculated for higher or lower storage temperatures.

Getting the measure of mycotoxins

Exactly when and where to test along the supply chain, is now formalized into Hazard Analysis Critical Control Point (HACCP) testing. Experienced operators will already be aware of inherently high risk points where testing has always been advised. This may be grain loads coming in from different parts of the farm and experiencing different growing conditions including soil moisture and irrigation levels. Mycotoxin testing will alert the farmer to any real-time mycotoxin problems and provide important farm and crop data for use in later years.

Routine testing of grain loads from different sources for mixing in silos or during feed manufacture is clearly a priority for managers of central grain depots and feed mills. Any point along the supply chain where grain and other debris can accumulate, whether in conveyors at the grain store or feed mixers and bins in the feed mill, are high risk points for fungal growth and mycotoxin accumulation.

Mycotoxins are not randomly or uniformly distributed throughout static grain or feed loads but tend to occur in so called "hot spots" corresponding to damp spots and pockets of mechanically damaged or insect infested grain that encourage mould growth. Sampling a moving stream of grain, feed ingredient or finished product reduces any selection bias associated with sampling and testing a static load. Static grain loads should be probed many times and all over, with sub samples bulked to produce a more representative gross sample for testing.

Speed and sensitivity of testing are the twin main thrusts of mycotoxin testing over the last two decades, including actual time taken to obtain an accurate and actionable reading and result. If a test result is achieved on-site within minutes, then "rogue loads" can be dealt with promptly and isolated without contaminating the main bulk of grain, feed ingredient or finished feed. When samples were taken back to laboratories for testing, no prompt action was possible for suspicious loads with visible mold or a musty smell, without holding up operations. Traditional methods to analyze mycotoxins include fluorometer and LC methods using immunoaffinity (IA) columns. Chosen for their ability to isolate mycotoxins in simple or complex sample types, IA columns ensure precise measurements whether in the field or laboratory setting and provide the most comprehensive range for detection of single or multiple mycotoxins.

Maximum protection against the threat of mycotoxin contamination is achieved when inbound raw materials such as rice, corn, wheat, cottonseed meal or barley are screened prior to storage or use in feed production. This need to know on-site and on time led to the development of portable on-site testing equipment like the VICAM Vertu® Lateral Flow reader — used to identify and quantify key mycotoxin hazards at critical control points right along the feed and grain supply chain. VICAM has gone one stage further with introduction of five-minute on-site quantitative strip tests to detect DON (DON-V™) and alflatoxins (Alfa-V™).

VICAM’s quantitative strip tests are designed for use with the Vertu® Lateral Flow Reader and can be performed with a minimum of on-site training and technical expertise. These novel tests employ the highly sensitive and selective monoclonal antibodies required to accurately measure DON and alfatoxins in grain or feed material.

Current passion is to drive down testing times to several minutes. More important is the overall on-site picture to allow prompt testing by nonscientists, on the spot and anywhere along the supply chain, to secure prompt accurate and repeatable results over the sensitivity range required. Whether the actual testing time is three or five minutes is secondary.

Mar 20, 2013

Beyond the Scale

Operations management software can deliver benefits that go far beyond the scale to not only improve the grain handling operations themselves but also streamline back-office functions and improve customer service – from faster weighing processes and traffic flow to speeding up invoicing to improving accuracy and communications.

At a grain handling facility, generating a scale ticket is the first step in managing the operations for inbound and outbound shipments. Operations management software with capabilities such as quick lists and RFID technology (which automatically retrieves customer information and records ID and weight information) mean less manual data entry and searching for information, which, in turn, improves accuracy and decreases wait times for haulers. Quick and easy ticket generation is just the tip of the iceberg when it comes to what operations management software can do for an agribusiness. With system integration and automation tools, the ticket information can go beyond the scale to improve efficiency, accuracy, and service from the scale to the bin to the office to the customer.

With a message board interface, the ticket information can display on an outdoor electronic display so that the hauler immediately can see and validate the information. Plus, the display board can convey instructions to the hauler as to which pit to proceed to, keeping traffic flowing and ensuring accuracy as to where the grain is dumped. At the pit, load information such as the vehicle ID, commodity, and grade can be automatically transmitted to a monitor in the receiving area to further ensure accuracy and make communication at the pit much easier versus trying to decipher handwriting or static-filled radio communications. System integration capabilities also allow for the ticket information to automatically update a binning system to ensure the grain is routed to the correct bin, as well as update the back-office accounting system so that statements are accurate and timely. Using an online account access tool for your customers, the ticket information can be available to your customers 24/7 so they can review the information at their convenience. System capabilities that allow for being able to automatically email tickets to your customers also help make you a great service provider in their eyes. In today’s age of instant communication, your customers expect that level of service, and automation tools and integration can help ensure you provide the level of service your customers appreciate.

Have you reviewed your grain handling processes lately to see how efficient they are? Are your scale house and office processes contributing to better customer service or are they hindering it? Are you maximizing system integration capabilities and automation to take full advantage of the benefits they can provide? Operations management software and automation tools are easy to fit into all kinds of facility layouts. Working with a software provider to review facility layout, traffic flow, and processes can bring best practices to your agribusiness and help you determine how automation can work for you. Whether you are ready for incremental automation or becoming fully automated, even small changes can make a big impact in improving efficiency, accuracy, communications, and service.

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Steve Day is Senior Product Manager for the oneWeigh Scale Automation System with Cultura Technologies Inc. For the last 15 years he has been dedicated to helping agribusinesses improve their shipping and receiving operations with practical, easy-to-use tools.

Mar 11, 2013

GEAPS Exchange Education Sessions

In late February, grain elevator operators descended upon the land of bourbon and thoroughbreds for the 2013 edition of the GEAPS Exchange. The event, held at the Kentucky International Convention Center in the heart of Louisville, featured a diverse line-up of educational sessions, which tackled many of the industry’s critical issues, and a trade show with more than 300 exhibitors eager to showcase their latest equipment.

GEAPS Exchanges focus on education and information that provide “take home” value. Three concurrent session tracks focused on many different topics; however, the sessions Feed & Grain attended focused three main areas: safety, what’s new and transportation issues.

The following is a brief re-cap of these sessions.

Preventing catastrophic events

In the workshop, “Preventing Catastrophic Events at Your Grain Facility,” attorney Mark Aljets, of Nyemaster Goode, a law firm in Iowa, explained that he’s not a safety expert. He has, however, toured facilities to see first-hand issues that can lead to a catastrophe, he has experience in reviewing what contributed to grain facility explosions, has been involved in four litigations triggered by grain facility catastrophes, and reviewed more than 150 depositions “from guys shoveling grain to CEOs.”

Because of this unique perspective, he urged managers to take responsibility for establishing a “culture of safety” in their grain operation. Here’s a quick review of some of his recommendations and reminders:

  • Someone in each facility must know “backwards and forwards” NFPA 61
  • Managers must ensure that written policies are in place for housekeeping procedures and preventive maintenance of equipment
  • Demand compliance; regularly review housekeeping and maintenance log sheets
  • Develop and implement an employee-training program. At the very least it must cover:
    • Recognition and preventive measures for hazards related to dust accumulations
    • Common ignition sources
    • Specific procedures and safety practices applicable to their job tasks, including housekeeping procedures, hot work procedures and preventive maintenance
  • Conduct your own surprise inspections
  • Use outside resources for inspection — but pay attention to, respond to and implement plans based on their recommendations
  • If it’s not documented, assume it’s not being done

“No company is immune from catastrophe, no matter how large or how small,” Aljet warns, it only takes one event to realize there’s a great deal more work to do.

(Graphic element: Slide 4 from PowerPoint)

Drought carries on . . . and on?

Though likely better than last year, 2013 could be our fourth straight year of below-trend yields, suggested Dr. Elwynn Taylor, Iowa State University climatologist and agronomist during his presentation, “Drought and Its Impact on Worldwide Grain.”

The corn belt is struggling through the impact of both short and long-term droughts, he explained. Short-term droughts are those that hurt crop production. Long-term droughts are hydrological droughts — the water table is drawn down and waterways dry up. The current drought is both short — and long-term and not likely to have a sudden recovery. “A year as extreme as 2012 is seldom followed by a full return to normal,” he said.

La Nina weather patterns often result in erratic yields year-over-year, while El Nino brings favorable Midwest yields. Since 1976, El Nino has been dominant. Then 2010 launched the second strongest La Nina on record and the U.S. typically sees stronger weather events — drought, severe flooding and tornadoes — with La Nina. The recent La Nina was no exception.

If the United States is back in a pattern of more volatile weather and potential for severe weather, there’s more crop risk. The trend line for corn yields is an increase of 2 to 2.5 bushels/acre every year. Before 2010, Iowa corn growers had six years above trend line — the longest in history for that state. For the past three years, yields were below trend — 20% below in 2012.

According to Taylor, spring and early summer weather might change the picture for the coming crop year, but risk of less-than-ideal moisture exists, carrying with it concerns over yields, supplies and the ability to efficiently ship barge loads of grain down the Mississippi.

