Survey of Manufacturers: Improved outlook for grain storage
May 01, 1993
by Teresa Acklin
Asia, the Middle East and Latin Am- erica have proved to be the “hot markets'' for grain storage and handling equipment in 1992, according to executives of several metal storage bin manufacturing companies interviewed by World Grain. The pace of North American grain storage sales has picked up, due largely to requirements of the huge 1992 maize crop in the United States. Market opportunities have been more modest in Europe, Africa and Australia, and sales into eastern Europe and the republics of the former Soviet Union have proved difficult. But on balance, the grain storage equipment business has improved during the past year over previous years.
Educating current and potential clients about modern grain storage equipment and technologies and adapting products and services to local cultures and requirements were mentioned as significant challenges facing manufacturers, and lack of capital in developing countries, where the need for storage is the greatest, was singled out as the largest barrier to the spread of modern storage technologies.
World Grain posed three questions to industry executives: What are the prospects for the grain business in general and the grain storage business in particular in 1993 in the major grain producing regions? What is the greatest challenge facing suppliers of grain storage equipment in the 1990s? What are the major barriers to realizing proper grain storage in the less developed countries?
Comments of the executives on these questions follow.
STATUS OF THE GRAIN INDUSTRY
North America. “Prospects in North America look good, especially because of the bumper harvests in 1992,'' said Mitch Golleher, international sales manager, Grain Systems, Inc. (G.S.I.), Assumption, Illinois, U.S. “Carryover of the 1992 crop will demand more storage in 1993.''
Larry L. Groce, vice-president, international, of the Grain Systems Division, Butler Manufacturing Co., Kansas City, Missouri, U.S., agreed, stating, “We expect the combination of 1993 grain production, carryover stocks and economic conditions, including the cost and availability of money, to be favorable to overall grain storage demand in North America and also in South America, the Middle East and Asia, while medium to lower demand is expected for Europe, eastern Europe, Africa and Australia.''
“The United States will experience a good to excellent year as the large 1992 harvest is processed and stored,'' said Charles Weikel, general manager, Agricultural Building Company (A.B.C.), Mendota, Illinois, U.S.
Carmen R. Wenger, president of Chore-Time/Brock International, Milford, Indiana, U.S., also foresees growth in U.S. grain storage equipment sales in certain areas, despite the maturity of the market. But, Mr. Wenger cautioned, the expansion probably will not be broad based.
A.J. Cheesman, president York Manufacturing Co., York, Nebraska, U.S., indicated that he sees storage demand prospects in North America, Europe, Australia and the Middle East as being consistent with the activity of the past few years.
“There will be, of course, some new commercial projects, but it will remain largely a replacement and upgrading market,'' said Mr. Cheesman.
Europe. Opportunities for grain storage expansion in Europe are seen as more limited.
“Western Europe will remain internally focused on the absorption of the changes resulting from three major events affecting the European grain business: 1 the consolidation of producers and processors in the European Community, 2 Germany's unification, and 3 increased sales of processed foods to eastern Europe,'' said A.B.C.'s Mr. Weikel. “As a consequence, there will be few new opportunities in the grain business, except those that significantly improve efficiency or product movement to the east.''
International exchange rates conspire against American suppliers to the European market, according to Mr. Golleher of G.S.I. “My main concern is Europe, because of the very strong dollar,'' Mr. Golleher said. “This will be a tough market to conquer not only because of the strengthening dollar, but also because of some local manufacturing facilities opening their doors again.''
Eastern Europe and the republics of the former Soviet Union hold promise as markets for grain storage equipment, but so far most activity has been connected with particular projects.
“Most eastern European countries, and especially the republics of the former Soviet Union, have a need to increase grain production,'' said Luca Celeghini, managing director, Ballarini Socama S.p.A., Reggio Emilia, Italy. “They have a great problem with obsolete storage plants. New facilities will be required where new areas are converted to the cultivation of cereals and oilseeds. Existing facilities will have to be improved. And new storage facilities will be installed when new processing plants are erected,'' Mr. Celeghini asserted.
