May 29, 2014

How to Protect A Facility Through Mycotoxin Management Planning

A relatively small investment can end up saving a facility millions of dollars.

May 7, 2014

Research Takes Center Stage

The Institute for Feed Education and Research has completed six research projects to date, with four additional projects still underway. The foundation’s research committee reviews proposed research to determine applicability for our industry. To date, almost all the ideas for research have come from AFIA ideas needed to support our industry.

May 5, 2014

Feed Bodies Deliver FSMA-Ready Solutions

It will be up to individual facilities to prepare themselves to avoid getting hit. But luckily, no one is alone in this fight; there are asso­ciations, academics and others working to help them off the tracks.

Apr 16, 2014

Feed and Food Industries Convene in Atlanta

Feed & Grain’s staff braved one of the worst winters on record to attend the International Production & Processing Expo in Atlanta.

Apr 4, 2014

The Costs of the 2014 Renewable Fuel Mandate

On Nov. 15 2013, the Environmental Protection Agency shocked many when it acknowledged the “blend wall” that petroleum groups had been claiming for years, was, in fact, a reality that needed to be addressed immediately.

Apr 2, 2014

How to Decontaminate a Dry Grain Processing Facility

A 280,000-cubic-foot protein powder grinding, dry­ing and packaging facility had a Salmonella spp. con­tamination of some of the equipment. The facility was nearly impossible to decontaminate using conventional methods, not only because it was a large facility, but also because of its height. It was 90 feet tall with three floors in need of decontamination (the second through fourth floors).

A row of chlorine dioxide gas cannisters line a dry grain facility in preparation for Salmonella spp. decontamination.

Apr 2, 2014

Raising the Bar: A New Standard for Steel Bin Safety

It is estimated that more than 750,000 steel grain bins have been built in the United States in the past 75 years. It is anyone’s guess how many of these are still in use. In recent years, the industry has erected between 10,000 to 16,000 steel bins a year.

Mar 28, 2014

Attention to Grain Quality Keeps People Safe

Since 1978, Purdue has docu­mented grain entrapment cases — both on-farm and commercial. In 2010, the number of entrapment incidents spiked at 57.

Jan 3, 2014

The Bagging Triangle

Dry bulk packaging is a simple yet sensitive balancing act. Maximum efficiency and productivity are at the center of a triangle with product, bag and machine at the vertices. This delicate balance is called The Bagging Triangle. It describes the relationships between the three corners and how the right combination can positively impact an operation’s bottom line. It’s a simple concept; a shift or change in one corner — the product, bag or machine — necessitates a change in one or sometimes both of the others.

Jan 3, 2014

Congress Moves on Key Waterways Infrastructure Act

With more than 60% of exported U.S. grain transported via inland waterways and a large percent of farm and ranch exports and imports moving through U.S. harbors, new projects for flood protection, port improvements and upgrades to the nation’s aging locks and dams are critical for all involved in agriculture, and the nation’s economy as a whole.

Jan 3, 2014

Web-based Feed Wizard Unites Manufacturer and Consumer

The rise of the Internet has created a new business atmosphere, one where businesses are playing a constant game of catch-up, with consumer trends changing as soon as industries grow comfortable with them. In response to this rapidly changing pace, the feed and grain industry is starting to implement newer, more efficient technology. In the last decade, facility automation has gone from cutting edge to the norm, tablets and smartphones have begun their integration into facility operations, and webbased accessibility is becoming more comprehensive and available. Every company is looking for more ways to use technology to improve efficiency, but what is often overlooked is the potential for technology to connect manufacturers to the consumers of their products.

That’s why Feed & Grain partnered with the American Feed Industry Association (AFIA) and AgGateway to bestow the annual IT Innovation Award, to highlight how others are adopting technology in the grain storage and feed manufacturing industries in original ways. The 2013 runner-up is Kentucky Equine Research for its Web-based feed wizard MicroSteed™. This accessible program has 25 years of research hidden behind its easy-to-understand user interface that allows end users the ability to find out what feed will best supplement an individual horse’s needs based on its age, breed, weight and activity level, combined with its forage program.

Bridging the gap

Kentucky Equine Research (KER) is a research-based company that focuses on providing practical, real-world solutions to equine feed manufacturers. Their founder and president, Joe D. Pagan, Ph.D., has always felt that there is a lack of information available when it comes to feed nutrition.

“When I left graduate school, I entered the feed industry, and when I got there I realized there was a big gap between what was going on in academia and what was going on in the industry. So we created Kentucky Equine Research to be a bridge between the two.”

KER’s primary priority is the extensive research they perform in nutrition and exercise physiology at their research facility in Versailles, KY. Using state-of-the-art testing equipment, unavailable to many manufacturers, they evaluate how athletic horses use nutritional ingredients, vitamins and minerals, along with tests on how various feedstuffs affect performance in a horse.

KER also works with 35 horse feed manufacturers on six continents as Brand Alliances. The partnership includes giving feed manufacturers technical support to formulate existing or brand-new feeds based on the class of horse or performance level the manufacturer is targeting and the local forage. The manufacturer can make sure that not only are their customers receiving the performance they desire, but that the blend is the exact mix necessary to meet it. The wide range of nutritional needs required by horses makes it hard to calculate exactly what level of basic nutrients — protein, fats, carbohydrates, minerals and vitamins — are needed. Without proper testing, it is easy for feed manufacturers to oversupply a particular nutrient, leading to products that cost more money to produce

Behind the curtain

Although MicroSteed recently launched a new design and platform, the program itself has been around since the early 1990s in various forms. It was designed to address a problem relating the scientific data needed to properly integrate feed into the overall ration being used by the horse owner.

“One of the big things we wanted to be able to do from the very beginning was to be able to show an end user how a feed company’s product fits into the overall context of a ration,” Pagan explains.

The problem comes from how to get this important yet cumbersome data to the user in a timely, easy-to-grasp form.

“In the late 1980s, Microsoft Excel hadn’t been rolled out yet, so doing those types of ration evaluations were difficult. You were literally doing them with a calculator and a legal pad, and then when you were done you had a set of numbers that didn’t mean much to the typical horse owner,” said Pagan.

So, KER started to look at a way to provide that vast amount of information to the average horse owner — in a visually pleasing form — eventually settling on the stacked bar graph that they use today, with each bar depicting the percentage of the required amount of a nutrient in the ration and individual ingredient contributions toward the total shown as colored gradients within each bar. The company selected the program Harvard Graphics, and while it made the information easier to digest, it still took half a day to evaluate a ration. They started to work toward a custom software solution to meet their needs. In the early 1990s KER developed the first MicroSteed, a 16-bit Windows-based software. MicroSteed has continued to evolve alongside the available technology, until two years ago when KER decided it was time to move it to a Web-based platform bringing us to the current iteration.

A new opportunity

When making the decision to bring MicroSteed to a Web-based platform in 2010, KER took a look at where the world was. Though the Internet was still in its infancy at KER’s founding, it was fully integrated into both personal and professional life by the time they decided to use a new platform. With the rise of smartphones and tablets, there are fewer and fewer places that are not connected to the grid, and the demand to be able to access anything from anywhere is increasing.

The MicroSteed website is simple, but comprehensive. It is developed on a wizard platform, which was selected because it is easy to use, and can convey the vast amount of information sitting right behind the framework. The age of trying to fit as much information on the screen as possible is past. The user inserts information into easy-to-understand fields for each of the 12 categories such as age, body weight, breed, life stage, activity level and amount of time at pasture. Each category comes with a magnifying glass that gives more detail on the category in question, giving the users more information about the choices, information on how to gather the needed data and how the data will be used. The wizard will then give the user a selection of feeds that will meet their horse’s nutrition needs along with a link to the manufacturer’s page, with more information about the blend. The feed selection page also offers users the chance to email the manufacturer with questions about the blends offered and any questions they have about the entire process. The feed selection page is followed by the completed ration page, featuring both the stacked bar graph and an acceptable ranges graph explaining the nutrition the horse is receiving based on the overall ration.

This program is targeted toward end users, and in the world of equine ownership, that range includes everything from highend racehorses to the family horse. Not every user will be concerned about every category MicroSteed gives an option for, but they don’t need to be. Any of the categories, other than classification, can be left blank, leaving the tool usable to all levels of users. And though there are 25 years of research being used to formulate these recommendations, the user never sees it, nor the huge amount of possibilities that exist within the wizard.

“Because all of these variables come into play, there are infinite possible combinations that affect nutrient requirements,” explains Pagan. “MicroSteed takes all of these into consideration and calculates nutrient requirements on the fly.”

MicroSteed has been adapted for each of KER’s Brand Alliances. Each version of the site is set up to reflect the unique factors that are important to the individual feed manufacturer and its end users. As a multinational organization, it’s not only the categories that can be changed, but also the unit of measurements, allowing a familiar experience for end users no matter where they are located.

Feed manufacturers that partner with KER give their sales team a powerful new tool when connecting to consumers. They no longer have to carry around binders full of information and give their customers a rough guess or wait for an estimate from the home office for the feed formulation that will meet the customer’s needs. Once KER has done its extensive research, most of the possible variables will already have been accounted for, and the salesperson is just a few clicks away from knowing exactly what is right for the customer. Because MicroSteed is a Web-based application, this can be done while on a sales call or in the field.

The site also adjusts for the mobile user, offering up a slightly different interface, but keeping its functionality. The idea is to be ready for the growing trend of mobile users, and to give their brand partners’ salespeople another tool in their arsenal.

“Embracing this technology will become more and more important in the future as everyone becomes more dependent on his or her smartphone in day-to-day living,” says Pagan. “KER has produced MicroSteed in versions for the computer and the smartphone so that its Brand Alliance partners can communicate with horse owners at home and in the barn aisle.”

Kentucky Equine Research’s MicroSteed is an example of how the feed industry can use technology to reach out and provide for its consumers. No matter what business, the first step in gaining customer loyalty is offering them an easy, hassle-free buying experience. MicroSteed allows users to browse at their leisure at a wide variety of feed products selected for them in the comfort of their own home, giving the confidence that what they select is right for them.

Jan 3, 2014

'Need for Speed and Space' Drives Co-op Expansion

Customer satisfaction is the core of Cottage Grove, WI-based Landmark Services Cooperative’s business plan. So, when the 15,000 member strong co-op’s board of directors conducted a study in 2012 to measure satisfaction with its Evansville, WI, shuttle loading facility, it knew something had to be done to improve the results.