U.S. will benefit from Panama Canal expansion

Investing more than $5.25 billion will provide better ports, a deeper and wider canal system, improved locks and less environmental impact, while doubling capacity, reported Maria Eugenia de Sanchez, executive vice president for planning and business development, with the Panama Canal Authority.

Sanchez’ presented “Panama Canal Expansion and Effects on River, Ports and Grain Shipping.”

With an updated completion target of mid-2015, her analysis shows the expansion will benefit U.S. grain shippers. Because the canal serves as the key route to ship grains to Asia and containerized ships back to the U.S., the ability to handle larger ships will benefit the United States, which is the top shipper and receiver of goods through the canal. Grain, in fact, while representing about 25% of the product going through the canal, represents about 35% of the traffic when you consider the number of ships heading to the U.S. to pick up grains, Sanchez points out.

In addition to moving larger ships, the expansion is expected to reduce the delays that can occur during peak traffic season. Ships sitting and waiting to move through the canal can rack up tens of thousands of dollars in costs due to delays, she noted.

Infrastructure hinders U.S. exports

The “Inland Transportation Issues” session delivered by Richard Calhoun, president of Cargo Carriers, a division of Cargill immediately followed the presentation on the Panama Canal expansion. Calhoun quickly tied the two sessions together: “We can’t reap the benefits of the Panama Canal expansion if we can’t get products to it,” he emphasized. Calhoun has become an evangelist to bring attention to the issues the Unites States has with its interconnected transportation infrastructure and the competitive advantage it provides U.S. grain shippers to serve worldwide markets.

The nation is at risk of losing this advantage, he said, and the grain industry must take action now. “You need to be an engaged citizen” and bring attention to transportation issues, he told the group.

Because transportation in interconnected, he explained, it doesn’t matter if your elevator sits on a rail leg or if you have an ethanol plant just down the road to buy most of your corn. “When one mode of transportation in this country is in trouble, it affects the others,” he said. For example, in 2005 when Katrina temporarily shut down ports, the cost of a railcar increased $2,000 overnight in some areas, and the price a farmer received for corn dropped 30 cents/bushel overnight.

In this presentation, though, Calhoun focused most of his attention on the inland waterway system. “Awareness is high right now” because of the drought and how the impact of that drought was effectively communicated to the American people and to politicians, he said. Based on data he provided, risk is high, too. Many of the locks and dams in this country are more than 70 years old, 60% are more than 50 years old, well past their intended life of 30 to 40 years. Repair and upgrades to fix our transportation system (highways, bridges and the waterways), according to an independent study by the American Society of Civil Engineers (ASCE), are estimated to cost $220 billion annually from 2010 to 2040 to avoid an infrastructure shortfall.

Failure to invest in repairs and improvements, according to the ASCE study, will cost the U.S. 400,000 jobs by 2040. If the country maintains only its current level of investment in surface transportation systems, that nation will be hurt by increased shipping costs. The lost value of exports will be $270 billion by 2020 and will rise to almost $2 trillion by 2040, Calhoun said.

Meanwhile, delays are becoming common and more costly. “And what do you think will happen when — and I say when, no if — a catastrophic lock failure” shuts down a whole section of the country? The cost of other transportation increases immediately.

As important, countries such as China, Brazil and India continue to invest in infrastructure. The U.S. is risking a significant competitive advantage at a time when global demand is increasing. This is a call to arms, Calhoun says. “Get involved.”

The 2014 edition of the GEAPS Exchange will return to the Quest Center in Omaha, NE, Feb. 22-25, 2014. For more information, please visit www.geaps.com.

Mar 11, 2013

Warning: Grain Tsunami Incoming

Grain merchandising is a never-ending series of challenges, and 2012 crop has been that in spades. Drought-decimated corn and soybean crops left elevators with less grain to handle and less revenue. Buyers and sellers alike have had to adapt to record high basis levels on corn and soybeans, tight holding by farmers, and volatile futures spreads. At least wheat offered some reasonable revenue opportunities!

Even bigger challenges lie ahead. September 1 combined stocks of corn, soybeans, and wheat this year are projected to be around 1.45B bushels, the lowest since 1997, and compared to 1.9B bushels in 2012. (This uses USDA’s 9/1 forecast carryout on corn and soybeans. Wheat stocks are estimated from USDA June 1 wheat carryover plus estimated production minus estimated June/July/Aug disappearance.)

By late August 2013, the wind will be whistling through bins across the country. Around 88% of U.S. storage space will be empty, the pipeline of corn and soybeans will be nearly depleted, and imports from South America may be the story. Summer basis swings on corn and soybeans could be dramatic and violent, with atypical grain flows to redistribute supplies. The BNSF railroad, for example, has reduced rates for soft red wheat from the eastern Corn Belt to Texas feedlot areas and to the Pacific Northwest export terminals. But the lack of corn and soybeans can become bearish on the basis in some areas; there’s no reason to bid up if you can’t originate enough inventory to run your ethanol or soybean crush plant.

Some export facilities may sit nearly idle by late summer (except for wheat); U.S. soybean export shipments were already at a record 85% of the crop year projection by March 1 and total sales were at 95+% — with 6 months until harvest. Tight corn and soybean stocks mean exports can’t climb much in any case, until 2013 crop hits the bins.

But a dramatic turnaround lies ahead and sharp grain traders will use idle time wisely this summer. In February, the USDA Economic Outlook forum in Washington, D.C., offered optimistic scenarios of soaring production and sharply higher ending stocks in 2014 on corn and soybeans, along with slightly lower wheat production and stocks.

  • Corn: 96.5M planted acres @ 163.6 bpa for a crop of 14.53 billion bushels. Ending stocks in 2014 at nearly 2.2 billion bushels
  • Soybeans: 77.5M planted acres @ 44.5 bpa for a crop of 3.405 billion bushels. Ending stocks projected at 250M bushels
  • Wheat: 56M acres @ 45.2 bpa for a crop of 2.1 billion bushels; 2014 ending stocks at 639M bushels, the lowest since 2007/08.
  • Corn + soybean production: 17.94B

At this point there’s no reason to doubt USDA’s general premise, although a repeat of last season’s heat and drought could change things quickly and dramatically. Here is an alternate Grain Service Corporation (GSC) scenario for '13 production:

  • Corn: 98M acres @ 155 yield = 13.9B bu. (record)
  • Sbns: 77M acres @ 43 bpa = 3.3B bu. (near-record)
  • Wheat: 56M acres, and 2.2B bu. production

USDA assumed corn acres down .7%, and soybean acres up .3%, largely based on the soybean/corn price ratio. But feedback from GSC clients and many other surveys point to higher corn acres this year; we used 98M for this scenario. Our yields assume a significant recovery from the drought, but are below USDA’s figures and below prior records. Our wheat scenario uses USDA’s acreage but a slightly higher total crop.

Even using GSC’s somewhat more conservative production scenario, inventories this fall could reach 20 billion bushels, despite the depleted Sept 1 stocks, as potential record corn and soybean crops pour into elevators. This would be nearly 3B bushels higher than last year and close to the record 20.5 billion bushels set in the fall of ’09. USDA’s Outlook Forum projections on corn and soybean production are 740M bushels higher than used in Chart 1 and Table 1, which would only add to the challenges. (Note: All production and stocks figures exclude sorghum, oats, barley, and other crops.)

TABLE 1 & CHART 1 HERE

Navigating the 180° transition from '12 crop to '13 crop will be difficult, but reality will be more complex than simple numbers. The Sept 1 totals in Chart 1 and Table 1 assume corn and soybean harvest is complete, when it’s really barely underway. And daily consumption also serves to free up space. Total bin space is higher now than in 2009; USDA statistics indicate around ¾ of a billion bushels of space have been built in 2010 through the end of 2012, plus more this year. Regional variations also become a factor, in carry-over stocks as well as production. Southern and Eastern states will hold a larger percentage than usual of carryover stocks this year, and these areas are no longer in drought, improving their production prospects. The Western Corn Belt remains the greatest concern, with the double whammy of minimal carryover stocks and ongoing severe drought.

Overall, the reversal to a tsunami of grain carries implications of cheap basis and wide carries across corn, soybeans, and wheat. But those empty bins in early September and the depleted pipeline will take time to replenish, and steep basis premiums are likely for the early bushels — premiums that can often roll forward. Plan for cheap basis this fall, but be careful about shorting basis for early slots.

As ’12 crop basis trading opportunities dwindle along with grain stocks, use that ‘spare time’ to prepare for the fall harvest.

  • Review credit lines and financing needs with your lender.
  • Project potential grain receipts against available space.
  • Consider booking fall freight early to ensure cars and fix your cost.
  • Monitor new-crop futures carries

Financing may become a bigger issue again. Overall, crop values may not be much higher than last year — if at all — but merchandisers will likely be carrying more owned-inventory and for longer periods this harvest. Table 2 uses production X USDA’s average farm price as a broad measure for the value of the crops. This won’t determine individual financing needs, but it’s a starting point for discussions with lenders.

TABLE 2 HERE

A problem that’s anticipated is often a problem that’s averted, and by summer much of the furor in old-crop basis may have subsided. Imported corn and new-crop U.S. wheat will serve to stretch feed supplies in some regions, and soybean and perhaps some meal imports will also buffer the transition. Even with unusual stop-gap measures, the merchandising and logistics transition will still be dramatic as the 2013 harvest rolls into town and last year’s shortfalls turn into a tsunami of grain.

