Grain and Field Beans

SIC 5153

Companies in this industry

Industry report:

This industry classification is comprised of establishments engaged in buying and/or marketing grain, dry beans, soybeans, and other inedible beans. Also included are country grain elevators, terminal elevators, and other merchants involved in marketing grain. Establishments primarily involved in the wholesale distribution of field and garden seeds are in SIC 5191: Farm Supplies.

A total of 7,166 establishments with roughly 53,400 employees overall were classified in this industry in 2009. The leading states in 2009, as measured by number of establishments, were Iowa and Illinois with 761 and 715 establishments respectively, followed by Kansas with 523 establishments, Minnesota with 492, and Nebraska with 457 establishments. North Dakota, Texas, and Ohio each had more than 200.

Worldwide, the grain trade peaked in 1979 at 240 million metric tons. During the 1980s and early 1990s, however, both U.S. grain buyers and sellers suffered from market stagnation. Foreign policy decisions led to grain embargoes restricting the ability of U.S. merchants to peddle grains in some overseas markets. In 1992, Fortune reported that approximately half of the country's grain elevator and terminal capacity had been idled.

By the mid-1990s the condition of the industry had improved. The grain market of 1996 was the strongest since the 1970s, according to The Wall Street Journal. The failure of the winter wheat crop left supplies in storage at low levels, and high demand from importers like China pushed corn and wheat prices to record highs that year. The booming prices caused financial disaster, though, for farmers and elevators that had signed hedge-to-arrive contracts. Countrymark Cooperative Inc. of Indiana was embroiled in court cases as a result of these instruments.

The Federal Agricultural Improvement and Reform Act of 1996, or the so-called "freedom to farm" legislation, phased out farm subsidies over a seven-year period. It allowed farmers to grow whatever crops were profitable on the market, rather than restricting what they could plant or forcing them to leave some of their land unplanted. Grain storage facilities anticipated changes to their operations to meet the new demands of different amounts and types of crops that would come to them.

Grain markets were volatile in the late 2000s. Corn prices skyrocketed as corn 's use for ethanol production expanded rapidly during the latter 2000. Although prices, which peaked in 2008, declined somewhat in 2009, other factors, including a global recession, continued to impact grain prices in the open market. Although the overall grain market was marked by volatility in the late 2000s and into the early 2010s, supply concerns, which plagued the industry earlier in the decade, had eased off.

Within the global grain trade, the United States remained the leading exporter of wheat and soybeans, exporting 24 million tons and 40.7 million tons, respectively, in 2009-10 season. The United States also led all countries in exports of corn and sorghum, with 50.3 million tons and 4.2 million tons. In addition, the United States was the fourth largest export of rice (behind Thailand, Vietnam, and Pakistan). The majority of imports and exports came through south Louisiana ports.

Bumper crops of corn and soybeans in 2010 were causing transportation concerns and driving the cost of that transportation higher. The cost of transporting grain by rail in October 2009 had roughly doubled compared to October of the previous year.

Industry leaders included Archer Daniels Midland Co. (Decatur, Illinois); Cargill, Inc. (Wayzata, Minnesota); Bunge North America, Inc. (St. Louis, Missouri); and CHS, Inc. (Inver Grove Heights, Minnesota). Based on annual sales, Cargill led the way with $116.6 billion in revenue in 2009. Archer Daniels Midland (ADM) had sales of $61.7 billion in 2009. Bunge Limited, the parent company for Bunge North America, totaled $41.9 billion. CHS had 2009 revenue of 25.7 billion.

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