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Building costs complicate grain elevator expansion

Inflation is making it difficult for grain elevators to upgrade and expand.

Reed Akre manages Sublette Farmers Elevator in northern Illinois. He tells Brownfield they would like to renovate their current building and put in a new dry fertilizer building but it is hard to make the numbers work.

“The cost of concrete and the steel for the rebar and everything is getting very high so having to come up with replacement costs for buildings is tough.”

And he says there is a lot of uncertainty when making capital investments. For example, Akre says they ordered new truck a year ago and they are hoping to have it by this June.

“The truck went up another 15% last August and we don’t even know if that is going to be the final price.”

He says those decisions require more analysis than they used to and working with a good banker helps minimize risk.

Brownfield interviewed Akre at the Grain and Feed Association of Illinois Convention in Peoria Monday.