Mar 8, 2013

Motivating Employees: Carrots Beyond Salary and Benefits

Almost all managers have heard (and likely used) of both carrots (rewards and recognition) and sticks (punishments or censures) as methods to work with your employees. In this column we draw on a recent book entitled, The Carrot Principle, by Adrian Gostick and Chester Elton who base their recommendations on a 10 year study of 200,000 managers and employees — where they state that top managers (as measured by performance of their firms on Return on Equity, Return on Assets and Operating Margin) rely more heavily on the use of recognition to engage their people, retain talent and accelerate performance. Their data and suggestions are convincing, and below we highlight some of their findings and add some of our thoughts on possible applications in your grain elevator or feed mill. Their book is well worth reading and we find the lessons are applicable to both large and small businesses.

Almost, closer, nearer

Gostick and Elton start out by stating that a manager who sets clear goals, communicates openly, respects people and creates trusting relationships — almost has it right. They further posit that a firm where people are coming to work on time, doing their job and feel satisfied — is close to achieving its full potential. Finally, they talk about management theories which promise to transform your business from ordinary to extraordinary, which will push you nearer to your goals than ever before. But — they argue that “almost there” is a frustrating place to be — and that you need what they term an “accelerator,” and that this accelerator is purpose-based recognition.

The authors quote a statistic that 79% of employees who quit their jobs cite a lack of appreciation as a key reason for leaving. Their solution to this issue and a better strategy to motivate and retain employees is to use "carrots," which they define as something used to inspire and motivate your workforce. Their comprehensive research shows that when employees know that their strengths and potential will be praised and recognized — they are significantly more likely to produce results.

Survey says...

Gostick and Elton cite a study first conducted by Lawrence Lindahl in 1949 — who researched human behavior at work — and which has been replicated several times since. In these surveys, managers were asked to name what they thought employees wanted and then this was contrasted with a similar list prepared by employees. Every time, managers guessed that good wages and job security would top employee lists, but their people always cited “feeling appreciated” and “informed.”

They go on to write about a Watson Wyatt Reward Plan survey of 614 employers who employed 3.5 million employees. This study found that the average turnover rate of employers with a clear reward strategy was 13% lower than that of organizations without one!

Leadership is key

Gostick and Elton discuss leadership quite a bit. They offer some interesting insights, and outline what they call the “Basic Four” areas of leadership. They cite their 200,000 person study, and report that it confirms that managers who achieve enhanced business results are significantly more likely to be seen by their employees as strong in: goal setting, communication, trust and accountability. We will not discuss all of these areas, but there are some nuggets of wisdom we will pass on.

Communication within your feed and grain company is going to happen with or without your active participation as an owner or manager. Employees are talking about customers, processes, rules, office romances — everything — and all the time. So if you fail to constantly and openly communicate about what your firm is and what is important — the conversation does not stop, you just aren’t a participant, much less leading it. Thus, you need to communicate regularly and openly to keep things on track. Do this in-person, via e-mails, with company newsletters and via mid-level managers.

The authors state that a good place for managers to start the process of building trust is by becoming more visible to employees. Getting out of the office and mingling with employees is a simple solution to a very common trust problem. One of our favorite quotes from the book is this: “The things that keep us in our offices are nowhere as important as open communications with employees.” We’re sure many owners and managers in the grain and feed business practice this strategy — but it can certainly be improved. Making a commitment to spending an hour or two each week talking to your truck drivers, feed grinders and grain receiving personnel can pay big dividends. Talking to them on their turf — in their area of operations — allows you to not only show interest, but see things from their perspective.

Perhaps a workable approach here would be to make a list of 20 to 30 questions, and go through them (a couple at a time) each time you visit their work area. Questions can focus on their physical job, or can be more probing regarding their relationship with you and your business. Example questions might be:
1.) Are there any problems or bottlenecks that are causing issues for you?
2.) Who is your favorite customer to deal with and why?
3.) If you were the boss, what changes would you make in your area?
4.) Is there a product or service which you think our business would benefit from carrying or offering?
5.) Why do you like working here? And, don’t forget that these employees can be a key source of insight on customers and competition, and may well have these insights long before they hit your radar.

The building blocks of recognition

In their book, the authors outline four of the most common forms of recognition, which they say “make up the backbone of a healthy recognition culture:”

Day-to-day recognition

Ideas here include handwritten notes, small gift certificates, flowers when appropriate, or fruit baskets. Elon and Gostick call these “low-cost, but high touch” recognition. A useful tool they put forward is a recognition frequency log, reproduced in Table 1 below.

Table 1. Recognition Frequency Log


Recognition Frequency Log

My Employees

Week 1

Week 2

Week 3

Week 4

Example: Jim Porath

Extra Effort

Dealt with tough customer issue

Had great cost-savings idea

Source: Gostick, Adrian and Chester Elton. The Carrot Principle

Another useful chart tool they provide for managers is one which allows you to get to know your employees — their strengths and individual motivators, as outlined in Table 2 below.

Table 2. Employee Strengths and Motivators

Need

Employee Name

______________

Employee Name

______________

Employee Name

______________

Career aspiration

What is most important to this person

Strengths to develop

What forms of recognition and awards does this person value?

Recognition ideas

These tools may seem overly simplistic. But, given the hectic pace of today’s feed and grain business and the demands on your time, it is virtually impossible to know when you last acknowledged an employee, what every employee’s preferred form of recognition is, etc. And, these tools keep you from just missing entirely the employee who is never on your radar, but just does a solid job (quietly) day after day.

Above and Beyond Recognition

Employees who go above and beyond should be rewarded with a more formal response from your company. Examples might be implementation of a novel or cost-saving idea, achieving a sales goal or providing exemplary customer service. Recognitions or rewards here might be a plaque with your company logo combined with a cash award (see the How Much to Spend.. and on What? section below for more detail).

Career Recognition

Give some thought to implementing a recognition program for your employees on the anniversary of their hiring date. The authors state that this is the most underutilized vehicle for recognizing and engaging your employees. The simple act of recalling an employee’s hiring date provides an opportunity to put a spotlight on every employee. Just make sure it stays personal — turning this into a ‘form’ celebration devoid of any personal attention will soon undermine any motivational value.

Celebration Events

Find reasons to celebrate — it is fun and will motivate your workforce! Events might be company anniversaries, achieving record results or completion of an important project, and new product launches. We have seen companies rally around service projects such as raising funds for a children’s charity, participating in a 5k race that is a fund raiser, or working at a food pantry. While not strictly a celebration, the chance to work together on a worthy cause can be a source of pride and real accomplishment, and is great PR for your feed and grain firm.

Carrotphobia

Gostick and Elton have a great section of their book entitled “Carrotphobia,” where they elaborate on why some managers do not put forth the time and effort to recognize employees. We thought a couple of these managers’ reasons and the authors’ responses were worth highlighting:

Why would I recognize them? Aren’t they just doing their jobs?” The authors counter that recognition gives employees that extra push they need to do their jobs even better. “They already get too much recognition.” Elton and Gostick characterize high performers as “recognition sponges.” They warn that you should not stop praising these employees... or they just might stop doing what it is you value! “I don’t want to play favorites,” countered by the observation that when you start recognizing performance frequently, the authors point out that you will find it easy and that nobody feels left out – and that it motivates others to seek similar recognition. And finally, “They’ll expect more recognition.” Yes they will say the authors — and when recognition is provided regularly, employees stick around for seconds and thirds — turning out even better results. And, they ask — this is a problem (not)? They sum this chapter up with a quote from a senior business manager: “To be effective, individual recognition should be frequent, specific, timely and public.”

Frequent, specific and timely

Gostick and Elton found in both their North American and global data that effective recognition is frequent, specific and timely. Their survey showed that these factors were most key: recognition must be aligned: it is given frequently to those who are acting in accordance with the clearly articulated goals of their business. Secondly, they found that recognition is best when it is performance based — meaning it is based on specific goals that everyone understands (not favoritism). Finally, they found that recognition needs to be meaningful — awards and/or kudos are presented in a timely manner. This means they are given close to the date of accomplishment and are given in a sincere public ceremony.

How much to spend... and on what?

We hope that you buy into the concept of recognizing and rewarding your employees. The Carrot Principle provides some tools you might utilize to implement a recognition program in your feed or grain business:

1. Level of Recognition broken down into rewarding employee behavior measured as:
a) a small step toward living their (and your feed and grain company’s) values (called “Day-to-Day awards below);
b) a one-time above and beyond action which makes your firm more successful;
c) an ongoing above-and-beyond demonstration of your firm’s values or
d) an action, project or behavior that has a significant impact on your bottom line.

They also suggest some possible annual dollar amounts per employee, to coincide with the several of the levels listed above:
Day-to-Day small step awards = $0: EX: handwritten notes, verbal praise;
One Time Above and Beyond awards = $100 to $200 annually. EX: movie tickets, coffee certificates;
Ongoing Above-and Beyond Awards = $250-500 annually EX: Weekend getaway package, fruit-of-the month award from a catalog company, or perhaps large personal item that can be used with the employee’s family — gas grill, ping-pong table, etc.