But, while the potential is great, the results so far have been meager. “The majority of opportunities for international involvement will remain in specialized one-at-a-time projects to improve the agricultural infrastructure,'' said Mr. Weikel. “Often, these projects will be undertaken by the larger Western companies or governments.''
Working in eastern Europe entails risk. “Eastern Europe is opening up more and more, but its stability is still a big question,'' said G.S.I.'s Mr. Golleher.
South America. “Led by Brazil, South America will experience significant growth and improvement in grain processing, storage and transportation,'' according to Mr. Weikel. “Expect increasing investments in agricultural infrastructure including elevators, transportation and communications throughout the 1990s.''
Mr. Cheesman was equally encouraged. “South America, eastern Europe, Africa and Asia all appear to be poised for considerable growth opportunities that should begin to materialize this year and continue for several more years,'' he said.
“South America looks pretty good, as usual, because of the continued interest in American-made goods,'' said Mr. Golleher.
Australia. Exports of grain storage equipment to Australia are expected to be very limited. “Australia tends to be a tough market because of ever-increasing freight rates and also because of local manufacturers,'' said Mr. Golleher.
Africa. The market for grain storage equipment in Africa is dependent on outside financial assistance. “African opportunities look good because of the World Bank's solicitation of loans in some of the under developed countries,'' said Mr. Golleher.
“Some developing countries such as Egypt and Ethiopia, with good economic relations with the developed countries, will require a new flow of basic investment to agriculture,'' said Mr. Celeghini of Ballarini Socama. “And some developing countries with potential internal resources for investments, such as Algeria, Morocco and Tunisia, will be called on by their people to convey investment capital to basic infrastructure improvements, such as storage plants,'' Mr. Celeghini asserted.
Middle East. The Middle East remains a very good market for grain storage. Mr. Golleher summed up the attitude of suppliers, stating, “We've always felt good about the Middle East, and will continue to focus on this market.'' Asia. Considerable attention has been directed toward Asia.
“Asia will continue to focus on issues relating to its increasing population,'' said Mr. Weikel. “These include the need for larger and more efficient grain storage facilities.'' G.S.I.'s Mr. Golleher said, ‘‘We will concentrate on Asia, as usual, because of our strong dealer network in that region.''
CHALLENGES FOR THE 1990s
A major challenge facing grain storage manufacturers involves adapting products and services to other cultures and to the differing requirements of various foreign markets, according to Rodney Carpenter, sales engineer, Chore-Time/Brock International, and Harmon Towne, Brock's manager of engineering.
“The greatest challenge facing the industry in the 1990s,'' according to Mr. Cheesman, “is to assimilate major market forces into a strategy flexible enough to meet current requirements and future demands. Rapid changes in demographics of grain demand are coupled with continual changes in the world population patterns. Local infrastructures and political considerations will require more customizing to incorporate local equipment into export projects. In addition, creative financing arrangements will be required to meet storage demand in Third World countries,'' Mr. Cheesman said.
“Probably the greatest challenge facing suppliers of grain storage equipment is the need to teach,'' asserted Mr. Golleher. “Suppliers of grain storage equipment often tend to concentrate purely on sales of steel, rather than on qualifying the customer as to his basic needs and requirements.
“As I have witnessed personally, especially in Third World countries, much of the grain storage out there is not being utilized properly,'' Mr. Golleher continued. “In some countries, as much as 60% of the grain harvested still ruins because of the lack of storage, or because there is no storage at all. Perhaps in some of these countries, it would be to our benefit not only to sell the steel but also to do more to educate the people in proper methods of grain handling and in grain storage management.''
A.B.C.'s Mr. Weikel said another challenge is to provide continually improving service and products to the large multinational grain processors, in part because the companies provide models for smaller concerns in developing countries. “Improved service means much more than just delivering a responsive body at the end of a phone line, it also means demonstrated quality control programs, innovative engineering and design, and a willingness to go anywhere at any lead time to provide support or installation,'' he said.