The Evansville location serves producers across an expansive territory throughout southern Wisconsin and northern Illinois and has taken in a little more than 200 million bushels of grain since it was built in 2002. At the time of the study, the facility’s capacity was 1.9 million bushels, but because of its large service area, producers still had to contend with long lines at harvest time.

The Evansville expansion included a 730,000-bushel storage bin. Photo by Elise Schafer

Sep 23, 2013

Using Data to Your Advantage

As the ubiquity of facility automation spreads throughout the feed and grain industry, users are beginning to look for benefits beyond simply running their equipment electronically. Removing facility operations from manual control is still an undeniable advantage to automation systems, but there is also value in their often overlooked secondary function: nearly constant data collection.

“Data collection is showing to be of increased importance to today’s feed and grain facilities,” remarks Josh Coder of Control Stuff, Inc., an automation systems integrator from Cologne, MN. “As the technologies and tools for data collection and analysis become more cost effective, and with shorter payback periods, there has been a surge in requests for collection and analysis of data related to the various processes.”

Automation systems can monitor and log everything from electrical demand to inventory levels to equipment run time and parts temperatures, and sophisticated reporting tools available with many of today’s options can be used to streamline operations and make better management decisions.

The mechanics

In order to understand how facility data is collected and how it can be analyzed, it’s important to identify the components of an automation system, and how they communicate with one another. Coder outlines the basic components as follows:

HMI – Human Machine Interface

  • This is the user’s connection with the automation system, which allows for control and monitoring capabilities. HMIs come in many forms, from panel boards with switches and lights to desktop computers.

PLC Programmable Logic Controller.

  • This is the “brain” of an automation system. The PLC processes real world information to make logical and timely decisions, on the basic principle of “if/then.” Aside from this basic processing, PLCs are capable of monitoring, recording, alarming and more.

I/O – Inputs and Outputs

  • Discrete Inputs – This is information collected from devices like limit switches, plug switches, hand-off-auto switches and other real-world equipment that return a signal that is either on or off.
  • Analog Inputs – This is information from devices like CTs, level sensors, flow meters and other field devices that return a signal that is variable.
  • Discrete Outputs – These are what the PLC uses to control devices like relays, motor starters, solenoids, actuators and other field devices that require an “on” or “off” state to function. Generally, when a discrete output is “on,” the field device is operating and when the discrete output is “off,” the field device is not operating.
  • Analog Outputs – These are what the PLC uses to control devices that require a variable signal to operate. Rather than the “on/off” state of a discrete output, the device requires a signal of varying voltage or current. Field devices such as internal screener gates, turnheads and Variable Frequency Drive (VFD) speed control often call for analog outputs.
  • Communication Cards – These are not technically inputs or outputs, but are used to “talk” to other devices such as computers, smart sensors, scale systems, hazmon systems and other devices that are not capable of i/o connection.

Data-based managing

Once the various inputs, outputs and control devices are integrated and begin collecting data, how can management use it to improve facility operations? Alan Berndston, director of sales for New Berlin, WI-based WEM Automation, Inc., has one example.

“In the past, most users’ data needs were based around inventory, quality, and production totals,” begins Berndston. “These are all still very important, but feed mills are also demanding true mill performance data. So, Key Performance Indicators have become an essential element of our reports. Mill managers need to know the average time it takes to unload a truck, how many times an ingredient bin has jogged, how many batches per hour are produced, the number of trucks loaded, etc. These graphic reports establish performance goals that can be measured and reported instantly by date, shift, or formulation”

Heath Roker, project manager / sales engineer of Salina, KS-based Kasa Industrial Controls, Inc., explains another way to use data to track performance.

“Look for utilization patterns to measure how efficiently the equipment is being used,” Roker begins. “In a grain facility, a leg or a bucket elevator is a critical component in moving the grain, and you need it to run at optimal operating efficacy. You can determine if a leg is meeting that level, running below efficacy, or being over-driven by collecting the averages of the flow of grain on the legs and how full the buckets are.”

Roker notes that operators at non-automated facilities may run equipment up to 30% less efficiently than the equipment’s potential, so as to avoid plugging the leg, which results in longer lines at the dump pit and an overall less efficient facility.

Doug Forst, president of CMC Industrial Electronics, a HazMon provider based in Burnaby, B.C., Canada, says that’s part of the appeal of facility automation — to remove human decision making from the equation all together.

“One of our largest customers has as internal mandate for all of their conveying equipment — bucket elevators, conveyors and drag conveyors — to have engineering controls added by the end of 2015.” Forst says. “That means if there is an out-of-safe parameter on the machine, it will automatically stop. The alternative method requires people to manually touch the bearings or use a thermal gun to get a heat reading, but this company wants the entire process 100% monitored in real time, tied back to a control system that will stop those machines automatically.”

Forst also advises using temperature monitoring reports as part of a preventive maintenance program. The data could reveal, for example, an over-lubricated bearing.

“The goal is to have the right amount of lubrication on your bearings. If you over-lubricate a bearing, it will run hot because it has to push the grease around, which can damage it and could potentially could lead to a shutdown on that piece of equipment.”

Integrating the facets of a feed and grain facility, such as scales, motor control equipment, level sensing devices, critical safety devices, hazard monitoring equipment and grain temperature monitoring equipment, allows automation system users to remove human decision making from their basic operations, to meet equipment and operations performance goals, and can assist in preventive facility maintenance.

Sep 16, 2013

Country Elevator Conference Concentrates on Congressional Action

Country elevator operators will soon converge on St. Louis for the National Grain and Feed Association’s 42nd Country Elevator Conference and Trade Show (CEC). The CEC is the largest gathering of country elevator personnel in the United States. The show will be hosted at the Hyatt Regency hotel next to the St. Louis’ Arch. The tradesshow portion opens on Sunday Dec. 8th at 4:00pm with doors closing on Monday Dec. 9th at 7:00pm. The Confrance portion will be going on any time the show floor is closed including the morning of Tuesday DEC. 10th from 8:00am to 11:30am.

The Conference

The Leadership Conference will feature speakers throughout the industry, and informative sessions targeted specifically to people who manage grain elevators and their highest level staff. The talks will cover a wide range of topics, including the effects of legislation and potential market trends.

Speakers include…

  • The director of the Food and Agricultural Policy Research Institute (FAPRI), Patrick Westoff, will take a look at the potential farm bill in his presentation “2013 Farm Bill—Changes in How Farm Programs Will Operation in 2014.”
  • Marty Ruikka a principal at The ProExporter Network will take a look at the future of biofuels at “Biofuels Industry—Where it’s Headed and Implications for Grain Handlers.”
  • Brandon Willis, from the U.S. Department of Agriculture’s Risk Management Agency, will talk about crop insurance at “Future Direction of Federal Crop Insurance Program.
  • The Andersons’ Robert Marlow, will have quality maintenance advice in “Maintaining Grain Quality in Big Harvest Year.”
  • There will also be major sessions on the 2014 market outlook, futures market customer protection rules and high-frequency trading, and sustainability initiatives and impacts on grain handlers and producers.

The Trade Show

The trade show, that opens when the conference is not in session, is expected to attract more then 500 visitors and will feature almost 100 booths occupied. Both attendees and presenters will consist of industry leaders and their most trusted staff, offering a great place to network with a group of peers and discuse the direction of the industry.

Registration has already begun for the industry’s primer event at ngfa.org/CEC13. The Country Elevator Conference and Trade Show is your best chance to get the pulse of the industry for the coming year.

Sep 12, 2013

IFEEDER Refines its Mission

“One of the biggest challenges we face is getting the AFIA membership to realize we must attack the issues facing our industry with a united front, and IFEEDER gives us a vehicle to do that,” Crutcher states. “As individual companies, we do not have enough critical mass to make an impact. We must work together to pool our resources to make a meaningful impact on the issues our industry faces.”

Ken Thomas will allow IFEEDER to keep its finger on the pulse of the industry, to make sure it funds the right projects.

Sep 6, 2013

FSMA's Tight Deadlines, Scope of Reform Worry Feed Industry

As the Food and Drug Administration picks up the pace in promulgating Food Safety Modernization Act rules, feed facilities and suppliers are working against the clock to prepare for some of the biggest regulatory changes the feed industry—with its 900 ingredients and facilities and suppliers of all sizes—has ever faced.

“I think a lot about the ability of our industry to be sophisticated at all levels to absorb, understand and implement these kinds of controls. We’re not really sure we can do this at all levels in an 18-month timeframe,” said Richard Sellers, American Feed Industry Association vice president of feed regulation and nutrition.

The first major reform of food safety laws in seven decades, the Food Safety Modernization Act was enacted in January 2011. While much was made of how the new law would affect the food industry, the feed sector will be significantly impacted as well as the law applies to all FDA-regulated food and facilities, including grain elevators, animal- and pet-feed ingredient manufacturers, grain millers and processors.

“If you process, manufacture, store or sell animal feed, FSMA regulations will apply to you,” explained Kelli Ludlum, American Farm Bureau Federation food safety specialist.

One of the most basic requirements of the law—that feed facilities re-register with FDA every few years—is already causing some confusion.

Food or feed facilities that were required to register with FDA under the Bioterrorism Act of 2002 now have to renew their registration every even-numbered year between October and December, beginning in 2012. Under the 2002 law, registration was permanent.

Acknowledging that word about the re-registration requirement had not gotten around as well as it should have, FDA extended the December 2012 deadline to January 2013. Still, as many as 2,000 feed facilities may have been dropped from the registration list after failing to re-register because they didn’t know about the new rule.

“That’s a big concern of ours,” Sellers said. “Firms, if they have not, need to immediately re-register their facilities under the Bioterrorism Act so there’s an accurate list.”

Hazard identification and risk management plans required

FSMA addresses three broad areas: preventative measures, detection and response measures and imported foods.

Under the preventative measures area of focus, feed companies are required to identify any hazards and write a risk management plan to control those hazards. The plan, which must be available for FDA to review and copy, encompasses several areas and requires facilities to keep related records for two years.

Hazard identification and risk management plans are central to the law. They are not, however, requirements for Hazard Analysis and Critical Control Points (HACCP) certification or a HACCP plan.

“The preamble to the related rules references HACCP in comparing FSMA to existing programs, which is understandably confusing to some,” Seller explained.

For help meeting the new preventative control requirements, AFIA is encouraging companies to consider its Safe Feed/Safe Food program, which is a voluntary third-party certification program based on HACCP principles. In addition, once the FSMA rules are finalized, the organization plans to make any needed adjustments to the Safe Feed/Safe Food program to make it FSMA-compliant.