2. How much to spend? Gostick and Elton suggest that a place to start for recognition is to spend about 2% of payroll.

3. Regarding awards, rewards and recognition, The Carrot Principle has a super list of 125 ideas that managers can use for praise and recognition. A couple that we liked were:
a) For their recognition, write down the person’s accomplishment and make copies — and tuck them under the windshield wipers of every car in the parking lot.
b) Bring something back from your next business trip for each employee as a thank you.

It doesn’t have to be expensive, just thoughtful.

Carrots — not just for better eyesight!

Rewards, recognition, awards, praise and gratitude can certainly go a long ways to improving the bottom line for your grain and feed business. And, many of these carrots are low cost, but offer much upside in terms of employee attitude and performance. Recognizing employees should become a habit — just something you do automatically when employees have done something worthy of praise — big and small. In addition, this is a habit that will be contagious. When you recognize employees, you are modeling that habit for others. And, we bet it won’t be long before your direct reports pick up this very good habit. We hope we have generated some ideas on your part that will help you motivate your employees to do their best and will also improve their performance and retention in your business. Carrots are great motivators — and can help you see your way to increased success!

Mar 5, 2013

Global Feed Industry Collaborates to Benchmark Livestock Sustainability

As members of the feed and agriculture industry, we slightly cringe when restaurant servers describe their grass-fed, locally sourced beef as though the alternative should be avoided; we shudder when television cooking show hosts refer to “meatless Monday” as having an overwhelming impact on the environment; and we shake our heads in dismay when animal rights activists claim it takes more than 2,400 gallons of water to produce 1 pound of meat.

It’s not that we don’t support small farms or enjoy local meat. It’s not that we have no regard for environmental sustainability or oppose water conservation efforts — that couldn’t be further from the truth. In fact, the agriculture industry views environmental sustainability as one of its top concerns and many segments within it dedicate significant resources to improving their carbon footprints and finding better ways to produce more with less.

The problem is that negative perceptions of modern agriculture — specifically livestock production — largely stem from baseless claims and misleading reports, such as the 2006 United Nations Food and Agriculture Organization paper Livestock’s Long Shadow.

The report’s executive summary stated that livestock was responsible for 18% of the world’s total greenhouse gas emissions, more than the entire transportation sector combined. Because the comparison model the UN FAO used — called a lifecycle assessment — didn’t put transportation and livestock on an equal playing field, Dr. Frank Mitloehner, air quality specialist and associate professor of Animal Sciences at the University of California Davis, as well as other experts and academia in the food and agriculture industry, challenged the claim.

Then after Mitloehner et. al published a counter-report, Clearing the Air: Livestock’s Contribution to Climate Change, the UN FAO retracted its misleading conclusion and the 18% statement. Today the UN FAO is leading the “Partnership on the environmental benchmarking of livestock supply chains” to help improve the environmental performance of the livestock sector using accurate information from the industry itself.

Global partnership emerges

With participation on behalf of the American Feed Industry Association (AFIA), the International Feed Industry Federation (IFIF), the International Poultry Council (IPC), the International Meat Secretariat (IMS) and other global commodity organizations, the partnership is the largest of its kind and aims to create an agreed upon method by which to measure environmental impact and benchmark livestock production performance.

In 2011 the Institute for Feed Education and Research (IFEEDER), a 501(c)(3) charitable foundation whose mission is to sustain the future of food and feed production, approved a $15,000 donation to the AFIA to support a broad cross section of agriculture professionals who bring a balanced scientific view to the partnership and could help determine the proper lifecycle assessment for the study.

Along with several other feed industry experts, AFIA asked Mitloehner to represent it at the partnership’s steering committee in Rome, Italy, last summer where he was elected chairman for the first year of the three-year initiative.

“It’s an extremely important project for the industry, both in the United States and globally,” says Joel Newman, president and CEO of AFIA. “We’re very pleased that IFEEDER was able to support it and allow us to be a major contributor in the process and for [Dr. Mitloehner] to have the honor to chair this first year of the project.”

Not even a full year into the partnership, Mitloehner says progress is well underway.

“Three technical advisory groups have been formed with experts throughout the world: small ruminants, feed sector and poultry sector,” says Mitloehner. “These three groups are in the midst of establishing the methodology of developing environmental footprints for each industry.”

By the end of the first year the three groups will have a report and in the second year the groups on beef and swine will form and finish their respective reports.

Far-reaching affect

Although the partnership was spurred partly by the UN FAO’s acknowledgement of incorrect statements regarding livestock production, its outcome will reach far beyond simply righting a wrong.

Newman explains how AFIA will use the partnership’s findings to share better decision-influencing information with its members going forward.

“Part of our individual objective is to develop a database for the carbon footprint of the major processed feed ingredients we use in feed manufacturing,” Newman says. “That information will help our members make sure they’re doing their best to minimize the impact on the environment through feeding livestock and poultry.”

IFEEDER board member Bruce Crutcher, president of Truow Nutrition, says the feed industry is eager to learn how it can improve its environmental footprint.

“We all know environmental stewardship has room for growth,” says Crutcher. “Being able to measure where you have been, where you currently are and the impact of the changes you make going forward will be very valuable.”

Why is change needed?

The root of production agriculture’s need to benchmark its environmental impact is the fact the population is on a steep upward trajectory. By the year 2050, it’s estimated there will be a total of 9.1 billion people to feed worldwide.

“We have to double [global food output], but we can’t just double herd sizes, we have to get more product out of existing herds or shrinking herds,” says Mitloehner. “We’ve shown that’s possible in the United States where we’ve doubled our beef production with half the number of animals in the last 40 years, but we need to do the same thing all over the world.

“The obstacle is that many in the United States feel that we we’ve gone beyond the point of optimization and we’re now exploiting animals and the environment.”

Increasing the world’s food supply is an inevitable reality that can’t be achieved without the commercial feed and livestock sectors. Through the UN FAO’s environmental benchmarking of livestock partnership, IFEEDER and other agriculture organizations are helping find better ways to measure the industry’s impact and make the improvements necessary to sustainably feed the world for generations to come.

To learn more about IFEEDER’s mission, visit www.ifeeder.org.

Mar 5, 2013

Loads of Benefits Delivered by a Transportation Subsidiary

Whether your business is in the production of feed, the manufacture of pet foods, milling operations — or any other manner of production or processing — you must be able deliver your product to the customer. If a producer does not engage an outside carrier to haul its product, then chances are that one of the most material and burdensome parts of its operation occurs in the maintenance and operation of its transportation fleet.

Improved safety, compliance and tax savings

Running a transportation fleet means managing logistics and dispatch, complying with regulatory controls, and maintaining licenses, registrations and safety files — all on top of tremendous capital expenditures associated with the repair, maintenance and replacement of transportation assets. Across a wide spectrum of industries, companies familiar with the onus of fleet operations have benefited by organizing those operations into separate transportation subsidiaries.

Many companies have realized greater control over compliance, safety and other concerns associated with managing fleet operations after dedicating them to a separate entity. Companies attempting to keep registrations current, manage dispatch operations, monitor compliance with motor carrier safety and other regulations, maintain driver safety files, and keep tractors, trailers, lifts, rolling stock, barges and an assortment of other logistics equipment in good working order, without housing those tasks in a separate entity dedicated to transportation operations, frequently experience such efforts falling into disarray. Moreover, separating transportation operations into a different entity provides protection for a company's remaining assets from liabilities arising from transportation activities, where some of the greatest exposure often exists.

Better compliance and safety and protection of assets from liability are fine benefits that make the creation of a transportation subsidiary highly worthwhile. However, the greatest benefit from transferring fleet operations to a transportation subsidiary may be realized by the effect it can have on a company's tax bill.

A transportation company dedicated to transporting property for-hire whose annual capital outlays for transportation equipment amount, for example, to $1 million, can benefit from sales tax savings in the tens of thousands of dollars by taking advantage of sales tax exemptions. A company's transportation fleet often represents one of its greatest concentrations of capital. The sales tax alone on purchases of power units, trailers, rolling stock, barges and other equipment is enough to make anybody observing cash flows shudder. A company attempting to squeeze extra years out of its equipment in a difficult economy could find much needed capacity in its capital budget by taking steps to become eligible for sales tax exemptions.

Varying exemptions offered in many states

Approximately half of states recognize exemptions from sales and use tax applicable to certain purchases made by common carriers, or public or for-hire transportation companies. Depending on the state, exemptions may apply to purchases of power units and trailers, repair and replacement parts, and the equipment used for repairs, tires, rolling stock, barges, and other equipment and supplies used by the transportation company. States also vary in their application of exemptions based on the use of the equipment. Some states require that the equipment be used in interstate transport, meaning that the equipment must physically cross state lines in its ordinary usage to qualify for exemption. Other states apply exemptions to equipment used only within the state as long as the goods being transported originate or ultimately end up in another state. Yet other state exemptions apply equally to intrastate and interstate uses of transportation equipment. And finally, some states require that a transportation company transport goods for multiple companies to qualify for exemption, while others would grant the exemption even to a carrier hauling product for just a single customer.