Finances, education, infrastructure and government-private sector friction were cited as barriers that must be overcome to provide producers and agribusiness in the developing countries with the grain storage technologies they require.
“The primary barrier to proper grain storage in developing countries is economic in nature and includes the availability of affordable financing,'' said Butler's Mr. Groce. “Proper grain management training for producers and the grain handlers and processors of grain also could be of help, but without proper grain storage equipment, the overall results would be limited,'' Mr. Groce asserted.
“Developed nations such as the U.S. have provided low-cost, medium- to long-term loans to their own grain producers to purchase and install adequate on-farm grain storage facilities in years when grain production was rapidly increasing and installed grain storage capacity was not adequate to properly store the crop,'' Mr. Groce continued. “This program could be made available in the developing countries, and import barriers could be reduced to allow market access for imported grain storage systems, thereby reducing post-harvest losses and increasing the overall food supply,'' he said.
“The major barrier to proper grain storage in less developed countries remains the lack of a complete and efficient agricultural infrastructure,'' said Mr. Weikel. “This means not only transportation, processing, bulk handling and storage, but also communications and markets. Overcoming these difficulties requires relatively free markets, incentives and consistent government policies,'' Mr. Weikel explained.
“The key thing that the government and industry must continue to do is to encourage the development of markets and sources of financing for the large capital investments necessary to improve agricultural infrastructure,'' Mr. Weikel concluded.
“In some developing countries, officials will not listen to people who know and understand proper grain storage,” said Ed Benson of Chief Industries, Inc., Grand Island, Nebraska, U.S. Indicating that deeds speak louder than words, Mr. Benson suggested that there should be a source of funding to facilitate the construction of storage pilot projects that could demonstrate the effectiveness of available storage equipment and technologies.
Other impediments to grain storage in developing countries include a lack of information from some markets as well as limited educational opportunities for local operators in grain facility management, grain drying and aeration, and other basic grain storage techniques, according to Chore-Time/Brock's Mr. Carpenter and Mr. Towne. “Preparation of multilingual technical information and organizing multilingual regional training programs both help in overcoming these hindrances,'' stated Mr. Carpenter and Mr. Towne.
“Lack of capital along with incomplete understanding of grain storage techniques and equipment are the two biggest barriers to proper grain storage,'' said Mr. Cheesman. “Government and industry must work together to design storage facilities that meet the local requirements for native grains and the existing transportation and processing infrastructure,'' Mr. Cheesman explained. “Industry must patiently adapt and not expect to impose the large-scale facilities used in developed countries onto economies that cannot yet support them. Staged development will be the key, and government will need to support it with creative approaches to financing.
“The industry as a whole must strive to do a better job of educating the world on the economics and availability of storage technologies and equipment,'' said Mr. Cheesman. “The economic considerations particularly need to be publicized throughout the world. The value of grain saved through proper storage will provide a rapid payback on the investment. In areas with the highest loss ratios, payback can be realized in the first two harvests.
“The most efficient and effective steps are to first develop modern on-farm production storage using the concept of decentralization with relatively small facilities,'' Mr. Cheesman continued. “As transportation and processing infrastructure develop, the storage will evolve according to a more centralized concept with larger facilities.''
The industry has a responsibility in helping clients purchase their products, according to Mr. Celeghini. “The lack of financial means limits most development programs,'' said Mr. Celleghini. “Also, the international banking system is strained by the amount of past-due loans. This has prompted developing countries and those with whom they do business to explore alternative solutions such as barter, countertrade, local manufacture of part of the plant, etc. Such solutions can be applied only in specific cases. It is up to the supplier to find out, case by case, what if any alternative form of financing a project is acceptable,'' Mr. Celleghini said.
“Our governments are at the moment exchanging agricultural ideas with less developed countries in hopes of enhancing their interests in certain fields,'' said Mr. Golleher. “The problem to me appears to be the failure of our government to involve those of us in the industry who know something about solving these problems. Perhaps our government's cooperation in involving us will stop some of the storage problems before they are problems. The government's reluctance to involve us will only increase the problems.''