The rules for feed are separate from those for food and are due out in a little less than a year and a half.

New inspection and recall authority for FDA

The detection and response section of the law gives FDA the authority to increase facility inspections. The agency is supposed to create regulations for low- and high-risk facilities. All low-risk facilities will be inspected within five years of the date of enactment and again every seven years. High-risk facilities, which are likely to be those that have had inspection problems or have high-risk products, will be inspected within three years of enactment and once every five years after that.

Facilities that are up for inspection should be prepared with a plan for employees during the inspection. The plan should include which employees will be working with FDA during the inspection, where the necessary documents are filed and how the facility will address any issues that arise from the inspection.

Also related to detection and response, feed companies that are required to register with FDA will be expected to participate in updating the Reportable Food Registry, when necessary. Such reports should be made less than 24 hours after a company learns of a reasonable probability that the use of or exposure to a certain food will cause harm to humans or animals.

There are also traceability responsibilities tied to reporting. Reporting companies may have to notify others in the chain of commerce, so staying on top of recordkeeping is essential to ensuring the right people and companies are contacted.

FSMA gives new authority to FDA to issue a mandatory recall, although the agency must first request a voluntary recall from the firm responsible for the product. The FDA commissioner is the only person who can issue the recall, and the authority may be used only for serious adverse consequences or death in humans or animals.

Importers must verify foreign suppliers meet U.S. standards

In the area of imported products, under the proposed Foreign Supplier Verification Program (FSVP) rules, importers, defined as the owner of a food item or ingredient when it enters the U.S., are required to conduct in-person risk-based verifications of foreign suppliers to make sure they meet the same hazard identification and written risk management program requirements U.S. firms do. FDA expects importers to keep the records associated with this verification for two years.

“This rule tells you what you have to do to go overseas and look at a facility, and what kind of records you have to have,” Sellers said. However, because the rules related to “what those controls are and what those records have to look like for feed have not been released, we’re sitting on part of the story, but not the whole story.”

Proposed in late July along with the FSVP rules, rules related to the accreditation of third-party auditors would establish a program through which qualified third parties can certify that foreign food facilities comply with U.S. food safety standards. The third-party auditors, also known as certification bodies, will conduct food safety audits and issue certifications of foreign facilities and the foods for humans and animals they produce.

“This provision says if you don’t go over [to the foreign facility] and you don’t visit at periodic intervals, you can use an FDA-recognized third-party, such as one of 30 foreign governments that will be recognized as having a sophisticated regulatory system, a private third-party certification program or another association FDA recognizes,” Sellers said.

FDA will have to determine what it requires for these third-party entities to gain recognition.

Importers will not generally be required to obtain certifications, but in certain circumstances FDA may use certifications from accredited auditors to help determine whether to admit certain imported food into the United States that FDA has determined poses a food safety risk. FDA may also use third-party auditors to determine whether an importer is eligible to participate in a voluntary program that will speed-up the review and entry of food.

In addition, under FSMA, FDA has the ability to refuse entry into the U.S. of food from a foreign facility if FDA is denied access by the facility or the country in which the facility is located.

Court establishes timeline

By a court order issued on June 21, FDA must publish all outstanding proposed rules, of which there were five, including those related to preventative control for feed, by Nov. 30, 2013. Additional outstanding rules are connected to international contamination and sanitary transport of food and feed. All comment periods for these proposals must close by March 31, 2014, and the final regulations have to be published by June 30, 2015.

The court order stems from a suit filed in August 2012 against the FDA by the Center for Food Safety and the Center for Environmental Health. The groups were trying to compel the agency to implement what they considered were long-overdue provisions of the FSMA. This April, the U.S. District Court for the Northern District of California agreed FDA had failed to meet the deadlines established by Congress. Because FDA and the Center for Food Safety and the Center for Environmental Health could not agree on a timetable for deadlines, as directed by the court, the court issued its own deadlines.

Still awaiting the feed rules, the industry faces some considerable challenges with such a tight timeline. For example, feed facilities will have to deal with modified Good Manufacturing Practices (GMPs), which are not part of FSMA, and FSMA’s new preventative controls at the same time.

“It would be nice if we could do the GMPs first, let them operate for a few years, then do the preventive controls,” Sellers said. “FDA says that’s not possible because they’re under a strict deadline to get the preventative controls out, so they’ll do the GMPs at the same time.”

Only roughly one-quarter of feed manufacturers have dealt with GMPs before, so these new requirements will be a significant challenge.

“You have to go through this hazard identification and create these huge preventive controls, validate the system, verify it’s working, take corrective action when it isn’t and keep records for two years,” Sellers said. “Those are all the things that are laid out in FSMA and they’re quite complicated.”

Jul 18, 2013

OSHA's Sweep Auger Policy Comes Full Circle

After nearly five years of back-and-forth between the grain industry and OSHA over its fluctuating sweep auger policy, a recent agency memo has brought some degree of closure to the issue.

The controversy was sparked in 2008, when an insurance agent wrote to OSHA regarding its policies on whether employees could remove their harnesses and lifeline inside a bin if there were no engulfment hazards present, and if employees could operate sweep augers if the sump was not protected by grating. OSHA’s detailed response cited the Grain Handling Standard (1910.272 (g) (1) (ii), and addressed the sweep auger component by saying it did not intend “a prohibition against employees entering grain storage structures while machinery is running.” But it went on to state that “Employees may enter [grain bins] while machinery is running if the employer can demonstrate that appropriate protection has been provided to prevent employees from being exposed to the hazards/dangers of the moving machinery.”

The response noted the “obvious example” of effective employee protection from hazards through machine guarding, which prompted the insurance agent to follow up with an inquiry about the use of unguarded sweep augers with employees inside the bin. What followed was OSHA’s infamous series of Letters of Interpretation, stating that unless the employer eliminates all hazards presented by an energized (running) unguarded sweep auger, it was in violation of the Grain Handling Standard.

The problem with this stance is that guarding a sweep auger on all sides, including the front, would render the equipment useless. Sweep augers are used to empty grain from a bin by pulling contents from the outermost area into the middle, where it funnels into a pump and exits underneath the bin onto a conveying system. Sweep augers travel at very low speeds and operation commonly requires a few workers to stay inside the bin to adjust its movement and ensure all the grain reaches the central discharge.

Given that the front of a sweep auger must contact the commodity in order to work properly, many in the grain handling industry were left wondering how they could continue using their equipment without violating OSHA’s policy guidelines.

Both national and state grain and feed associations provided OSHA with feedback over the next few years, expressing the industry’s confusion and frustration over the misguided policy, but in the meantime, OSHA ramped up grain facility inspections and the enforcement of its interpretation letter.

Then, in January 2013, the grain industry reached a milestone victory. A major grain handler in Illinois challenged OSHA after the company was penalized for allowing workers inside their grain bins with energized sweep augers. The company hired Epstein Becker & Green’s national OSHA Practice Group, who proved that a combination of administrative and engineering controls could be used on sweep augers to ensure that no one ever enters the zone of danger while the equipment is operating. As a result, OSHA withdrew all citations and penalties, and the law firm, along with area and regional OSHA directors and administrators, worked together to formulate the “Ten Sweep Auger Safety Principles.” For more detailed descriptions of these principles, go to www.gfai.org/files/news412_Sweep_Auger_Memo_5-3-2013.pdf.

  1. No employee shall enter a grain bin without a bin entry permit, which confirms there are no engulfment and/or atmospheric hazards present.
  2. The subfloor auger and the grain entry points must be de-energized and locked out before entering the bin to set up or dig out the sweep auger.
  3. The grate/guard on the subfloor auger must be in place and secured before operating the sweep auger.
  4. Employees operating the sweep auger cannot walk on the grain if the depth of the grain presents engulfment hazard.
  5. The only portion of the sweep auger allowed to be unguarded is the point of operation.
  6. A rescue-trained and equipped observer must always be positioned outside the storage bin to monitor the activities inside.
  7. The employer must utilize engineering controls within the grain bin to prevent workers from coming into contact with the energized sweep auger. Acceptable engineering controls include:
  • Sweep auger equipped with an attached guard, which prevents the workers contact with the unguarded portion of the auger.
  • Sweep auger equipped with a control mechanism, such as a dead-man switch, which will allow for the sweep auger’s operation only when the operator is in contact with the device. The worker must be positioned at least seven feet from the auger at all times it is energized.
  • Portable guardrails are permitted if they are placed at least seven feet behind the sweep auger.
  1. The auger must be provided with a positive speed control mechanism or bin stop device that prevents the uncontrolled rotation of the sweep auger.
    1. Workers are prohibited from using their hands or legs to manipulate the sweep auger while it is operating.
    2. If adjustments are necessary, the sweep must be unplugged, with the person making the adjustments maintaining the control of the plug, or locked-out in accordance with lock-out/tag-out procedures.

OSHA’s next move was another positive for the grain handling industry when it published a long-awaited sweep auger policy memo that stated employers operating sweep augers with the above 10 rules in mind will be considered compliant with the Grain Handling Standard.

When asked about his response to the memo, the Nataional Feed & Grain Association’s (NGFA) director of safety and regulatory affairs, Jess McCluer, said, “I think it’s a step in the right direction that provides some closure on the issues that we had problems with in their interpretation letters. We’re particularly happy to see [OSHA] allowing the use of engineering controls to protect workers because we had advocated for that position since the beginning of this situation.”

According to NGFA outside counsel, the memo can be useful during an inspection to demonstrate a facility has implemented and is following the safety procedures endorsed by OSHA — provided that the inspection is not based on an accident involving employee injury.

Although the memo was generally well-received within the industry, McCluer notes the agency may still have some learning to do about grain handling operations. “The point we’ve been trying to make to OSHA is that sweep augurs have not had a high rate of incidence in the last 30 years.” says McCluer. “There is some confusion within the agency over the difference between sweep augers and floor augers. Floor augers are the type that have a high incidence rate with accidents because if it isn’t properly guarded, or if it’s unguarded, it can cause injuries, but there has never been a high incidence rate regarding sweep augers.”

Despite the minor aspects that still seem misinterpreted by OSHA, its latest memo is a welcome chapter in the sweep auger policy saga.