What all states offering exemptions share in common, however, is the requirement that a carrier claiming the exemption demonstrate that it is a public transportation company for hire. This means that the transportation company must transport property belonging to another entity in exchange for consideration. A company hauling its own property will not qualify for sales and use tax exemptions in any state. Instead, the transportation company must carry goods for another company and do so for a fee.

A transportation subsidiary can benefit from tax exemptions offered in most states even where its operations are concentrated in providing transportation services to its parent. It first must be sufficiently separated from its parent, both in its organization and its operation.

Sufficient separation of the transportation subsidiary

Separate organization and operation of the transportation subsidiary requires a good deal of effort. Drafting and filing organizational documents, complying with state filing requirements in the states where the transportation company will do business, and registering tax identification numbers are just a few of the steps involved in creating the new entity. The transportation company also will have to establish its own U.S. Department of Transportation number and register operating authorities with the Federal Highway Administration and state regulatory agencies.

Having established an existence, the company must begin the real work of demonstrating that it operates as a public transportation company. States vary regarding the factors considered in determining whether an entity operates as a public transportation company and thus qualifies for sales tax exemptions, especially where the company primarily transports product for its parent. But all states make this fact-sensitive determination, in large part, based on the degree of separation of the transportation company from the business shipping the product and whether the transportation service is provided for consideration. Some of the factors may include whether the subsidiary is sufficiently capitalized, maintains its own books, records and bank accounts, issues its own W-2s, and deals with its parent on arm's-length terms. States also observe whether charges are invoiced for transportation services to the parent and whether the transportation subsidiary carries appropriate operating authorities and insurance.

Achieving the degree of separation from the parent sufficient to qualify as a public transportation company also requires adoption of and commitment to a new mindset. Fleet operations previously performed in-house by the parent company now reside in the new subsidiary. The transportation subsidiary must be in all respects an independent provider of transportation services. Essential to the creation of this distinction is the transportation subsidiary's effort to hold itself out to the public as an available for-hire transporter of property, taking affirmative steps to create a public identity and in many cases seeking opportunities to haul product for unrelated companies.

Efforts to achieve separation payoff in tax exemptions

Clearly the effort and upfront costs involved in creating a transportation subsidiary that will pass the scrutiny of state taxing authorities can be substantial. Nevertheless, with benefits ranging from increased control over compliance and safety and isolation of liability exposure to significant sales and use tax savings, a new transportation subsidiary is worthy of consideration. Projecting the potential tax savings that may be achieved by the transportation company illustrates this point.

Take, for example, a company that budgets $1 million annually in purchases of major transportation equipment — power units, trailers, trucks, barges and rolling stock. If just half of those purchases qualify for exemption, based on the states where the purchases are made and the use of the equipment in those states, then the potential sales and use tax savings would be about $30,000, assuming an average tax rate of 6 percent. Exemptions from sales tax on purchases of repair and replacement parts, tires, fuel and lighter equipment available in many states will add even more tax savings. Within just a few years of creating the transportation subsidiary, the taxes saved should outweigh the initial outlay.

A company currently managing its own fleet operations should talk to a tax professional, who can gather data and assess the potential for tax savings based on the nature and location of the company's transportation-related purchases and activities. The steps to create a transportation subsidiary and transfer fleet assets and operations to the new company should be identified, and the effort to maintain adequate separateness from the parent should be evaluated. Then, once the company determines the filings and registrations required to claim exemptions where the company qualifies for them, let the purchasing begin. The company just might discover the benefits of a transportation subsidiary enjoyed by many others before it.

Mar 4, 2013

Egg Ranch Cracks into Feed Production

From its humble beginning in Guy and Nell Hickman’s backyard in 1944, Hickman’s Family Farms has grown to become the largest egg producer in the southwest. The family owns and operates three Arizona locations: one in Maricopa and two in Arlington. In total, it houses 5.4 million layer hens — and an additional 1.3 million replacement pullets — and produces 2.3 million dozen eggs a week with distribution spanning six states, including Hawaii.

The success of Hickman’s egg and egg product business — and the looming demand for additional production capacity — prompted the company to lay the foundation for future growth by streamlining its feed procurement process. In an effort to add efficiency and maximize its cost/labor savings, the Hickman’s built a $14 million feed mill with high-speed shuttle rail receiving in Arlington.

Driving change

In 2002 when the Hickman’s entered into a decade-long feed manufacturing contract with AZ Grain, a privately held, multi-location grain company, it had targeted its growth plans for the Maricopa area; however, shortly thereafter, a population boom forced the company to abandon this long-term vision and recalibrated its growth plans. The Hickman’s added on to its Arlington operation (referred to as Arlington South) and began construction of Arlington North.

Unfortunately, hauling feed 120-miles round trip from Maricopa to Arlington was as unproductive as it was costly.

“Everyone in the animal industry is looking for efficiencies in labor and the manufacturing process,” explains vice president Billy Hickman. “The reality is utility and labor cost aren’t going to go down so it’s was in our interest to address this problem and try to minimize our freight costs.”

And so, in 2008, Hickman’s began researching and planning the construction of a feed mill of its own.

Building a feed mill

At first, Hickman’s envisioned the new mill to be the same size as AZ Grain’s Maricopa facility — running 600-tons/day on one shift — with a 20-car shuttle train receiving site. When Billy shared his plan with the large grain houses they recommended the company reconsider its grain receiving capacity.

“They were concerned about our ability to purchase competitively and to find shippers that would be willing to supply the volume we were looking for — especially in the future as large shipping facilities continue to be built and there are fewer small shippers,” Billy recalls.

The Hickman’s took the advice and decided to upgrade to accommodate 110-car shuttle trains in order to secure competitive rail rates and origination points.

“While this certainly increased our costs, there wasn’t as great a [price] jump doubling our production capacity in the feed mill so we decided to go for it,” he notes.

Hickman’s hired design/build firm, SM Associates Construction, LLC (SMA), to serve as the general contractors and subcontractor VAA provided the structural engineering for the project.

Hickman’s broke ground on its 1,200-ton/day feed mill with a shuttle-unloading site in December of 2011. After eight months of construction, it rolled its feed manufacturing out in phases, mixing its first ton of feed in mid-July. It is currently operating at 500 to 700 tons/day and will continue to add volume as its flock grows.

The company continues to partner with AZ Grain as its primary source for grain purchases and to supply feed to its Maricopa operations.

Rail solution

The 110-car shuttle receiving site required more planning and engineering due to design challenges and the difficulties presented by basalt, an ancient lava rock running 16- to 20-feet below the existing grade.

“Space constraints and traffic flow concerns, ruled out a loop track so we installed a ladder track, which consists of two parallel tracks running alongside the Union Pacific mainline,” explains Paul Yeatts, Hickman’s project coordinator.

The ladder tracks allow for trains to be pulled off the main line in thirds and dumped into a 50,000-bushel receiving pit. Employees use railroad power to move the full cars; open hopper gates using a Calbrandt gate opener; and then move empty cars with a Trackmobile mobile rail car mover.

Given the rail configurations, Hickman’s opted for an underground rail receiving system housed within a 10,000-square-foot tunnel.

While the feed mill is set up to receive 10,000 to 12,500 bushels/hour — or a quarter of grain receiving — the engineers set up the receiving pit to handle ¾ of a railcar so it can be parked and dumped.

SMA project manager Doug Eiden explains: “The pit can handle almost an entire car in the pit and will keep the unloading process moving. By our math we figured the 50,000-bushel receiving should get the trains unloaded in the 10- to 11-hour range fairly routinely.”

Whole grains and soybean meal are dumped into the same pit. To eliminate the potential problems caused by handling these commodities on the same system, the company installed a special patented receiving conveyor that can handle commodities at different rates.

From the receiving pit conveyor, the product is dropped on to a Schlagel Inc. receiving transfer belt conveyor that is not capacity sensitive. Two 25,000-bushel/hour receiving legs then elevate the product to the top of the bin where a Schlagel dual inlet distributor delivers the grain to its destination: the large storage bins, over to the daily feed mill storage bins, i.e. two Chief Industries 25,000-bushel hopper tanks, or to a 104- by 120-foot flat storage building for the soybean meal storage.

Provisions have been made for the installation of a hard car unloader for the soybean meal cars.

“If they’re receiving corn and want to bring one railcar down the line they could route it directly into the two hopper tanks next to the feed mill for their grinding supply,” Eiden explains. “Or they could send railcars of soybean meal to the bulk storage building without interrupting feed batch operations. This allows Hickman’s to explore local producers or other local supplier to service their operations.”

In February 2013 Hickman’s unloaded its first 110-car shuttle train in less than 10 hours; it will receive one train per month to maintain its supply.

Rail access will also allow Hickman’s to explore the shipping needs of the local growers. In addition to precisely tracking grain movement between the facility and AZ Grain, the company will use its C&A Bulkweigher to weigh local crops for shipping. From the bulkweigher, weighed products can be conveyed to the truck receiving lane or to the rail line.

The load-out system was design at 25,000-bushels/hour and can handle roughly 25-car units.

