ND town's grain elevator to face new facility

HEBRON, N.D. -- Southwest Grain already casts a long shadow over Hebron, N.D., from the west.

Soon, a long shadow will appear from the east if ADM-Benson Quinn builds a new grain facility in Hebron as big as the one it has in Hensler, as proposed.

Between the Goliaths east and west, two local elevators in Hebron will be like small Davids facing off a pair of giants.

In this story, though, the giants aren't playing for the same team.

Who still is standing in the end will depend on financial endurance and who adapts fastest to change.

At Hebron Farmers Elevator, where the boots of co-op members have worn treads into the wood steps out front, manager Bill Aasheim doesn't shrug off the challenge -- he knows it'll be a tough one.

"We'll give it a shot and give it the best we can," he says, in an office where a framed 1915 Farmers' Union charter is yellowed with age but still legible. "Nobody's going to give up with this thing."

For the Farmers Elevator, there's nearly 100 years of history in the balance.

High-capacity facility

ADM-Benson Quinn plans to be in operation in 2012, so there's a little time to get ready.

The company has Morton County, N.D., zoning approval for a 195-acre site on Old Highway 10 outside Hebron, enough for towering concrete silos and a round track to load 110-car grain trains bound down the BNSF Railway mainline to shipping ports.

Shawn Schaff, manager of ADM-Benson Quinn's Hensler site, said his company isn't ready to divulge its plans for Hebron.

The company is a subsidiary of Archer Daniels Midland, an international food and energy giant that reported $2 billion in net earnings last year.

It has deep pockets and a big appetite for grain.

Both Hebron Farmers Elevator and Modern Grain, a few blocks apart on Main Street, have sold grain to ADM-Benson Quinn to fill that immense appetite.

Modern Grain co-owner Tim Meuchel says he sells all his grain to them, but those sales will be a thing of the past when they have their own 1.8 million- bushel-facility less than a mile from his front door.

Meuchel says there isn't enough grain in the Hebron area to supply ADM-Benson Quinn's need for about 11 million bushels to operate efficiently. He gets about 1 million bushels and Aasheim, at Farmers Elevator, says the union co-op handles about three-fourths of a million bushels.

"I know the bushels grown around here and there's not enough to make that (11 million) happen. It'll have to come out of the Mott-Regent (N.D.) area," Meuchel says.

For his part, he hopes to increase his sunflower handle, which has grown to about 20 million pounds a year.

"We're going to have to do something. There's competition all over. This is just another challenge," he says.

Surviving competition

For two decades, the Hebron elevators have survived the competition of Southwest Grain with 2.6-million- bushel capacity headquartered in Taylor, N.D. It's 25 miles away and enough miles between to keep some grain business at home.

Southwest is part of CHS Inc., another commodity, processing and energy giant with a reported $502 million in net earnings last year.

It is the biggest of the big grain facilities west of the Missouri River and in the top 25 of all licensed grain elevators in the state.

Jim Bobb, Southwest's grain division manager, says he buys a "little grain, not a lot" out of the Hebron elevators, and that from the producers' perspective, there's a need for more 110-car grain trains and elevators sized for that kind of haul.

"With niche crops, (canola, sunflowers, beans) farmers are growing everything. They (Hebron) should be able to get in between us," he says. "Everybody looks at the negative, but I don't see it that way."

Choices

Producers coming up from the Mott wheat country will make a left turn or a right turn on the Interstate, depending whether they choose Southwest in Taylor or ADM-Benson Quinn in Hebron.

Bobb says distance only is one factor in choosing that right- or left-hand turn.

Southwest Grain is a cooperative, and members share profits.

The elevator currently is paying out $6.8 million in patronage to its members for their business last year, an average dollar return of $2,655 per member.

Most of the members' earnings are withheld until they are 70 years old, a kind of retirement bonus that can amount to hundreds of thousands when it's time for members, or their heirs, to cash out.

These are close to the largest dividend checks in Southwest's history, part of an upward trend for the past three to four years, Bobb says.

ADM-Benson Quinn doesn't pay year-end dividends on profits, but its day-to-day grain price is higher than Southwest's -- 20 cents a bushel more for 14 percent protein wheat in Hensler recently.

Delane Thom, general manager of Southwest Grain, says the region's grain producers soon may have yet another choice.

New Salem (N.D.) Farmers Union Elevator will ask its members whether they want to merge with CHS Inc. and build a $7 million facility a quarter mile east of the existing elevator on the south side of town.

The new facility would have in excess of 1 million bushel storage and round track to load out the 110-car super grain trains that BNSF Railway prefers to the small sections older style rural elevators can handle.

Whether ADM-Benson Quinn builds in Hebron, about smack in the middle between Southwest Grain in Taylor and a new terminal in New Salem, isn't an issue, Thom says.

"So much is rumored, but we'll do what's right for our company," Thom says. "We intend to move forward."

At Hebron Farmers Elevator recently, it's near noon and the guys are heating hotdogs for lunch in an electric frying pan.

The smell adds a homey ambience to the elevator, where four generations have kept the Farmers' Union spirit alive.

"This is a good elevator. People like coming here. They're treated fair," Aasheim says. "But it's a psychological thing. People think bigger is better."