Jul 15, 2013

Accurate Nutrition Without the Lab

The United Nations’ department of Economic and Social Affairs released a report in 2012 that the world’s population will reach an estimated 9 billion by the year 2050 (http://esa.un.org/unpd/wpp/index.htm). This estimate has placed a great deal of emphasis on agriculture and non-agriculture entities to determine the best way(s) to produce food for future generations. The current facts are that the amount of arable land to plow and sow is limited, and meat consumption is increasing as world economies evolve. Given the finite resources that are available for food production, technology will need to provide solutions for feeding an ever growing population. This is why Feed & Grain has partnered with AgGateway and the American Feed Industry Association (AFIA) to develop the Information Technology Innovation Award. This award acknowledges work that is being done to make the process of putting food on the table more efficient and economical.

This year’s winner is Adisseo for its web-based platform, Precise Nutrition Evaluation (PNE; www.PNE.Adisseo.com). Precise Nutrition Evaluation is an innovative technology that combines an internet-accessible database with near infrared spectroscopy (NIR), in vivo (animal feeding studies) analyses of ingredients for the determination of apparent metabolizable energy (AME) and digestibility of amino acids (DAA), and ISO-certified wet chemistry methods that are both stringent and high-quality. Together, PNE delivers a more accurate, near-instantaneous nutritional analysis for the three most expensive nutrients within 25 feed ingredients (Table 1; AME for poultry, total and phytate phosphorus, and total and digestible amino acids for swine and poultry).

If we were to stop here and summarize the article below, Adisseo’s PNE service gives nutritionists, livestock producers, and feed manufacturers more control over the nutritional composition of their feeds. In addition, purchasing decisions can be adjusted based upon ingredient quality, thus providing a better, more economical match between nutrition vs. animal requirements for higher feed quality and more efficient food production. Rob Shirley and Steve Gately from Adisseo help explain below what PNE is and how PNE benefits the livestock industry.

Where does the livestock industry typically get its information on the nutritional composition of feed ingredients?

Prior to NIR, resources for determining the nutritional quality of feedstuffs were fairly limited, and for the most part based on word-of-mouth, tables, and wet chemistry. While suppliers, colleagues, and friends provide information word-of-mouth, books and magazines provide a reference of “table values” for the nutritional content of ingredients. Both sources are capable of providing guidance on the nutritional composition of ingredients; however, the data from each are for all intents and purposes inaccurate because they represent a snapshot in time, can be extremely dated, do not reflect continuously changing circumstances that lead to nutritional variation (i.e. type of cultivar, geographic region, weather, harvesting, storage, manufacturing process, etc.), and can be from a mixture of wet chemistry procedures that may be poorly defined and / or conflict with each other. To get around the uncertainty of the two previously mentioned resources and help ensure a certain level of animal performance, ample safety margins for key nutrient matrices are often built into formulations with the idea that it is better to have too much than too little. This over formulation strategy often costs money, and may not necessarily result in better animal performance.

In order to reduce the safety margins just mentioned, feed manufacturers and integrators can analyze the nutritional content of ingredients on a regular basis using wet chemistry and in vivo analyses. The information that is generated is considered more dynamic and “real time” because it not only reflects analytical information that is generated on a regular schedule, but is also sometimes derived from actual in vivo (in life) feeding studies. As data are made available, they can be entered into a database to show trends over time. Unfortunately in any quality control program, analytical reports are often received days to weeks after the ingredients of interest are consumed by livestock; so any data that are received become a historical artifact. Putting this into perspective, Gately explained that “sending a sample out for metabolizable energy and digestible amino acids tests in the past would take you weeks and weeks to get an analysis back”. In order to turn these dynamic datasets into a more useful tool that report historical data in a real-time manner, near infrared spectroscopy (NIRS) has been adopted by many feed manufacturers and livestock integrators because it is rapid, reliable, accurate (depending on the reference wet chemistry), non-destructive, and relatively inexpensive. Today, in-house NIR equipment and Adisseo’s PNE have cut the nutrient analysis time of ingredients down to mere minutes.

What does PNE offer?

Using NIR to determine the proximate analyses (protein, fat, fiber, ash, and moisture) for individual ingredients, and to a lesser extent mixed feeds, has been around for years. So when Adisseo started to work with NIR technology over 10 years ago, they knew they wanted to do something different and innovative. This is when PNE was conceived and developed.

“At Adisseo, we made the decision to take NIR one step further and develop DAA and AME calibrations. To do this, Adisseo had to put an extensive amount of resources into developing NIR calibrations and the PNE database," Gately noted. “As a result, Adisseo started testing ingredients in vivo (living organism) at their research facility in Commentry, France (Figure 1) using the rooster assay for DAA and the three-week-old broiler assay for AME analyses. In a typical AME trial, three-week chicks are fed a complete diet and a diet where part of the common diet is replaced with the test ingredient. The excreta are then collected, freeze dried and analyzed for moisture, gross energy and nitrogen content. The comparison between the energy in the two diets vs. the respective excreta is made to determine the amount of energy (AME) that the bird was able to extract from the ingredient. The AME trial setup for each ingredient is replicated several times for statistical purposes, and is therefore a very laborious, time-extensive, and expensive possess.” This processes just defined have resulted in AME calibrations for corn, wheat and soybean meal, along with total and phytate phosphorus information for nine ingredients and total and digestible amino acid calibration equations for 25 ingredient types. Although this work has allowed Adisseo to launch PNE, they are far from done. Since its launch in September 2012, Adisseo has maintained its calibrations and expanded the number of ingredients they have digestible amino acid calibrations on from 19 to 25.

What are the processes that allow PNE to work?

The first step in obtaining an accurate analysis is grinding. Grinding a sample ingredient to 1 millimeter (this is the same as 1,000 microns) reduces particle size and increases the uniformity of particle distribution throughout the sample that is scanned on the NIR; grinding also allows for a more complete penetration, reflection, and detection of light from the sample. It is very important that samples are not ground too fast, as this will overheat and change the nutrient composition of the sample. When the customer uploads a spectral file to PNE via the internet, the user defines the sample type, origin of sample and the analyses desired. Once the submit button is pressed in PNE, PNE compares the sample spectra to its core calibrations for the chosen ingredient and predicts (depending on the ingredient type) the AME, total and phytate phosphorus, and total and digestible amino acids within approximately 2-3 minutes. “When we first made Adisseo’s NIR service available to its customers (pre-PNE), it took two to four hours to turn sample spectra around into actual data. Today, PNE’s calibrations are encrypted in the cloud, analyses are returned within two to three minutes, and data are always available to the customer in case they want to create some trend charts for purchasing or nutrition-related activities” said Shirley. The near-instant turnaround time is unique to PNE, and has the ability to significantly change how feeds are formulated, ingredients are purchased and managed, and how feed cost is minimized.

What are the benefits of PNE?

After the drought of 2012, feed prices shot up to record breaking prices and highlighted how flexibility can be an asset when formulating feed. Amino acids, energy and phosphorus are the most expensive components in a feed formula, and Adisseo’s PNE gives accurate data for all three at the same time. This allows nutritionists to change the blend of feed ingredients and formula specifications, all while comfortably knowing that the formula will meet the nutritional requirements for healthy and efficient growth and production.

In order to validate the usefulness of PNE in production, "Adisseo has conducted a number of broiler performance trials, where book values were compared against PNE values for AME and DAA. In all the trials, improvements in feed conversion were consistently observed when nutrient values from PNE were used. These trials clearly demonstrate the biological and financial value of knowing the nutritional composition of feed ingredients," Gately says. Because PNE values are so accurate, PNE gives buyers and purchasing groups the ability to verify that what they are receiving is what they are paying for, and also check where the best value can be found. "If you look at the purchasing side of the equation, an integrator may have a number of suppliers to choose from. If a buyer is evaluating three distiller suppliers, the buyer has the option of ranking them according to how much digestible lysine is in each product. In addition, the amount of phosphorus and/ or AME from different soybean meal suppliers can be a criterion by which to rank soybean meal suppliers. At this point, buyers can start to rank the value of each supplier’s product based on what they traditionally deliver," Shirley remarks.

Summary of PNE

Precision is necessary in any science, and agriculture is a science that bases its productive output on cause-and-effect principals. As society continues to grow, agriculture must rely more on innovative technologies to efficiently improve food production. This is an unavoidable fact for a growing society that relies on agriculture to feed the world. In the case of swine and poultry production, knowing the nutritional makeup of feed ingredients is critical to formulating swine or poultry feeds that provide the correct nutrients, at the right levels, for the most economically efficient growth and production. Nutritionists, livestock producers and feed manufacturers that use Adisseo’s PNE platform have more control over nutritional decisions for their livestock, create better business opportunities on ingredient selection and purchases, and provide a better match between nutrition and production in terms of higher feed quality, more efficient production and better profitability.

Jul 14, 2013

Identifying the Core of Your Business

In today’s market, companies often lose sight of their core. Most feed or grain companies have ambitions to grow their business but few have an actual plan, beyond working harder. With the agricultural sector’s increased understanding of how to optimize animal and plant performance, there is continuous pressure to keep up with genetic improvements. This manifests itself through choices made by owners and presidents whether to enter specialist or niche markets, open up new geographies and supply chains, or adopt new technologies such as analytical or processing equipment. Given these options and the road forward, the question then is, "why do some feed & grain companies prosper while others do not?"

We believe that one reason some businesses fail and others succeed lies in “the paradox of growth.” Over the past ten years, Chris Zook, a consultant with Bain & Co, has developed a set of ideas known collectively as Profit From the Core that offers a practical and useful alternative. These ideas are simple and logical, and, in our experience, are intuitively attractive and practically useful to firms of every size. According to Zook, there are four pillars to a sustained growth strategy:

Pillar 1: A business must have a strong, well-defined core with leadership economics in the “core of the core”

Every business has a core. Most likely it is the part of the business, which, more than any other, drives customer loyalty and firm profitability. The core is what makes your company unique and is the root of your competitive advantage in the market place. Do you know (specifically, not generally) what the core of your business is? For many feed manufacturers, they may simply say producing feed. Grain merchants may say that they are traders. However, is that really the entire core of your business model? Do you have a reputation for producing value added feed products or are you known for your uniformity and quality control procedures? Perhaps it is your quick delivery or ability to custom mix and design new feed formulations. How many discussions have you had at board level about what the core of your business is? Is your management team clear on what the core of your business is? Understanding the core is important; it is the starting point for identifying growth opportunities.

In many enterprises, management teams do not agree on the core and some have never even talked about it. By not fully identifying the core or by taking it for granted, companies can prematurely abandon the real core of the business or become involved in growth initiatives that are too far from the core, spread resources too widely and develop confusion in their organizations. An example of this was an organization in Northern Europe that started 80 years ago as a fishmeal supplier, then moved into feed, and later animal breeding, biologics and genetics. A venture in the Middle East involving the construction of turn-key plants led to the collapse of this poorly conceived business with the company being sold and restructured. Today, it is successful with a clear mission that its core is in the poultry health industry.