Feed mill workflow

In addition to the monthly six-figure savings from reducing its freight costs, Hickman’s decided to bring its feed production in house better control inputs and feed quality.
“If the best grains aren’t used in the feed, we can actually tell the difference in the performance of the chickens,” Billy says. “It serves us to control the accuracy of formulations.”

Three full-time employees — general manager Dago Ortiz; assistant mill manager XXX; and XXX, maintenance — manage the mill’s 120-ton/hour batching system using an Easy Automation control system.

Grain is pulled out of one of the facility’s two 550,000-bushel Chief Titan storage bins by a 25,000-bushel/hour Schlagel reclaim belt conveyor that delivers grain to the two Schlagel receiving legs and a Schlagel swingset distributor feeding to the Chief hopper tanks. From there, grain is moved on a Schlagel reclaim conveyor to a storage bin surge over the 50-ton/hour RMS roller mill where the grain is ground.

A Schlagel reclaim auger moves the ground grain with a 100-ton/hour grinding leg. Past the grinding leg, another swing-set distributor offers a few options: the grain can go to load out [to service local dairies] or fill select ingredient bins within the feed mill.

Rather than installing one large roller mill machine, the Hickman’s opted for two smaller machines, only one currently is in place; installation of the second rollermill will allow it to double its production to 1,200-ton/day.

Within the grinding system, a 10-ton/hour hammer mill is used to mill off-grade local products, which are then reclaimed back into a leg and delivered to ingredient bins by a dual-inlet distributor.

Outside, an 8-ft. by 8-ft. truck receiving pit handles minor bulk ingredients. The flush-floor dump handles 200 bushels capacity, fills a 10,000-bushel Schlagel round-bottom drag conveyor and delivers the product to a 10,000-bushel/hour receiving leg. Ingredients are discharged by a four-duct distributor on the leg that feeds to the hopper tanks, the ingredient bin distributor or to the soybean meal storage building’s fill conveyor.

Inside the mill, there are 18-ingredient bins for bulk minerals providing up to 80 tons of storage per bin. Main ingredient bins are reclaimed back to the scale hoppers by Schlagel screw conveyors; large mineral bulk items are reclaimed to the scale hoppers by Easy Automation double-auger screw conveyors. The mill has three weigh hoppers and an Easy Automation microsystem, which utilizes 10 5.5-cubic-foot holding bins and four tote bag unloaders to deliver ingredients to the mixer via the weigh belt conveyor.

The site includes three liquid tanks: a 12,000-gallon fat tank, a 10,000-gallon choline tank and a 8,000-gallon methionine tank.

After being weighed in scale hopper mounted with load cell scale supplied by Southwest Scales, the ingredients are dumped into a 6-ton Scott Mfg. dual-ribbon twin-shaft mixer to create the finish feed. The mash is dropped into a surge hopper below the mixer where it is taken away by a 180-tons/hour Scott paddle drag conveyor. From there the feed moves to a Schlagel mash leg and either goes to an ingredient bin — if it’s a high-concentrate pre-mix ingredient — or to load-out bins, which is controlled by a Schlagel syncho-set distributor.

The feed load-out station contains six 30-ton load-out bins.

The mill runs one shift, six days a week. It is not constantly running at full capacity as the flow is broken up by the moving of grain and receiving of incoming ingredient trucks.

More layers, expand reach

Hickman’s plans to build more laying houses in the near future.

“We could actually triple our size with the capacity of this feed mill simply by adding hours of the day, increasing the shifts,” Billy explains. “Between layers and replacements, we can easily grow to about 15 million birds.”

The company aims to become a Southwest regional supplier of eggs, egg products and fertilizer.

Feb 26, 2013

To the Rescue: How Salvage Operations can Minimize Commodity Losses

Preparation 101: the Pillars of Safety, part I of this two-part series, focused on how grain and feed facility managers can prevent emergencies by preparing their staffs for a variety of disasters and following three fundamental safety rules: keep written safety policies, conduct frequent training and drills, and maintain a good relationship with first responders.

Part II takes into consideration that some catastrophic events, whether “acts of God (usually weather related)” or pure accidents, are unavoidable. Even structural collapses, grain fires and bin explosions can happen despite taking all possible precautions and necessary housekeeping measures. While part I covered tips for rescuing victims from emergencies, part II focuses on how to rescue your commodity, where to turn to safely handle the removal of burning grain and damaged debris from a facility, and how to aid the operation through access to resources in your own community.

What is a grain salvager?

Salvage firms are generally hired by the insurance company once a claim is filed to recoup as much commodity value as possible, minimize losses and reduce the costs associated with a catastrophic event.

The operation involves removing commodity from a bin, flat storage structure, rail car, or river or ocean barge, using specialized equipment and techniques that cause minimal damage to the product. The unharmed and least affected grain is returned to the owner to market or process and the rest is cleaned and graded appropriately and sold at a discounted rate.

Houston Grain Trading Inc., of Houston, TX, is a salvage company specializing in managing insurance claims. In addition to extinguishing fires and dealing with salvage and debris removal, it also works with adjusters to evaluate the claim, document values, negotiate with the insured as the insurance company’s expert and provide documentation on the progress of the operation for investigation purposes.

Other salvagers specialize in removing commodities from specific vessels, such as Hulcher Services, Inc., headquartered in Denton, TX, which has served the rail industry since 1963 as a transfer and salvage provider for derailed cars. Nearly 15 years ago it began its grain division, providing emergency response and facility recovery services nationwide.

There are safety considerations with every salvage job due to the inherent dangers of fire, bin entry, grain dust and hazardous chemicals, so it is essential for the salvager to discuss all potential hazards at the facility with the manager before assembling on location.

Have hazards handy

Jon Kumlin, senior division manager of transfer for Hulcher Services, Inc., says the first phone call is crucial to help the salvager devise a recovery strategy and determine what safety and rescue equipment will be required for the job.

“In our first discussion, we determine the extent of the emergency whether it’s a bin explosion, structural collapse, fire or derailment,” says Kumlin. “Then we go through an extensive list of hazards, including dust issues, confined spaces and the condition of the grain. We need to know if anything is bridged in the bin that would require additional processes to make it a safer environment to enter.”

According to Mike Elder, executive vice president - environmental health and safety, of Cottage Grove, WI-based Landmark Services Cooperative, it’s important to have the facility’s safety hazards list accessible and easy to understand. Elder helped oversee two salvage operations following fires at Landmark grain facilities in 2008 and 2011. He referred to the coop’s established safety plans when explaining the hazards of each facility to Houston Grain Trading, Inc.’s president Don Jones.

“At one facility we had a number of items that would be deemed hazardous in our safety plan, such as anhydrous ammonia storage, propane storage, and other agricultural chemicals,” says Elder. “Although these chemicals weren’t housed next to the grain storage, they need to be noted when developing plans for dealing with fire.”

Once the hazards are identified, the salvage and recovery crew can arrive on site with the correct equipment and supplies for the job, to meet the first responders and start the initial steps toward disaster recovery.

Fighting fire

A grain bin fire presents perhaps the most life-threatening emergency a company can face and complicating the situation further, traditional fire extinguishing methods are not recommended. Likening a salvage operation to a game of chess, Houston Grain Trading’s Jones warns that the worst first move one can make is to hose water into the top of a tank.

“Adding water to a grain bin on fire can create a steam explosion, taking the lives of firefighters and anyone on site,” says Jones, adding “I’ve seen it happen.”

From the commodity salvage perspective, excessive moisture damages grain and can make it difficult, if not impossible, to market should the USDA or FDA “red tag” the commodity, which severely restricts how it can be used or even forces it to be dumped.

Jones generally takes charge of the firefighting efforts to help ensure the tank doesn’t collapse and the commodity isn’t further damaged in the process. Instead of water, Jones says the safest and most effective way to simultaneously put out a grain fire and salvage the commodity is to remove it from the bin with front end loaders, separate the charred grain from the salvageable grain with his company’s rough screen, and then load it onto hopper bottom trucks to be dispersed into piles according to quality.

Hulcher Services Inc.’s Kumlin says he always has a local fire department on standby for spraying water only onto flames while the commodity is being removed. He recommends frequently inviting the local department to tour your facility so they can respond better to a fire or any emergency situation.

As mentioned in part I, the value of a good relationship with first responders is immeasurable during an emergency, but as Landmark Coop’s Elder discovered firsthand, other relationships can prove equally as important for locating the resources to handle your commodity salvage operation. Sometimes the key to an effective recovery is as much “who” you know as “what” you know.

Equipment sourcing

Elder describes the location of its Cottage Grove headquarters — where it experienced a tunnel fire beneath a 500,000-bushel corn bin in December 2011— as lucky.

“We had to make a hole in the bin over an area of ground that wasn’t very solid, but it needed to withstand the weight of an end loader repeatedly driving over it to remove the grain,” he recalls. “We’re fortunate to have a couple major contractors in our area, so they came in and built a temporary gravel road in a day or so.”

Landmark’s good fortune didn’t end there either. The fire department sprayed a large volume of water into the tunnel and needed a way to remove it, so they turned to a neighbor situated minutes away from the coop.

“Kitty corner from us is the sewage pumping company, so they came over to pump the water out and safely disposed of it for us,” says Elder.

