Upgrading grain elevators to facilitate multicar rail shipments

Stephen Fuller, Kerry Litzenberg, Larry Makus and Hector Viscencio
Additional contact information
Stephen Fuller: Department of Agricultural Economics at Texas A&M University, Postal: Department of Agricultural Economics at Texas A&M University
Kerry Litzenberg: Department of Agricultural Economics at Texas A&M University, Postal: Department of Agricultural Economics at Texas A&M University
Larry Makus: Former Research Associate at Texas A&M University, Postal: Former Research Associate at Texas A&M University
Hector Viscencio: Assistant Research Scientist in the Department of Agricultural Economics at Texas A&M University, Postal: Assistant Research Scientist in the Department of Agricultural Economics at Texas A&M University

Agribusiness, 1986, vol. 2, issue 2, 247-263

Abstract: This article provides an investment analysis of the decision to upgrade grain elevators to multicar grain loadout facilities subject to changes in rail rates, levels of wheat production, and competitors' price response. The motivation for additional investment comes from railroads offering shippers more attractive rail rates for multicar shipments. The analysis is used to evaluate the decision to upgrade a set of selected Plains elevators and identify the effect of varying investment levels, various levels of rail rate reductions, small and large annual grain production levels, and a declining elevator gross margin on return to upgrading investment. The analysis uses a spatial model to calculate grain flows at selected elevators as a result of rate changes and then uses a computerized budgeting routine to evaluate the investment decision.

Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:2:y:1986:i:2:p:247-263

DOI: 10.1002/1520-6297(198622)2:2<247::AID-AGR2720020209>3.0.CO;2-S

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