Feed and grain companies should identify their core business and then leverage their strength and success in that core to identify growth opportunities. Many mills and traders have multiple product lines within their core business area, such as feed for cattle, pig or poultry. It is worth examining each of these areas in detail and asking which contributes most to growth in sales and profits and to then examine why. This can be an effective way to begin to understand the core of your business.

Pillar 2: Pursue the correct adjacent moves (and avoid the wrong ones) to secure growth within the company

Businesses have many options for growth each year, but most growth initiatives fail to generate significant sales or profits. Those most likely to succeed are ones that are close, or adjacent in Zook’s words, to the core of the business. A company can achieve new adjacency growth through products or services, new customer segments, new parts of the value chain, distribution channels, business and geographies. For example, Nestlé has grown from its core business of infant formula and instant coffee to enter adjacent businesses such as pet food (adjacent in that they have similar customers, logistics, production, marketing and distribution), which has proved to be very successful.

The best adjacency strategies also leverage and reinforce the core business. For example, the ability of Nestlé to negotiate with retailers is enhanced by having another product sector, pet food, in which it owns and sells strong, high quality brands. For grain traders, it may be valuable to invest in a new commodity or a more agile supply chain. For feed companies, a successful adjacent growth strategy may be adding a line of products that include heterotrophic algae. Besides seeing an increase in immunity, a decrease in mortality and increased litter size in herds, producers who utilize feeds with this type of algae will also be able to further brand their products as value-added DHA Omega-3 enriched for consumers. Another opportunity may be incorporating a line of products marketed toward odor or dust control. As our population becomes less rural and more urbanized, the industry will need to find ways to be more neighborly and accommodate environmental regulations.

A useful way to engage in this process of adjacent thinking is to take the definition of the core you have identified for your business and then ask who else might buy these products or what else would we need to do in order to get a new customer group to buy our products.

Pillar 3: Become the best at following the customer

Consumers often forget that the food and feed industries are intertwined, and that together they are part of a larger picture, the human health industry. As professor Patrick Wall, University College Dublin, Ireland said at Alltech’s 29th International Symposium, "Your jobs are so important. If something goes wrong in the food chain, the repercussions are huge. Everything an animal eats — so do we. It takes millions of dollars and years to build a brand, but can take a few seconds to destroy it.”

With headlines dominating our newspapers each day on horse meat contamination in Europe, E-coli spinach scares in the United States and dog treats from Denver linked to salmonella, it is more important than ever to have a traceability program in place from farm to fork for both humans and livestock. A study by AMR Research, a U.S.-based international research firm, shows recalls are more common and costly than expected — expenses often exceed $10 million per recall, with companies losing twice that much. An effective traceability system could make many of these recalls avoidable. Perhaps feed companies can look at ways to improve quality control practices in the mill and ensure consistency and uniformity in every bag of livestock, poultry and pet feed. Take some time to identify parts of your state, country or region that do not currently feed your product in their operations. Why don't they? What would you have to do to change that? The answers should be a fairly long list, and this can be your portfolio of growth opportunities.

A clear example of following the customer has been the substantial investments in China by key suppliers of McDonalds and Yum Brands (KFC), which has been driven by those restaurant chains’ demands to only receive ingredients with a similar consistency, supply chain and quality as they receive in their parent countries. As food safety becomes a real consumer concern, companies building in China are likely to bring an entire supply chain of suppliers and buyers with them.

Pillar 4: Use repeatable formulas in the business strategy

The final stage in this process is to avoid reinventing your wheel. In finding and investing in adjacent growth opportunities, your firm needs to find a way to repeat its formula for success in each new market. Nestlé, for example, has built a repeatable formula based on strong brands, premium prices and wide distribution. By implementing a repeatable formula in their business plans, companies will find internally they will have more strategic clarity, speed in recognition, decision and action, lower management complexity and more focused innovation.

For your own business ask yourself - how successful have you really been to date in your feed or grain businesses? How do you serve your customers? How do you deliver your product? What are your skills in sourcing materials and inputs or service? This is the starting point for identifying your repeatable formula.

Defining the core of a company is the foundation to today’s business strategy. “The core” is what makes a company unique and is the key source of competitive advantage. While both grain and feed companies will need to continue to find techniques to reduce costs and increase the value they deliver for their producers, growers and customers, the industry must also weigh the cost of the innovation against improvements in genetics and in meeting regulatory guidelines and health concerns. As we listen to the voices of our consumers, it is even more critical to shift from the mindset of “just being in the feed/grain business” to recognizing we have a role in the human health industry that must feed an additional billion people by 2020.

Jul 14, 2013

Put Your Money to Work

Since 2008, the U.S. economy has remained generally grim as it’s teetered between periods of recession and slight uptick. Industries like manufacturing, construction and realty famously suffered, while others like technology and food weathered the storm less scathed. But one segment has consistently outperformed the rest throughout this tumultuous period in U.S. history: agriculture.

Given the strength of the industry, banks are eager to lend money to the grain segment, but according to sources at some of today’s leading ag lending institutions, they can’t find the demand. Many agriculture-related firms are taking cues from the rest of the country’s outlook and are holding on to their cash and putting off large financial moves like expansions or loan refinancing. While there’s nothing inherently wrong with keeping your liquid assets in check, bank execs argue that now may be the best time to revisit your long-range debt terms and invest some of the capital you’ve been holding onto.

Elizabeth Hund, senior vice president and division head of U.S. Bank Food Industries; Galen G. Herr, regional credit officer of Rabo Agrifinance; and Mitch Ferree, title of Regions Bank provided an update of today’s agriculture lending landscape and outlined how to best take advantage of current market conditions.

Feed & Grain: What are the general market conditions for agriculture today?

Mitch Ferree, Regions Bank: On a micro level, supplies are down after last year’s drought and the market is trying to determine if the current crop can refill some of the grain pipeline. Old crop corn and old crop beans still offer some real opportunities to sell because they're still at historically high levels, but the opportunity to price has not been nearly as lucrative, due to the expectation for a larger crop — which may or may not materialize.

Galen G. Herr, Rabo Agrifinance: The long-term outlook is positive for agriculture, due to the growing demand driven by population expansion and the developments of the Chinese and Indian economies. When the income of the people in those countries increases, it will lead to improvement in diets and greater demand for protein, which translates into greater demand for feed grain.

F&G: Has this bullish outlook translated into heightened banking activity within the ag sector?

Ferree: With agriculture being as strong as it’s been over the last three or four years, the risk profile of ag borrowers has been very good, but loan demand has been light because operators have strengthened their liquidity positions and don't need to borrow. Many in this marketplace have little to no balances on the line because the markets have allowed them to strengthen their financial statements.

Elizabeth Hund, U.S. Bank Food Industries: We’ve got a real appetite for lending to the grain industry with little demand right now. From February 2008 to February 2013, [U.S. Bank’s] loan outstandings to grain companies was down approximately 30%. As a result, banks are willing to do longer tenures, larger loans, and give aggressive pricing because they don’t have enough assets on their books. If I were in the grain business, and even if I’d had a rough year, I would still be aggressive with the banks.

The banks have cleaned themselves up, are in good positions and have unloaded troubled assets, but the economy is slow so no one is growing, hiring, borrowing or expanding — and that’s the engine that feeds the banking industry.

F&G: Are banks reluctant to lend to the grain sector after last summer’s drought?

Herr: As an ag lender, we understand the production risks aspect and understand that you can have a bad year, but if you have good management and good fundamentals, you're going to be able to rebound following a bad year.

Overall, the grain origination sector has been very stable and a widespread weather event is fairly unusual. The last time we had a drought of this magnitude was 1988, and the following year crop yields were close to trend line. We are looking for business with ag companies that have sound solvency, sound net worth, have a strong working capital position and have had a history of profitable operations during the good times. Those are the types of companies that are going to be able to weather the bad year or the short crop year.

F&G: What is your message to those on the fence about expanding or investing in business growth?

Ferree: I would want them to understand their position very well. For any kind of expansion, make sure you're putting a good business plan behind that decision. Anytime you make long-term capital purchases, it is just that — a long-term investment — and you want to make sure you are willing to take on the risks associated with that investment before depleting your liquid position.

Every operator situation is a little bit different and you've got to have a good handle on what those expansions are going to do for the operation over time. Expansion just for the sake of expansion doesn't do anybody any good; there's got to be a business case around it to help them make plans for a future generation or an income opportunity.

Herr: First, be diligent about doing a cost-benefit analysis of the opportunity to look at the financial risks, as well as the operating risks that may be associated with any type of growth or expansion. Then, bring your lender in at an early stage to get financial feedback on these opportunities and to benefit from the experience they’ve had in similar situations with other clients. Rely on lenders or other professionals as value added resources to make sure whatever business risk you’re taking with a new line or an expansion is well thought out and has a high probability of success.

Hund: Many companies are hesitant over the uncertainty of tax rates, Obamacare and the threat of a Chinese recession, but you’re never going to get cheaper money than right now. If you’re considering a long-term investment — three to 10 years —the interest rates can’t go down much further, so I’d say, ‘Do it.’

You’re not going to find a better time to borrow. In the 33 years since I started, the industry has never been more bullish. There are a lot of reasons to be conservative, but there’s also the fact that the time is right if you take a global focus.

F&G: What advice do you have for those who are not in the best financial position but are eager to borrow?

Ferree: My advice to the grain elevators is to let their banker know exactly what the situation is and the cause of the need for additional capital. If it is because of a poor decision in the past, then have a plan in terms of how you're going avoid that situation going forward.

One good thing from an elevator’s perspective is the markets have stabilized somewhat, so there's not quite as much dramatic switch up and down, which can put an elevator in a precarious position. If Mother Nature works right in terms of having a good crop, I'd say we could see some downside in this market, which would alleviate some capital needs. But, the key to any banker-borrower relationship is good communication. Banks want to understand what’s driving the issues you may have and the need for capital, and what you're going to do to help offset risk.

Hund: Banks want grain companies to be very liquid and have enough money to meet a market call anytime the market moves, which is daily. We don’t want them to be highly leveraged and they shouldn’t have a lot of long-term debt on their balance sheet because if there is a bad year and you don’t generate the cash flow you usually do, that’s going to be a problem.