The moral of his story: take a survey of the businesses in your vicinity and establish relationships with them to take advantage of the equipment and services you may need access to during an emergency.

No company wants to experience an unavoidable catastrophe, but understanding how a safe salvage operation can minimize commodity damage may provide some reassurance. Time is of the essence when disaster strikes, so it is crucial to have all safety hazards readily listed for the salvage company. Then let the salvager work directly with the fire department or first responders to minimize the commodity damage that could be caused through traditional means of emergency response. Finally, having stock of the local resources in your community can help secure the equipment necessary to safely and efficiently complete the operation.

Feb 26, 2013

Are Computers Needed in Agriculture?

The world is changing rapidly. When I first took over my mom and dad’s agriculture computer systems business 20 years ago, it was a challenge to get cooperatives and other ag-related businesses to see the advantage of automating their accounting, managing the company’s books with computerized management software.

The systems were shockingly expensive and needed staff to run them. Moving into the late 90s, the challenge was the impression that computer systems only cost money and didn’t “make” money. I’d hear, “That spreader over there brings in cash. What can that computer bring me?”

Today, without a computerized solution to manage your business — and not just accounting, but all of your corporate diversities — you not only are losing customers, you’re biding time until your neighboring competitor will pounce on this weakness. The ag-focused computer systems that exist today are proven solutions, will show an immediate return on investment (ROI) and will convince your customers that you are partnered with them for the future of their business.

The computer systems and automation available for managing grain, the core of many ag businesses, are leading edge. RFID reading of trucks as they enter the facility creates efficiencies and deepens relationships. Message boards showing who they are and what crop they are carrying as they pull onto the scale put a smile on the drivers’ faces who know they are being cared for right from the start. Emailing the scale ticket to the farmer completes the process.

The ability to email grain settlement information and ACH the dollars to the farmer’s account shows that you care enough to put the money in their hands as quickly as possible. Invoices, statements, grain contracts (with signatures), AP vouchers, payroll stubs and much more can all be emailed automatically, reducing the amount of paper generated from the business. With these automations come auto pay capabilities. You can have all of these items directly deposited, and reversely, pull from your customers’ accounts.

In the agronomic portion of your business, the software solutions available blend product based on historical data from the field, dispatch the product to the equipment in the field, allows changes to the blended product as it moves through the field, brings it back to the system, and still offers prepay and other contracts to bill it to precision. Furthermore, this is all immediately viewable on the web.

Many ag businesses need to track their “position” of products, so when they purchase product from a vendor and then sell it to the farmer, they always know exactly how much inventory they have on hand. And with computerized management, this is all available on a hand-held device.

And this is just the tip of the iceberg. If you feel as though your agronomy business is falling behind on the technology playing field and don’t have a computerized management system in most or all the areas of your business today, you are missing the “sure-hit” that will take you to the next generation of agriculture.

Feb 4, 2013

10 Sweep Auger Safety Principles

Attorneys with the law firm Epstein Becker Green's OSHA practice office in Washington, D.C. recently resolved a citation delivered by OSHA to an IL grain company due to an sweep auger violation. The citation was withdrawn and the agency agreed to allow employees to work in grain bins with energized sweep augers in the future assuming they comply with the agreed upon terms of the 10 Sweep Auger Safety Principles outlined in its settlement agreement.

Below is the list of Sweep Auger Safety Principles that OSHA, at the national office level, has agreed to, and which should now serve as guidance to the industry for how to perform sweep auger operations in compliance with the Grain Standard:

  1. In accordance with 29 CFR 1910.272, no employee shall enter a grain bin until after completion of a bin entry permit, which confirms there are no engulfment and/or atmospheric hazards present inside the storage bin, or unless the employer or the employer’s representative who would otherwise authorize the permit remains present during the entire entry. A qualified person shall complete the grain bin hazard evaluation.
  2. Before entering the bin to set up or dig out the sweep auger, the subfloor auger and the grain entry points must be de-energized and locked out.
  3. Before operating the sweep auger, the grate/guard on the subfloor auger must be in place and secured.
  4. Employees operating the sweep auger cannot walk on the grain, if the depth of the grain presents engulfment hazard.
  5. It shall require that the sweep auger is provided with guards and covers per the manufacturer’s design, and the only unguarded portion of the sweep auger is the point of operation.
  6. A rescue trained and equipped observer, in accordance with 1910.272(g), must always be positioned outside the storage bin monitoring the activities of all workers inside the bin.
  7. If a worker is to enter the bin while the sweep auger is energized, the employer must utilize engineering controls within the grain bin to prevent workers from coming into contact with the energized sweep auger. The use of only administrative controls without the use of an engineering control is not a sufficient means of worker protection. Acceptable engineering controls may include:
    a. Sweep auger equipped with an attached guard, which prevents the workers contact with the unguarded portion of the auger in accordance with 1910 subpart
    b. Sweep auger equipped with a control mechanism, such as a dead-man switch or other similar device, which will allow for the sweep auger’s operation only when the operator is in contact with device. If this method is utilized as a means of worker protection, the worker must be positioned at least 7 feet from the auger at all times it is energized; moreover, if worker(s) in addition to the operator of the sweep auger are in the bin, additional engineering controls (such as those described in section 7 of this criteria) must be used to protect those worker(s).
    c. Portable guardrails are permissible, provided they are placed at least 7 feet behind the sweep auger. Note: The use of a warning line, or other easily removable device, other than a portable guardrail, is not considered sufficient engineering controls.
  8. The auger must be provided with a positive speed control mechanism or bin stop device that prevents the uncontrolled rotation of the sweep auger.
  9. Workers are prohibited from using their hands, legs or other similar means to manipulate the sweep auger while it is operating.
  10. If maintenance/adjustments are necessary to the sweep auger, the sweep must be unplugged, with the person making the adjustments maintaining the control of the plug, or locked out in accordance with lockout/tagout procedures.

Feb 1, 2013

Compliance and Sustainability Dominate IPPE Agenda

The 2013 International Production and Processing Expo (IPPE) once again gave feed industry professionals a bird's eye view of today's most pressing issues, opportunities and challenges facing the industry. Providing that information was the American Feed Industry Association, the sponsor of the International Feed Expo, one of the three shows co-located at IPPE 2013.

AFIA presented educational programs including the International Feed Industry Institute and the annual Pet Food Conference as well as the Feed Education Forum, a half-day forum addressing issues unique to feed manufacturers in three knowledgeable sessions.

The forum opened with an update from Keith Epperson, AFIA’s vice president of manufacturing and training, on the latest regulations from the U.S. Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA).

Richard Sellers, vice president of nutrition and feed regulation, gave an update on the Food Safety Modernization Act (FSMA) and other government compliance rules including the Farm Bill, Salmonella, the ethoxyquin rule and inspection tips.

Sellers expects the feed rules of the FSMA to be published by mid-February 2013 and noted that facilities participating in the AFIA’s Safe Feed/Safe Food Certification Program should already be compliant with the regulation.

In addition to the educational programs available to all IPPE attendees, several AFIA leaders stopped by Feed & Grain's booth to share their insights on what the future holds for the feed industry.

Safe Feed/Safe Food Certification Program = FSMA compliance

Since launching them at the 2012 International Feed Expo, Epperson revealed that both of AFIA's Pet Food Safe Feed/Safe Food Certification Programs have been well received by the industry and four are certified with a number of others in the process of being audited.

"The FDA looks at these programs favorably and ... with third party certification being a key requirement of the FSMA, we see potential certification for our members through the program," Epperson said.

Another program growing in popularity is the International Safe Feed/Safe Food program, which partners with FEFANA, the European association for the producers of specialty feed ingredients and their mixtures.

"The international program began two years ago and we have almost 20 certified facilities with two more in the process," said Epperson.

The domestic program is the foundation Safe Feed/Safe Food Certification Program and the AFIA certified its first facility in 2005.

"Today there are 470 facilities certified facilities representing just over 100 companies because many companies have multiple facilities certified," Epperson said. "The benefits of enrolling in the Safe Feed/Safe Food Certification Program are that it brings quality and food safety to a new level. Certified facilities see a safer product go out the door because they’re meeting and exceeding the FDA guidelines."

To watch the complete interview with Epperson, enter search ID 10861081.

World population, commodity prices, weather pose challenges

"Feeding a population of 9.1 billion people by the year 2050 is a huge undertaking by the industry, but one that I think we can achieve on a global basis," expressed Joel Newman, president and CEO of AFIA.

To meet this challenge, Newman said the AFIA established a sustainability initiative two years ago which focuses on six key points and relies on a special committee to discuss and make recommendations for addressing those issues.

In addition to feeding an exploding population, high commodity prices and market volatility are two trends Newman predicted will extend into 2013. Companies in the feed industry will benefit from solid risk managements plans because "as we go into spring, we’re all hoping for a successful planting season, but we need to recognize we’re still in a drought condition," Newman said. "The open question is how will spring planting go and will we have enough moisture to produce a good crop."

Newman also highlighted some bright spots the feed industry has to look forward to.

"With every challenge comes an opportunity," Newman said. "The increased global demand for food provides us with not only the opportunity to feed the U.S. population but to export some of our production to other parts of the world, both animal protein products and our feed technology and additives, allowing them to increase their own production."