Grain storage equipment manufacturers see 1993 as a good year for their businesses. “Butler's 1992 grain bin shipments were up nearly 50% over 1991,'' said Mr. Groce, “and 1993 is starting out at an even stronger pace than last year. With reasonable conditions (crop, carryover, economic conditions and access to markets) for the balance of the year, we could have back-to-back good years for grain storage.''
Most other manufacturers would concur.
But most urgent is the surmounting of the financial barriers preventing developing countries from acquiring the grain storage technologies they require, the executives asserted. Few development issues can be considered more important. Only when what is produced is protected will the world take the necessary next step in ensuring that food is accessible to all in need.UPDATE: BUTLER MANUFACTURING CO.
UPDATE: CHORE-TIME/BROCK INTERNATIONAL
|(partial list of project completed or started in 1992)|
|C.I.A.S.A.||Mexico||Industrial corn processing||162,000||37|
|A-S Agri||Saudi Arabia||Wheat/barley storage|| 24,000||30|
|Alesayi Co.||Saudi Arabia||Wheat/barley storage|| 47,000||40|
|Eun Sung Silo Co.||Korea||Rice/maize storage|| 18,000||60|
|Caddo Trading||Syria||Soybean processing|| 16,500|| 5|
|C.P. Group||Thailand/Indonesia/China||Feed mills|| 30,500||25|
|P.T. Comfeed||Indonesia||Feed mills|| 16,000|| 8|
|Dako||Turkey||Grain storage|| 14,000||17|
|Resintech Engineering||Malaysia||Feed and flour mills|| 26,000||14|
| (partial listing of 1992 projects)|
|Malayan Flour Mills||Malaysia||72,500||25|
|Farmers Feed Supply||Belize||9,500||8|
|Harinas del Istmo||Panama||5,086||4|
Behlen Manufacturing Co., Columbus, Nebraska, U.S., is currently assisting AGRIASIA of Taipei in the expansion of a rice drying and storage complex owned by San How Rice Co. of Taiwan. The existing facility has 10 7-m-by-16-m Behlen hopper bins with a total storage capacity of 4,200 tonnes. The capacity of the receiving and handling equipment is 100 tonnes per hour.
The expansion under way will increase the storage capacity of the facility by 7,560 tonnes.Update: York
In 1992, YORK began work on a 450,000-tonne storage project near the Persian Gulf. The project consists of 30 sites. Each site will be capacle of temporarily storing 15,000 tonnes of imported wheat. The project should be completed by late 1993.
Major projects completed during the past year nearly doubled the 1991 level, and even greater growth is expected in 1993. Projects completed in 1992 were in Mexico, Bolivia, Singapore, South Korea and Nigeria, primarily related to feed mills and flour mills.UPDATE: AGRICULTURAL BUILDING CO. (A.B.C.)
UPDATE: BALLARINI SOCAMA S.P.A.