I like to say: ‘You can’t control the weather, but you can manage your balance sheet.’ If you have long-term debt on your balance sheet that you need to service, the interest rates aren’t going to get any cheaper so do what you can to refinance the debt. If the pre-payment is too high, it may not make financial sense, but if you can refinance, this is a great time to refinance.

Apr 22, 2013

Behind the Scenes: Cargill AgHorizons' Hales Point, TN, River Terminal

In early 2011 Cargill AgHorizons awarded Kajima Building & Design (KBD) Group Inc. the bid to overhauled its outdated Hales Point, TN, barge-loading facility located on the banks of the Mississippi River. The plan involved expansion of its storage and handling capacity and a structural foundation capable of meeting the demands of river terminal operation. However, given the unpredictable nature of Ol' Man River, the Atlanta, GA-based design/build firm had to overcome a number of unique challenges.

KBD Group began preliminary construction in the spring of 2011; however, early into the project, the Mississippi river experienced flooding greater than in the 80-year recorded history for this area. During this time, 6 to 10 feet of floodwater engulfed the project site. As a result, the expansion suffered a number of setbacks: the design/build firm’s jobsite trailers, temporary gravel roads, a silt fence and the preliminary grading work were destroyed.

Construction was halted for weeks (during this time the site was only accessible by boat), which gave Cargill an opportunity to reconsider some of the parameters of the project. For example, the company changed the location of the office building by increasing the grading work and placing it on a higher level to avoid future damage.

After the water receded, the team re-mobilize in June of 2011.

“Our team worked closely with Cargill, Inc. to get the original existing facility cleaned up and back in working order. Cargill’s goal was to complete the facility by July 1, 2012 prior to the end of summer and fall wheat, corn, and bean harvest,” KBD Group vice president Mike Rhinehart explains, noting how all entities — subcontractors, equipment suppliers, vendors — worked diligently to meet this goal.

The riverfront location posed two challenges: variable water level and unstable soil. While weather and river level challenges vary, the installation of a solid foundation can be navigated with expert engineering.

Preparing for future floods

Since annual flooding was generally predictable at the Hales Point facility, KBD Group took it into consideration during everything phase of the design process. For example, access from the barge tower to the adjacent work platform has several levels so that the walkway can be raised or lowered based on the river level. Pits and tunnels were designed with sump pits and waterproofing membranes to protect from the rising ground water. The large pit at the receiving tower was designed with buoyancy in mind to protect from the uplift forces that would be imposed by extremely high groundwater levels. The design team analyzed historical data of the river to determine the 50-year and 100-year flood levels at this exact site.

With its location so close to the river, the site’s soil condition was not ideal.

Rhinehart explains: “To compensate for the poor soil quality, we analyzed several foundation options and determined the most appropriate system would be an array of rammed aggregate piers, known as Geopiers, placed in several separate mobilizations to allow for the construction of the different subsurface levels. We also had to use sheet piling for the construction of the deeper tunnels and pits, which required close coordination to work with the existing structures. In addition to the Geopiers, the new large bins were placed on up to 10 feet of engineered structural fill. This was required to raise their bottom elevation enough to allow for the underground tunnel and conveyor system.”

The facility required a considerable amount of soil built up to support the expansion, which in addition to an added [855,000] bushels of storage space, and included the installation of a 32-foot deep concrete pit, multiple below grade tunnels and foundations, and the demolition of two existing buildings.

The dirt work on a project of this scope would have been costly; however, a near-by landowner wanted to turn his mound-filled property into a level agricultural field.

“We were able to level the field for him and use the dirt across the street, which saved a lot of money because hauling in dirt to this remote site would have been a problem,” says Rhinehart.

Working around existing structures

Beyond the groundwork, the existing structures the expansion was being built around posed their own unique sets of challenges. To integrate all of the new and existing equipment, foundations, and structural towers, KBD Group used extensive 3-D modeling during the design process. The architectural, mechanical, and plumbing design for this project was done entirely in-house by KBD Group utilizing Autodesk Revit 2012.

To maintain streamlined coordination, the project’s structural elements, designed initially using a combination of 2-D and 3-D AutoCAD, were modeled in the main project model; pre-engineered metal buildings were integrated later.

“All equipment was modeled to ensure that it could fit into the tight tolerances of the spaces,” Rhinehart explains. “This model was critical in coordination of all of the elements. Details were key to success of the installation, as equipment had to be accurate to very tight tolerances.”

KBD Group checked every beam, every motor, every access panel during the design process to ensure the proper space had been allocated for all the elements.

“Every chute and transition from one piece of equipment to another was coordinated with the equipment vendors’ information and modeled to allow for proper fabrication and installation, addressing the complex angles and size transitions required,” he says.

In addition to the installation of additional storage and new structures, KBD Group also constructed a new gravel access road and sediment basins, which included stripping, grading, and erosion control on an eight-acre site.

On time and on budget

As with any major project, KBD Group was challenged to stay as close to the dollar amount outlined in the original contact as possible. With the help of efficient design and on-site construction coordination, any additional costs, which amounted to a 9.4% cost increase, were related to additions or unforeseen nature-related issues, such as additional Geopier foundations and Geopier casings due to poor soil conditions; owner-requested electrical additions; flood impact costs, tower structural modifications, and additional floor aeration system components.

Despite the initial setbacks, the newly rehabbed facility opened on schedule July 1, 2012.

Edit note: KBD Group Inc. was awarded the Design/Build Institute of America's Industrial Process Design-Build Award for this project.

Mar 28, 2013

'Strong' Phosphine Resistance Found in U.S. Stored Grain Insects

The lesser grain borer (Fig. 1) and the red flour beetle (Fig. 2) are two major pests of stored grain in the United States, and are often combated with phosphine fumigation. These fumigations are starting to fail, raising questions about their effectiveness. Resistance in stored-product insect pests has become a major problem in many countries, with very high levels of resistance found in some parts of Asia and Africa and, more recently, in Australia and South America. Drs. George Opit, Thomas Phillips, Mahbub Hasan and Mr. Michael Aikins have conducted studies to see whether this is true in the United States. Their results have been recently published in Journal of Economic Entomology, under the title "Phosphine Resistance in Tribolium castaneum and Rhyzopertha dominica" from stored wheat in Oklahoma.

Growing resistance

In 2009, reports of phosphine fumigation failures in the United States along with the concern caused by high levels of phosphine resistance in many countries motivated a reinvestigation into the level of phosphine resistance in the red flour beetle and lesser grain borer from six counties in Oklahoma. These field insects were tested for phosphine resistance. Nine populations of red flour beetle and five populations of lesser grain borer collected from silos, concrete bins and steel bins were tested. Insects were tested for resistance using an internationally accepted method called FAO Method No. 16. Phosphine gas concentrations in fumigation containers were verified by using a gas chromatographic-flame photometric detector (Fig. 3).

Before this most recent survey, The United Nations Food and Agriculture Organization’s Bruce R. Champ and C. E. Dyte conducted a "Global Survey of Pesticide Susceptibility of Stored Grain Pests" in 1972 through 1973. They found that about 10% of stored-product insect populations sampled in different countries contained phosphine-resistant individuals.

Another survey, simlar to the one conducted in 2009, titled "Pesticide resistance in Tribolium castaneum (Coleoptera: Tenebrionidae) and Rhyzopertha dominica (Coleoptera: Bostrichidae) in Wheat" was conducted by Larry Zettler and Gerrit Cuperus, in 1990. It found found that 1 out of 8 red flour beetle populations and 8 out of 12 lesser grain borer populations collected from 10 Oklahoma counties had phosphine resistance. The report cited phosphine control failures in grain storage structures and suggested that these could have been due either to phosphine resistance or to inefficient fumigation. Even with these findings, use of phosphine in Oklahoma had continued with no effort to document whether the resistance to this fumigant has increased since 1990.

Survey findings

The results of the 2009 survey showed that 89% (8 out of 9) of the red flour beetle populations and 100% (5 out of 5) of the lesser grain borer populations were resistant to phosphine. In fact, in one red flour beetle population and three lesser grain borer populations, at least 80% of individuals fumigated in a test to detect resistance survived the fumigation.

When a field population is 100 times or more resistant than the susceptible population, this is called “strong” phosphine resistance. When dose-response tests were conducted to determine the level of phosphine resistance in these four populations, the red flour beetle population was 119 times more resistant to phosphine. Three lesser grain borer populations, were 254, 910 and 1,519 times more resistant! It is likely that resistant populations of pest species, like these in Oklahoma, occur in other parts of the U.S.

New fumigation levels

Highly resistant population mean that the amount of aluminum phosphide tablets needed in order to properly fumigate stored grain has risen exponentially. The label rate for aluminum phosphide tablets used for space or bulk fumigations in vertical storages such as concrete silos and steel bins is 30 to 140 tablets/1,000 cubic feet, or 40 to 180 tablets/1,000 bushels of grain, respectively.

To kill the red flour beetles that are 119 times more resistant than “normal” insects, it takes fumigating with a concentration of 377 parts per million (ppm) of phosphine gas for 72 hours to kill 99% of the resistant insects. This concentration is equivalent to 15 tablets of aluminum phosphide/1,000 cubic feet. However, at least 30 tablets/1,000 cubic feet or 40 tablets/1,000 bushels need to be used to kill red flour beetles with this level of resistance because aluminum phosphide labeling recommends these minimum numbers of tablets be used in vertical storages.

In the case of lesser grain borers, which were 254, 910 and 1,519 times resistant in three different collections, concentrations of phosphine estimated to kill 99% of these individuals were 573, 2,054 and 3,431 ppm, respectively. These concentrations are equivalent to 23, 83 and 138 tablets/1,000 cubic feet, respectively. Again, at least 30 tablets/1,000 cubic feet or 40 tablets/1,000 bushels need to be used. To maintain the concentrations of phosphine gas mentioned here for three days under field conditions would be difficult due to gas loss from the storage structure, gas sorption to grain, and incomplete reaction of the tablets.

Because a larger number of tablets are going to be required to kill resistant insects, it is likely that the current highest label dose rate for phosphine tablets is no longer effective for the highly resistant populations. Resistance to phosphine discussed here applies to cylinder-based phosphine products as well.

Conclusion

Phosphine gas is an important tool for the management of stored grain pests and many other pests of durable stored agricultural products, and the occurrence of phosphine resistance in pest populations presents challenges to the continued effective use of this fumigant. The presence of highly phosphine-resistant populations of lesser grain borer and red flour beetle in Oklahoma could be an indication of the same in other parts of the United States and North America and an indication that it could develop in areas where resistance may currently not exist but phosphine is commonly used.