To watch the complete interview with Newman, enter Search ID: 10861706.

IFEEDER celebrates anniversary

In 2009, the Institute for Feed Education and Research (IFEEDER) was formed to support the future of the feed industry as it works to sustain the escalating world population. It was launched at the 2010 International Feed Expo and on Jan. 29, IFEEDER hosted a luncheon to commemorate the anniversary and seek assistance from leading companies throughout the feed industry. The charitable foundation has already surpassed $1.2 million in pledges and is on the way to reaching its three-year goal of $2 million.

Dean Warras, chairman of IFEEDER's board of trustees, explained that there are plenty reasons why everyone in the feed industry should be concerned with IFEEDER's mission.

"As we look forward to 2050, we’re going to have approximately 9.1 billion people in the world, and so our focus is how are we going to feed them," Warras said. "We can do that by making a more sustainable U.S. feed and food production industry."

IFEEDER supports creating a more sustainable U.S. feed industry in a number of ways, as outlined by Jim Sullivan, executive director of IFEEDER.

"We’ve funded a number of educational efforts in different forms," Sullivan said. "We offer scholarships to graduate students for programs like the feed industry institute, and we provide funding for research on the sustainability of the feed ingredients used in the world and studies on the use of byproducts in the feed industry and their ramifications."

To watch the complete interview with Warras and Sullivan, enter Search ID: 10861069

Read more IPPE highlights, interviews with equipment manufacturers and service providers, and show news at www.feedandgrain.com/ippe.

Feb 1, 2013

Sweeping Change Ahead?

Since I began my tenure as Feed & Grain’s editor, OSHA’s 2009 Letter of Interpretation regarding bin entry and sweep auger operation has remained a point of strife and confusion among our readers.

In the letter, a response to an insurance agent’s inquiry about the restrictions involved with employees working in a grain bin with an energized sweep auger, OSHA stated that it is in violation of the Grain Handling Standard (1910.272 (g) (1) (ii) to do so unless the employer eliminates all hazards posed by an unguarded sweep auger. Many believe the now infamous letter exposed a fundamental lack of understanding of how a sweep auger works — as well as how grain is handled — since the implications would make operation difficult, if not impossible, while remaining in compliance with the standard.

Politicians and industry leaders, like the National Grain and Feed Association (NGFA), have reached out to OSHA, but despite their efforts, the agency has failed to deliver concrete guidance for acceptable procedures or alternatives for in-bin energized sweep auger operation. However, more than three years later, as these cases are making their way to litigation, grain companies are finally getting a glimpse of what may be expected of them.

Recently, attorneys in Epstein Becker Green’s national OSHA practice group made headway when representing an Illinois grain handler, who despite having “employed a combination of administrative and engineering controls to ensure that no employee was ever within the zone of danger,” received a citation for allowing an employee to operate a sweep auger while in the grain bin.

The law firm contested the citation, and worked with an OSHA area director and regional administrator to develop a set of safety principles to satisfy the “equally effective means or methods” language of the grain standard.

Ultimately, OSHA withdrew the citation; and as part of the settlement agreement, the company will incorporate a set of “10 Sweep Auger Safety Principles,” which if satisfied, would allow an employee to work inside a grain bin with an energized sweep auger. It also developed and submitted for OSHA’s review and approval a “Sweep Auger Policy,” which outlines engineering and administrative controls used to ensure worker safety.

Attorney Eric Conn, head of OSHA practice with Epstein Becker Green, is confident this ruling may guide future policy, and commends the willingness of the agency to work with his client to find a reasonable solution.

While the outcome of this settlement is a step in the right direction, on a national level, an elevator who adheres to these principles is not guaranteed protection from a citation until this or another directive becomes final policy, warns Jess McCluer, NGFA’s director of safety and regulatory affairs.

The outcome of this case may not be the final word on the issue, but it does point to a potential resolution in the near future. To read a detailed account of the case as told by the attorneys involved, click here.

Jan 25, 2013

Preparation 101: The Pillars of Safety

It's often said an ounce of prevention is worth a pound of cure. Perhaps in the grain industry a better analogy is a kernel of prevention is worth a bushel of cure, but however you look at it, safety experts and emergency responders close to the grain industry couldn't agree more.

Preparing for natural disasters, explosions and other emergencies should rank among facility managers' highest priorities — right up there with boosting efficiency, meeting regulatory compliance and increasing customer satisfaction. But occasionally, conducting the training required to prepare an entire staff for a catastrophic event is overtaken by production obligations and busy schedules.

Even facilities with established safety programs may find they could do more to enhance their effectiveness, so leading grain industry safety experts sat down with Feed & Grain to share their best tips with facility managers on the basics of emergency preparedness.

Principle policies

One of the grain industry’s leading resources in emergency response and preparedness is the Safety and Technical Rescue Association (SATRA). The non-profit organization , established in 1990, provides training and organizational support for local, state and international search and rescue teams through SATRA's training group.

Team members are trained on rope rescue, confined space, wilderness and disaster rescue, hazardous materials management, medical training, silo rescue and more. George Lovell, COO of SATRA, also works as a fire fighter, and says the most effective safety programs depend on three principles:

  1. A proactive, preventive culture. Teach employees not only how to respond to emergencies, but how to identify a potentially hazardous situation and notify management before it occurs. Additionally, emphasize the importance of routine accident-prevention activities, such as housekeeping, lock out tag out and working in pairs.
  2. A properly trained workforce. Designate a manager to oversee and document that training occurs upon new employee orientation and continues throughout their employment.
  3. An established relationship with first responders. The nearest fire department may not always be the best-equipped in your area to conduct a rescue or put out a grain fire. Identify a first responder team that is properly trained in handling situations specific to the grain industry and arrange to have them regularly visit the facility.

SATRA has developed a series of checklists specific to the grain industry that elaborate on these principles (See sidebar: Grain Industry Check List, pg. 35.), prescribing what employees and first responders must be trained on, as well as which proactive measures are the most crucial in a grain or feed facility.

Wayne Bauer, general manager of Star of the West Milling in Frankenmuth, IN, suggests a fourth crucial safety principle: written safety policies. Written policies help ensure that every employee is trained to meet the same requirements — and most importantly — without any gray area or room for interpretation.

“Write clear safety policies,” says Bauer. “This will likely involve at least 35 to 50 separate policies for feed mills and/or grain handling facilities and they must include what you expect from your employees and why. A good place to start is with the 12 to 14 basic issues identified in OSHA’s Grain Handling Standards.”

OSHA standards cover areas such as bin entry, grain dust, hazardous chemicals and lifeline equipment, but Bauer suggests going further to include policies on smoking on-site, use of ladders, safety rules for site visitors, site security and stairway cleanliness, among others.

“If you’re only going to cover the basics you might have a dozen policies, but if you’re going to influence a safety culture, you should cover nearly every aspect of your facility with a safety policy,” says Bauer.

Constant reminders of your facility’s policies via formal and informal training is another crucial piece of reinforcing a proactive safety culture.

Training and drills

Bauer says Star of the West Milling relies on a combination of handouts, fliers, staff meetings and one-on-one discussions with employees to carry-out its effective safety program.

“We conduct scheduled hourly sessions using videos and demonstrations as well as special, impromptu sessions called ‘Toolbox Talks’,” says Bauer. “Informal training is critical also. If someone brings up a good topic during a session and we want to review it the next day, we’ll gather by the punch clock and discuss it. There are opportunities for training everywhere and at any time.”

State and regional conferences are another form of training Bauer endorses. More than 30 Star of the West Milling employees have attended a one- to three-day conference to receive continuing education credits for grain industry safety.

Putting training into practice with drills is the final critical component of emergency preparedness. According to SATRA’s Lovell, company policy should require monthly safety drills.

“They should be rehearsed time and time again to where they become second nature,” says Lovell. “Conducting a drill every six months will not produce effective results.”

He notes it’s not important to focus on the type of drill — e.g. fire, explosion, entrapment, hazardous substance release, tornado, etc. — because each one should have the same main components.

“Every type of drill must include a component where everybody in the facility reports to the main office to do a headcount and establish who’s missing,” says Lovell. “Then, working in pairs, begin to search for unaccounted individuals and notify the first response team if necessary.”

First responders should attend drills on at least a semi-annual basis, according to Lovell, to ensure their familiarity with your facility and establish a good working relationship.

“One of the best things you can do is become acquainted with the local fire department,” says Lovell. “If you have an established program and the fire department is well aware of it, they’ll know where the designated meeting place is and who to contact first to relay the situation. First responders want to control everything and the more they know about the facility ahead of time, the more controlled the outcome will be.”

An effective safety program includes more than just the basics of OSHA’s Grain Handling Standard. While it is a good starting point, experts suggest developing an expansive set of written policies to address all potential facility hazards and help foster a safety culture. Training and drills are crucial to perpetuating an accident-prevention mentality throughout your workforce, while establishing a relationship with first responders has multiple benefits in cases where an emergency could not be prevented.

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Magazine

Marketwatch: Jan, 18

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low: 5.7266
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US Soybean Price Idx: ZSPAUS.CM

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