|(partial listing of major 1992 projects)|
|Egypt||1.2 million bushel storage (32,700 tonnes)|
|Venezuela (Int'l Multifoods)||90,000 bushel storage(2,500 tonnes)|
|Jamaica||80,000 bushel facility (2,180 tonnes)|
UPDATE: GRAIN SYSTEMS, INC., 1992 PROJECTS
|(list of the most important 1992 storage projects) |
|Country||Site||Client||Scope of Storage||Storage capacity (m3)|
|Qatar||Um Said||Qatar Cereal||Barley long-term storage. Extension of||24,000|
| ||Corp.||existing 15,000-tonne storage already|
| ||erected by Ballarini Socama.|
|China||Jangsu||F.A.O.||Storage silos for paddy drying plant||10,000|
| ||(also supplied by Ballarini Socama).|
|Germany||Barby||Lurgi-Cerestar ||Wheat storing section of a huge starch||7,000|
|Republic||Nagua||Consorcio Arrocero||Storage and processing silos for paddy ||12,000|
| ||El Pozo||drying plant and rice mill.|
|Italy||Oristano||Buhler||Harbor wheat storage plus silo end||45,000|
| ||section of annex flour mill.|
|Italy||Udine||Nestle||Process bins for bird feed mill.||3,000|
|Italy||Teramo||Sagem||Process bins for feed mill.||8,000|
|Italy||Alessandria||Italfiocchi||Storage and process silos for feed mill||8,000|
| ||for horses and domestic animals.|
|Italy||Viterbo||Coop Produttori||Barley storage silos for brewery.||20,000|
| ||Agricoli Riuniti|
|Silos y Bodegas||Mexico||Rail receiving||1,000 tph||60,000|
|Alimentos del Norte||Dominican Republic||Vessel receiving|| 100 tph||15,000|
|Danbrew||Thailand||Brewery|| 60 tph||9,000|
|Great Wall||Taiwan||Storage|| 80 tph||8,000|
|Ismailia Poultry Co.||Egypt||Storage|| 30 tph||2,000|
|Molino Santa Isabel||Panama||Rice mill|| 30 tph||2,800|
|Canto S.A.||Panama||Feed mill|| 40 tph||1,600|
|Hermanos Palacio||Panama||Rice mill|| 35 tph||9,000|
|Molino Doferra||Panama||Rice mill|| 30 tph||2,400|
|Molino Tolerique||Panama||Rice mill|| 40 tph||3,000|
|Purina||Philippines||Feed mill|| 45 tph||2,000|
|San Miguel Corp.||Philippines||Feed mill|| 75 tph||5,000|
|Pure Foods||Philippines||Wheat and maize|| 50 tph||3,000|
|Julu Feed Mill||Philippines||Storage|| 75 tph||2,300|
|Rizal Poultry||Philippines||Maize storage|| 50 tph||1,400|
|Nenita Farms||Philippines||Maize storage|| 50 tph||1,150|
|Nest Farms||Philippines||Maize storage|| 50 tph||1,300|
|JBC Snack Foods||Philippines||Maize storage|| 50 tph|| 500|
|Nutritive Snacks||Philippines||Maize storage|| 50 tph||2,000|
|Bina Satwa||Indonesia||Feed mill|| 40 tph||4,000|
|Hainan Feed Mill||China||Grain storage|| 100 tph||6,000|
|Shandong Feed Mill||China||Grain storage|| 100 tph||6,000|
|Humberto Diaz||Mexico||Grain storage|| 25 tph|| 500|
|Granja San Carlos||Mexico||Feed preparation|| 40 tph|| 500|
|Concentra Consorcio||Mexico||Feed preparation|| 100 tph||6,000|
| Agro-Industrial Alivale||Mexico||Feed|| 40 tph|| 500|
|Ernesto Aceves||Mexico||Grain elevator|| 100 tph||10,000|
|Gilbert and Sons||England||Farm|| 100 tph||1,200|
|Griffiths and Son||England||Farm|| 100 tph||1,200|
|Ozlem Feed Mill||Turkey||Storage|| 80 tph||2,800|
|Cankiri Untas Flour||Turkey||Storage|| 100 tph||6,700|
|Cozimak||Turkey||Storage|| 100 tph||3,000|
|Unpas Uncular AS||Turkey||Starch|| 80 tph||5,000|
|Sunar Misir||Turkey||Starch|| 80 tph||2,000|
|Hatap Flour||Turkey||Storage|| 50 tph|| 600|
|Dedeoglu Flour Mill||Turkey||Storage|| 50 tph||1,000|
|Sapekaa Seed||Turkey||Storage|| 50 tph||1,000|
|Yaltirlar Tarimsan||Turkey||Elevator|| 60 tph|| 850|
|Paymar AS||Turkey||Storage|| 60 tph|| 800|
|Abalioglu Feed Mill||Turkey||Storage|| 100 tph||5,000|
|Unsa Flour Mill||Turkey||Storage|| 100 tph||1,500|
|Birsan AS||Turkey||Flour mill|| 100 tph||12,000|
|Granja El Pilar||Guatemala||Feed mill|| 35 tph||2,000|
|Co-Op Madre y Maestra||Guatemala||Poultry feed||500|