What is now required is a survey of key stored-grain insect pest species across the U.S. to determine the presence and extent of phosphine resistance. In addition, a national resistance monitoring program for the U.S. needs to be developed. Resistance monitoring is crucial for a number of reasons, including providing an early warning of resistance, feedback on the success of resistance management activities, diagnosis of phosphine control failures and obtaining information on the likely impact of new phosphine resistance. Resistance monitoring is an important part of keeping the proportion of susceptible individuals in a population as large as possible to ensure continued effective use of phosphine.

Also needed is a phosphine resistance management strategy, such as a rotation plan with other active ingredients or products that may allow for applying phosphine as infrequently as possible to delay the development of resistance where it currently does not exist and to destroy resistant stored-product insect populations where they exist. Research will soon be under way to determine if alternative fumigant gases (eg., sulfuryl fluoride) and residual applied long-acting insecticides (a mixture of chlorpyrifos-methyl [21.6%] and deltamethrin [3.7%]) can be used to kill phosphine-resistant grain pest populations so the use of phosphine can be preserved for the future.

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 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 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.

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 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.

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.

Jan 20, 2013

Sweeping Changes Come to OSHA's Sweep Auger Enforcement

The Occupational Safety & Health Administration’s (OSHA) roller coaster ride of enforcement policy in connection to sweep augers and bin entry has taken another major turn.

After a recent string of confusing interpretation letters issued by OSHA effectively banned the practice of employees working with sweep augers inside of grain bins without nullifying the equipment’s functionality by requiring the auger to be guarded on all sides, a ground-breaking settlement of an OSHA case against an Illinois grain company appears to have reversed that policy. The settlement, which became a final order of the OSH Review Commision in mid-January, renews the industry’s right to work inside grain bins with energized sweep augers, and provides clarity to the conditions that OSHA deems acceptable for that work.

The grain standard

The recent legal landscape about the use of sweep augers and bin entry has left the ag industry perplexed. Much of the confusion dates back to the original implementation of the Grain Handling Standard (29 C.F.R. § 1910.272). The final Grain Standard, which was published in 1987, did not include any provision to address the use of sweep augers or the conditions in which an employee may work inside a grain bin with an energized sweep auger. The final rule did, however, include a general requirement about equipment inside grain bins at 1910.272(g)(1)(ii):

All mechanical, electrical, hydraulic, and pneumatic equipment which presents a danger to employees inside grain storage structures shall be de-energized and shall be disconnected, locked-out and tagged, blocked off, or otherwise prevented from operating by other equally effective means or methods.

Varying informal interpretations by OSHA about the language in the Standard, “which presents a danger” and “other equally effective means or methods,” resulted in inconsistent enforcement by OSHA in connection with sweep augers over the years. However, starting in 2008, a series of formal OSHA Interpretation Letters shifted the dialogue at a national — and enforcement — level

OSHA’s interpretation letters

As OSHA began to scrutinize the grain industry following a rash of engulfment incidents, OSHA also began to focus more attention on the issue of potential employee entanglement in the moving parts of sweep augers. That attention was spurred in part by a letter to OSHA from an insurance agent seeking a formal interpretation of requirements related to grating/guarding on sumps inside grain bins with sweep augers.

The insurance agent’s letter described a scenario in which an employer required employees to maintain a distance of at least six feet behind a partially guarded or unguarded sweep auger. In a Sept. 29, 2008 Interpretation Letter from OSHA responding to the request, OSHA linked 1910.272(g)(1)(ii) to the use of sweep augers, and expressed the position that employees were prohibited from being inside grain bins with energized sweep augers unless the employer could demonstrate that appropriate protections were provided to prevent employees from exposure to the hazards of the moving machinery.

OSHA further stated that completely guarding the machine and a rope positioning system to prevent employee contact with the energized equipment (i.e., a leash for employees) would be effective methods to protect employees. Finally, the letter opined that an administrative policy requiring employees to maintain a safe distance of 6 feet from partially guarded and unguarded sweep augers was not an “otherwise equally effective means or method” that satisfies 1910.272(g)(1)(ii).

Shortly after OSHA issued the Sept. 29, 2008 Interpretation Letter, the same insurance agent sent a second request to OSHA for further clarification, explaining that a sweep auger could not, by design, be completely guarded because the auger has to be able to contact grain, and that the rope positioning system that OSHA suggested would be “extremely dangerous.”

This second letter specifically asked for OSHA’s interpretation as to whether an employee could be inside a grain bin with an energized sweep auger. OSHA responded to this second request with another formal Interpretation Letter on Christmas Eve of 2009, with a direct “no.” OSHA reasoned in the Dec. 24, 2009 Interpretation Letter that if the methods proposed earlier by OSHA (i.e., guarding the operating side of the auger or putting a leash on employees) were ineffective, then the agency was “not aware of any effective means or method that would protect a worker from the danger presented by an unguarded sweep auger operating inside a grain storage structure.”

Industry, congressional outreach to OSHA

The second Interpretation Letter caused considerable turmoil in the grain industry. Employers wanted to comply with the Grain Standard, but found themselves scratching their heads about how to do that. Many in the industry attributed the rejection of this long-standing practice for cleaning grain bins to OSHA’s misunderstanding regarding sweep auger operations. Indeed, OSHA rebuffed several attempts by trade associations and industry leaders to help educate OSHA about safe methods of sweep auger operations, and repeated requests for additional guidance from OSHA for how grain handlers should resolve the dilemma surrounding the use of sweep augers with employees inside grain bins.

When OSHA did not engage with the industry further, trade associations and employers solicited the help of Congress. OSHA responded with two additional Interpretation Letters regarding sweep augers responding to requests from Senator Charles E. Grassley (R-IA) and Congresswoman Kristi Noem (R-SD) on May 16, 2011 and Feb. 16, 2012 respectively.

Neither letter provided alternatives that would satisfy the “other equally effective means or methods” provision of 1910.272(g)(1)(ii), and simply reiterated that OSHA considered a sweep auger to be unguarded if the front operating side was not also covered.

Many industry representatives viewed OSHA’s interpretation letters as an indication that OSHA lacked complete understanding of sweep augers and how they are used in the industry. For example, in the interpretation letter to Senator Grassley, OSHA describes sweep augers as “fast moving” with the potential to “sweep the worker into the discharge sump … resulting in a grain entrapment.”

Although the machines often have high revolutions per minute (RPM) outputs, those RPMs drive the flighting that contacts and pulls grain, but it is wholly unrelated to the speed at which the augers move around bins, which is actually very slowly.

Extreme enforcement

Meanwhile, as the industry tried to educate OSHA about its apparent sweep auger misunderstanding and gain clarification about how to operate sweep augers in compliance with the Grain Standard, OSHA began issuing citations to employers based on the new Interpretation Letters. The Interpretation Letters, in conjunction with the surge of grain elevator inspections under the Grain Handling Facilities Local and Regional Emphasis Programs in the grain states in the United States, raised the profile of the sweep auger issue, and led to a surge of citations for a long-standing practice.

Several of these citations were challenged by employers, including one to a federal OSHA sweep auger citation, and another to a Maryland OSHA (an OSHA-approved State Plan) citation, both of which were litigated to a decision by administrative law judges. In both cases, the sweep auger citations were vacated because the judges reasoned OSHA had not proven that any employees were in a “zone of danger” or that the augers were not adequately guarded.

However, since the federal OSHA case was not appealed or taken up by the OSH Review Commission and the other case was in a State Plan state, neither decision provided a binding legal precedent on OSHA, nor did they shed light on what OSHA would consider to be “equally effective means or methods” for employees working inside grain bins with energized sweep augers.

Even though OSHA was losing the sweep auger cases in litigation, the agency continued to issue citations for employees working inside grain bins with energized sweep augers — even if the employees were kept 7 feet away from the moving parts of the sweep auger.

Employers were faced with the option of accepting a citation and facing the risk of repeat citations (with penalties up to $70,000/violation); challenging the citations and incurring legal fees; or not emptying bins in an economical or efficient manner.

A groundbreaking settlement

Attorneys in Epstein Becker & Green’s national OSHA Practice Group represented a major grain handler in Illinois who received one of these sweep auger citations. The firm dealt with an OSHA Area Director and Regional Administrator who were uniquely knowledgeable about sweep augers from personal experience in agriculture, and who were willing to work with the employer in the case to develop a set of safety principles that would satisfy the “equally effective means or methods” language of the Grain Standard.

In this case, the company did allow employees to work inside grain bins with energized sweep augers, but it also employed a combination of administrative and engineering controls to ensure that no employee was ever within the zone of danger. The law firm contested the citation, and initiated a lengthy settlement discussion with the OSHA area director and the solicitor’s office to address the citations and the overall landscape of sweep auger enforcement in the industry.

The agency ultimately agreed to withdraw all of the citations and associated penalties, and the parties were able to agree to settlement terms that would provide guidance to the entire industry about sweep auger operations. The end result was a settlement agreement that incorporated a set of 10 Sweep Auger Safety Principles, which if satisfied, OSHA would allow an employee to work inside a grain bin with an energized sweep auger.

The 10 Sweep Auger Safety Principles were sent to OSHA’s national office in Washington, D.C., where they were reviewed and approved for settlement purposes, and, according to the Area Director and Regional Administrator, could be publicized for the industry’s benefit.

10 Sweep Auger Safety Principles

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.

Practical applications

As part of the settlement negotiations that resulted in the Ten Sweep Auger Safety Principles, the cited employer also developed and submitted for OSHA’s review and approval, a specific Sweep Auger Policy that included actual, practical engineering and administrative controls the employer intended to use at its facilities. The following is a non-exhaustive list of the engineering and administrative controls that OSHA affirmatively approved as being consistent with the Ten Sweep Auger Safety Principles:

  1. Safety Handle: A handle of at least seven feet in length attached to the back of the sweep auger, that is equipped with a Dead Man Switch or Kill Switch.
  2. Attached Standard Railing: A Standard Railing mounted to the Sweep Auger with protective covering (such as snow fence) attached across the back of the Standard Railing. The size of openings in the protective covering will conform to the allowable dimensions set forth in Table O in OSHA’s machine guarding standard.
  3. Portable Standard Railing: A portable, self-supported Standard Railing set in place behind the Sweep Auger, again with protective covering attached across the back of the Standard Railing.
  4. Operator Enclosure: A portable enclosure made of Standard Railing inside of which the Sweep Auger Operator can be stationed with a Dead Man Switch or Kill Switch while the Sweep Auger is Operating. Alternatively, other electrical controls may be used as long as they shut off the sweep auger when the employee steps outside the enclosure.
  5. Operator Stand: A stand inside the grain bin mounted to the bin wall or elevated from the grain bin floor above the moving parts of the Sweep Auger, from where the Sweep Auger Operator can operate and/or observe the Sweep-Cleaning Operations. The Sweep Auger Operator shall have access to a Dead Man Switch or Kill Switch. Alternatively, other electrical controls may be used as long as they shut off the Sweep Auger when the employee dismounts the stand.
  6. Light Curtin: When it is demonstrated to be a feasible option, a light curtain may be installed with a triggering distance of seven feet around the sweep auger, which would shut off the sweep auger whenever an employee moves within the triggering distance.

