Development of grain elevators and their vertical integration in Kansas

Abstract

This paper analyzes the development process of grain elevators in Kansas, focusing especially on the time-spatial competition and grouping of elevator companies. Originally constructed by flour milling companies, elevator construction boomed in the 1870s as railroads expanded to the west. Then, in the 1920s, many farmers' cooperatives built elevators. The first elevators were small with capacities of 5,000 to 15,000 bushels and were constructed of wood with sheet metal for protection against weather and fire. Wooden elevators gradually changed to concrete ones in the 1930s, and the storage capacity expanded to 150,000 to 450,000 bushels. Known as the Cathedral of the Plains, a grain elevator in a rural area served as a market and gathering point for grains produced within a 5- to 10 -mile radius. Each elevator also supplied fuel, fertilizer, seed, chemicals, feed, and daily necessities to farmers. However, only a few elevator companies established in the 19th century have survived through the consolidation of the grain business. In the late 1950s, the large grain elevators with over 1 -million bushel capacity, which are called terminal elevators, were constructed with governmental subsidies. Some elevator companies that own huge terminal elevators, in places such as Abilene, Salina, Hutchinson, and Wichita, emerged on the old Chisholm Trail. Collingwood and Garvey are examples. The companies constructed terminal elevators and gathered grain from more than 100 elevators that they had built or purchased in rural Kansas and Oklahoma. Although the names can be seen on the walls of elevators, Collingwood was taken over by ADM in 1987, and the last terminal elevator of Garvey was sold to DeBruce in 1996. Major grain companies had elevators and their own service areas in rural areas, as the Bunge Corporation had service areas in southwest Kansas, and Continental Grain in northwest and central Kansas in the 1950s and 1960s. However, major grain companies concentrated their attention more on terminal elevators and acquired them in the 1970s and 1980s. Major grain companies consequently integrated grain marketing vertically. For example, the Salina terminal elevator owned by Cargill, the world's largest grain company, has a capacity of 32 million bushels and stores grain from contracted elevators within a 90-mile radius.