How is the elevator compensated for managing the grain?
Typically there is a per bushel management fee levied against the capacity owned by each farmer. In nearly all cases, it is levied whether or not that capacity is filled. Management fees are usually filed with warehousing authorities as “special tariffs.” Annual fees usually cover an “in and out” charge, quality assurance, insurance, taxes and other such expenses. These fees are sometimes pegged as a percent of normal storage tariff and usually fall in the range of 5 to 10 cents per bushel. What if the farmer doesn’t need the storage in any given year? In most cases the elevator will lease back the condo storage if it needs added storage capacity. Under these provisions, the farmer may lease the storage capacity back to the elevator at an agreed upon rate. However, if the farmer wishes, he or she may lease it to another farmer (subject to approval of the elevator) at any rate he or she may negotiate. Who pays the management fee in this case? The farmer is ultimately responsible for the
