Purchasing Grain at a Country Elevator — Part 3

MikeM
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In Part 1 & 2 of this article, we explored some of the complexities involved in purchasing grain from farmers at a country elevator, including farm splits, quality discounts, grain contracting, storage, unpriced contracts, and ticket / contract advances.

In Part 3, we’ll cover additional aspects of the grain purchasing process, focusing on:

  • Checkoff / Assessments
  • Freight
  • Fees 

Checkoff / Assessments

Checkoff / Assessments are 3rd party charges that are typically collected when grain is initially delivered.  They are typically paid to 3rd parties such as government agencies or quasi government agencies, like commodity boards. These funds can be used to pay for things like crop protection programs and research.

There are a number of nuances to how assessments may be collected, all of which we support.

  • The ability to charge based on cents/dollars per unit, or percentage of the purchase price.
  • The ability to control which discounts maybe included to compute the total units or total value of the grain before the assessment is charged. 
  • The ability to charge based on the place where the grain was grown (which can vary by load) or charge based on where the grain was delivered to. 
  • The option to include or exclude the assessment from the value used for any tax computations. 
  • The ability to exempt certain producers or secondary grain dealers from these charges.
  • The ability to specify charges by commodity, and exclude certain grades of products from assessment.
  • The ability to accrue charges on every transaction, and then report and pay the charges periodically.
  • The ability to track both the receipt of cash and the offsetting liability to collecting agency in a separate G/L account.
  • The ability to set an assessment limit, and not charge the producer once that limit is reached, for one assessment or a group of assessments.

These charges can be collected and tracked per transaction, reported on, and paid.  This also works seamlessly with our account splits, so the correct assessment is collected on behalf of each producer involved in the split.

Farmer Exchange

Freight / 3rd party charges

Freight presents a number of unique challenges, all of which are supported by GSS:

  • Full support for different transport modes, such a truck, rail, vessel, or container, as well as subtypes (heavy axil rail cars).
  • The ability to track both any amounts due from the freight (vendor freight) as well as any freight charges you want to deduct from the grain settlement or add to the invoice (customer freight).  Note that these charges maybe the same (you pay $200 for freight and pass the charges onto the customer) or you may charge the customer / producer more or less for the freight. 
  • Freight can also be built into the contract price, and tracked through a separate basis component.  We offer full support for FOB deliveries.
  • Freight may also involve multiple carriers, and/or multiple legs.  For example, a train shipment might be shipped part of the way by Union Pacific, and then shipped the remainder of the way by Canadian Pacific.  Or an order for 10 trucks my involve 6 different haulers. 
  • The ability to bill for freight based on distance, weight, per load, or combinations of the above (pounds or kilograms per mile).
  • The ability to compute and charge for surcharges for items such as fuel, with the ability to track them as separate cost components in the general ledger.
  • Full support for directs / back-to-back shipments, where you may be paying a carrier, charging a producer, and billing a customer on a single transaction where you never take possession of the grain. 

Although we refer to this as freight, our ability to charge for multiple carriers & legs makes our functionality far more expansive.  You may use our Freight / 3rd Party Charges to pay or charge for a wide variety of sundry charges, including berthage, stevedoring, customs fees, inspections, or transloading charges.  You can track these fees and pay them separately, both in the general ledger and on the settlement document and/or invoices. 

We also give you the ability to capitalize freight into your inventory cost directly at transaction time, or to periodically compute freight into the value of your inventory and cost of goods sold.  We also give you the ability to run freight accruals to account for freight that has not yet been paid.

In summary, GSS delivers a highly flexible and comprehensive freight solution that adapts to any transport mode, charge structure, or multi-leg carrier scenario, while seamlessly supporting complex billing, costing, and accounting needs. Its broad functionality goes far beyond freight alone—enabling precise tracking, capitalization, and settlement of virtually any third-party charges across your operations.

Grain Auger

Fees

In addition to charges for 3rd parties, there maybe cases where it is necessary to charge a producer fees for various services.  Our solutions enable you to charge these fees in a variety of ways.

Fees maybe setup as part of the quality grade/discount schedule.  This is the ideal approach for fees that are related to the quality of the grain being delivered.  For example, you might charge a drying fee for wet grain with a high moisture reading.  Or you might charge a cleaning fee for grain that contains a large quantity of dirt or other foreign materials.

We facilitate this by allowing you to tie discounts together.  For example, assume that a moisture reading of 18% reduces the quantity of grain by a set percentage to account for the excess water.  We could setup our grade/discount table so the 18% factor value automatically defaults into the drying computation.  In effect the same 18% moisture reading accounts for 2 discounts – a variable unit discount to reduce the net quantity of grain delivered to account for the excessive moisture, as well as a separate drying charge to account for the drying service.

Grain Conveyer

Note that these discounts can be linked, so the factor doesn’t have to be entered twice, but are computed separately, and as drying is a service it might (depending on your jurisdiction) be taxed.

In addition to quality or unit discounts, we also allow you to add fees that are load based, such as an overall fee for weighing and inspection.  These fees can default in, and again can be charged against separate G/L accounts.

Finally, we offer the ability to add fees at payment time, which allows you to make final adjustments to payables.  Although you don’t have to edit the original transaction to enter these fees, the fees will be reflected on the original transaction, and they will be shown on the settlement document and accounted for if the payment or original ticket are reversed.

Summary

Together, these capabilities demonstrate how our software delivers a truly end-to-end grain purchasing solution—one that flexibly adapts to every operational nuance, from assessments and fees to complex freight and multi-party transactions. With comprehensive support for diverse business rules, charge structures, and accounting requirements, the system provides the breadth and agility needed to handle even the most demanding real-world scenarios.