Inside Iowa State: Iowa State University

March 12, 2004

Grain elevators get helping hand

by Anne Krapfl
Pulling Iowa's grain elevator companies out of the 20th century and positioning them to compete in a modern, specialty-grain, sometimes biotech-wary market is the aim of a quality management project by grain specialists at Iowa State.

Charles Hurburgh, professor of ag and biosystems engineering in ISU Extension, has been piloting the effort with Farmers Cooperative Company, Farnhamville, for nearly two years. The Odebolt elevator, one of 35 owned by the co-op, was the initial development site, with a grant from the Iowa Department of Economic Development funding the early work.

The effort has included re-writing, for the grain industry, quality standards -- known as ISO 9000 -- developed by the International Organization for Standardization. ISO 9000 targets industry and manufacturing.

"ISO 9000 doesn't speak the language of agriculture," but its certifiability and international acceptance make it desirable for ag businesses, Hurburgh said.

He started with a quality management outline developed for wheat grain mills by the American Institute of Baking and, working with the management team at Farnhamville, converted it to ISO standards. The standards define grain handling and documenting procedures -- for example, how to track and grade the quality of every truckload of incoming grain -- and ongoing employee training. They include statistical controls for measuring their work against federal standards.

The Odebolt elevator passed its first ISO audit last summer and has a final audit coming up in July. The company has expanded the program to four other elevators.

"Initially, our reason for going through the process was to be able to participate in markets that offered higher value. The nature of the commodity business is extremely tight margins," said Tim Sullivan, grain operations manager at Farnhamville. "The internal benefits already are enough to justify our efforts."

"We unearthed lots of places where 'that's the way we've always done it' isn't the most efficient way to do the job," Hurburgh said. "For every $1 invested in quality management, we have captured $2 in internal operating efficiencies, which is a little ahead of the national average for ISO-certified companies."

Hurburgh and Sullivan said Farnhamville Cooperative will be ready to sign some specialty grain contracts within a year or two, largely because of its quality management efforts. Negotiations with domestic buyers already have begun.

"The documentation and standards we've brought in to essentially 'keep score' on the internal operations of the company will allow it to capture biotech markets in the future," Hurburgh said.

"Our strategy will be to handle end user-specific grains with the same efficiency we're enjoying with our commodity corn and soybeans," Sullivan added. "Up to this point, 'added value' has tended to get eaten up with added costs."

Part of Hurburgh's funding agreement with the IDED requires him to produce a quality management template that other Iowa grain elevators can use. He has started to work with the Stateline Cooperative in Burt and the Des Moines-based Heartland Co-op.

His idea to convert the American Institute of Baking system to ISO standards for improved operations and management participation is catching interest across the grain industry.