Future enforcement

It remains to be seen what the agency’s enforcement philosophy will be, and whether there is consistent application of these principles in all OSHA regions. Regardless, this settlement and the corresponding 10 Sweep Auger Safety Principles reflect a major step in the right direction in the partnership between the ag industry and OSHA.

Jan 11, 2013

Cash Grain Observations

The 2012-13 growing season and marketing year will go down in history as a year of extremes. The American farmer experienced the worst drought in a half century and a second straight year of sharp price increases for grains. Along with these higher prices came higher volatility, whipsawing grain prices and straining margin accounts; and, after two years of disappointing production, basis have ratcheted up yet again to historic levels.

Not only did the drought affect how much grain was produced, it directly affected its transportation to market. Just one year after severe flooding along the Mississippi River left farm fields buried with silt and debris, the grain industry finds itself navigating some of the lowest water levels since 1988. The extremes witnessed throughout the year have exploded basis to record highs, and shaped unique regional basis trends. The following article outlines the distinctly different trends between corn and soybean cash markets and presents a basis wildcard that could offer opportunity by mid-February.

Strong Basis in Iowa

In the wake of the drought, the average U.S. spot corn basis, the difference between the cash price and the future price for corn delivered this month, has moved 13 cents higher than the same time last year during the 2011/12 marketing year, and 30 cents higher than the four-year average. Soybean basis is no exception, and on average has posted a 19-cent gain across the United States compared to the 2011/12 marketing year.

Figure 1 displays a heat map of basis changes observed December 2012 compared to December 2011. The first major change to note is that Iowa and Eastern Nebraska have enjoyed the strongest basis gains over the last year. These basis gains can be attributed to a 19% and 17% drop in corn production throughout Iowa and Nebraska, respectively. This sharp drop in production has shifted the percentage of corn grown in Iowa, which is used to produce ethanol, to roughly 69% from 56% the previous year. Meanwhile, in Nebraska, the amount of corn used for ethanol jumped to roughly 58% from 48%.

Despite weak margins, the ethanol industry continues to demand corn for delivery this month; and has resulted in stronger basis throughout Iowa and eastern Nebraska. Unfortunately, Illinois corn basis didn’t benefit as much despite also having a strong ethanol presence. This is a direct result of significantly weaker export demand, and the uncertainty surrounding a Mississippi River closure near Thebes, IL. Without stronger bidding competition from the river markets, ethanol facility bids will remain more competitive, allowing them to source their supplies without an aggressive bidding competition.

Soybeans: The River Effect

During the first portion of the 12/13 marketing year, which began on Sept. 1 2012, the pace of export sales has differed greatly between corn and soybeans — resulting in much different cash market landscapes between the two grains.

While corn sales have lagged this year, soybean export sales are running roughly 184 million bushels ahead of the pace needed to meet the U.S. Department of Agriculture’s (USDA) expectations of 1.345 billion bushels forecast in the December 2012 Supply and Demand report. Not only has the export market booked strong sales volume, but exporters have also loaded and shipped the bushels faster than anticipated. Foreign Agricultural Service (FAS) has reported cumulative export sales already meeting 88% of the USDA’s export demand forecast with 61% already inspected for shipment.

This compares to a four-year average of 70% sold and 46% shipped. Figure 3 displays the one year change in soybean basis between the 3rd week in December 2012 and the same period in 2011. This map clearly shows the impact strong export demand has had on river basis. Areas that have not been threatened by river closures, such as the lower Mississippi and the Ohio River, have experienced above average basis improvement by $.24 or more since last year. River terminals north of St. Louis experienced below average basis improvement of only $.14 cents or less due to the uncertainty surrounding river navigation. With the river at risk of closure, many elevators aren’t as motivated to bid aggressively for soybeans if a cost-effective way to ship them to the Gulf isn’t guaranteed.

River Outlook

On Dec. 17, 2012, contractors began removing the “rock pinnacles” near Thebes, IL, which has forced river closures between 6 a.m. to 10 p.m. every day. Barges have been able to pass only during the night and early morning. Removal of the most threatening rock pinnacles at Thebes, IL, is scheduled for completion around January 13, which adds around two feet of depth. Additional runoff from winter storm Gandolf is also forecast to raise the river depth to around 12.5 feet from only 3.8 feet on January 9. Considering the pace of river work, and the additional runoff from the winter storm, it looks more like we will be safe from any significant river closure until mid-February.

For a while now, basis has been depressed at river terminals north of St. Louis because of the possibility for river shutdowns. Now that the river seems navigable for at least another month, we expect to see basis rise quickly at those river facilities. The impact will not only be seen along the river, but will ripple throughout the countryside.

Figure 4 displays the impact to basis after barge rates spike $.20 and shows how a rise in transportation cost along the river is transferred along into the countryside markets. Though in Figure 4 we are observing a negative impact on basis, we believe the improving situation surrounding the river will impact the same areas in a positive way and could provide a basis selling opportunity for country elevators and producers within the Figure 4 “impact zone.”

Though the river situation is improving, and the Army Corps of Engineers is confident that there will be no Mississippi River closure; if the weather outlook deteriorates the situation could change quickly. If a dry weather pattern continues, we could easily find ourselves worrying about river closures in a month. Be wary that any basis improvement along the river could be short lived if the weather outlook once again takes a turn for the worse.

January WASDE Shifts Cash Market

Between Sept-Dec 2012 the national average cash corn price averaged $7.38, enough to slow the pace of export sales and trigger the USDA to revise their export forecast 200 million bushels lower than their previous forecast. However, according to the January World Agricultural Supply and Demand Estimates (WASDE) report, prices were not high enough to ration feed use within expectations, forcing them to revise their feed and residual number 300 million bushels higher.

In response to higher than expected demand the cash curve adjusted sharply following the report. On January 3, the U.S. average cash corn market had a $.09 carry between Spot and May delivery, but that quickly evaporated following the reports release. By the end of the day the carry only posted $.03 cents. The average U.S. cash market is now clearly moving toward an inverted market structure to draw any remaining unsold bushels out of the producer’s bins.

As corn prices move higher to curb demand in the feed sector, export sales will continue to suffer, putting pressure on corn basis at the river terminals.

The soybean cash market has already been inverted for quite some time as a result of tight supplies and strong domestic and international demand. Strong soybean export sales have supported basis strength along the river system. Soybean crush numbers have been off the chart with National Oilseed Processors Association (NOPA) reporting 157.3 million bushels crushed in November, the largest monthly total in three years. Iowa alone showed a 13% YOY increase in bushels crushed in November despite soybean production declining.

On Jan. 3, the national average carry between spot and May delivery was $(-.21) and the January WASDE report did little to change it. Demand this strong doesn’t necessarily warrant prices climbing back to the highs since much of the forecasted demand was expected to be frontloaded, but it does provide a strong argument for near-term price support at least until soybeans start coming out of the fields in South America. Look for soybeans to benefit most from any basis increases north of St. Louis since foreign export demand continues to be robust.

A Difficult Merchandising Environment

The 2012/13 marketing year has been more difficult than most for merchandisers. Not only has grain volume been sharply reduced, but common strategies of buying during harvest, storing it, and selling it later in the marketing year have also been squeezed. Figure 5 displays the national average spot corn basis calculated off the July 2013 futures contract. With basis currently sitting at exceptionally strong levels, it would appear that there is less room to capture basis improvement compared to past years. If you use last year’s maximum basis (the purple line) as a proxy for the upper target of basis appreciation, one can only expect a little over $.14 appreciation in the next six months compared to last year when we observed $.53 during the same time period. However, 2012/13 supplies are even tighter than last year, and we have only started the swing toward an inverse cash market. This suggests that we could easily trade above last year’s basis high as the futures market structure becomes more inverted.

One strategy to consider if you decided to carry unsold corn inventory into the next month, is to hedge that inventory off the July 2013 futures contract. By doing this you put yourself in a position to gain if the corn market continues to move toward an inverse structure which is typical in years when stocks are tight. However, this strategy would not work well if the corn market returns to a carry.

Despite the difficult merchandising environment there are still opportunities in the cash market, whether you find them north of St. Louis because of improving river conditions or by responding quickly to a shifting market structure. Keep a close watch on cash market movements from a national level to help identify and plan for regional opportunities.

Recently Added to Buyer's Guide

Ribbon Blenders

  • 5-cubic-foot unit features special three-piece grate designed with angled and pitched profile
  • All three sections of the grating have position sensors which interlock with the control panel, ensuring operator safety while running

Infinifeed Loop

  • Continuous feed loop system
  • Capacities available up to 1,800 bushels/hour

Loop Conveyor System

  • Can be used to fill and empty grain bins and flat storage structures or applied to feed processing and other conveying applications
  • Available in 8-, 10- and 12-inch diameters with capacities up to 10,000 bushels/hour

BioShield

  • 5-minute ELISA testing kit
  • Use a common extraction protocol for ease of use

Q-Sage Air Screen Cleaners

  • Separates grain by length and size to specifications
  • Numerous flow patterns available to accommodate each unique product and processing need

Vertical Blender

  • For reliable, gentle mixing of friable solids, abrasive materials and shear-sensitive products
  • For processing large volumes where floor space is limited

Magazine

Marketwatch: Aug, 19

US Corn Price Idx: ZCPAUS.CM

open: 6.641
high: 6.7722
low: 6.6162
close: 6.7188

US Soybean Price Idx: ZSPAUS.CM

open: 14.2373
high: 14.5071
low: 14.1683
close: 14.448

US Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 7.8458
high: 7.8708
low: 7.6159
close: 7.6658

US Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 6.903
high: 6.918
low: 6.6755
close: 6.7339