Kansans Want State’s Help
To Increase Grain Storage

TOPEKA, Kan. —(AP)— Farmers, agriculture groups and others are asking legislators to intervene to prevent millions of bushels of grain from being stored on the ground in future years.

Agriculture Secretary Allie Devine told a legislative committee Monday that the state needs to encourage construction of new grain storage space, as well as repair of railroads and rail equipment.

Other witnesses testifying before the Special Committee on Rail Transportation said helping short-line railroads maintain their operations is vital to agriculture.

But some committee members wonder whether the state would face the problems it does with storing grain if agricultural prices were higher.

"Right now, we've got more of a price problem than a storage problem," said Sen. Steve Morris, R-Hugoton, the committee's chairman. "If we had decent prices, I don't know that we would have a storage problem, because the grain would be moving."

Devine told the committee that if farmers, farm cooperatives and others do not increase their storage space, the state will continue to have problems storing grain in years of bumper crops such as this year.

She outlined a series of proposals to give farmers, elevators and railroads incentives to build new grain storage space and repair railroads and rail equipment, so that grain can be moved more quickly. The proposals are being reviewed by a task force appointed by Gov. Bill Graves.

"Agriculture in Kansas has reached a critical point," she said. "If good growing conditions, high yields and low prices converge again, Kansas will not have sufficient storage space for its future harvests."

Devine noted that elevators are seeking permission from her agency to store 25 million bushels of grain on the ground. Elevators and farmers expect 62 million bushels to be stored on the ground temporarily.

Devine blamed the lack of storage space on a combination of factors, including problems with rail service, but also low prices and low demand for grain.

Morris, the committee's chairman, sees farm prices as the biggest problems. Low prices encourage farmers to hold onto to their grain and wait for higher prices, if they can afford to do so, he said.

Grain prices were significantly lower in mid-September than they were in mid-September 1997. The price for wheat was $2.37 a bushel on Sept. 15, compared to $3.66 a year before.

Rep. Richard Alldritt, D-Harper, sees transportation as the main problem. Operators of short-line railroads are hoping the state will provide money to help them replace tracks and ties.

Danny McLarty, president and general manager of the Protection Co-op Supply Co. in Comanche County, told the committee that his members cannot ship grain by rail because of track conditions.

"I realize that ties and rail cost money, but the only way to generate revenue is to move cars over the rails," he said.

Devine suggested the state has a long-term grain storage problem. Commercial grain elevators can store 742 million bushels of grain, while farmers have space on their farms for another 400 million bushels, for total storage space of 1.14 billion bushels.

But last year, the four major crops in Kansas — wheat, corn, milo and soybeans — produced more than 1.25 billion bushels, and those same crops are expected to yield nearly the same amount of grain this year.

Devine noted that her agency and the Department of Commerce and Housing are trying to arrange to have grain stored at sites such as industrial parks and airports.

"The state's only option is to be creative in looking for alternative storage this year and incentives to increase storage in future years," Devine told the committee.

Devine said the task force appointed by Graves is most interested in three tax proposals.

The first would create an income tax credit for farmers who invest in new storage space on their farms.

Another proposal would exempt from the state's 4.9 percent sales tax labor and materials used to repair, maintain or construct grain storage and railroads and railroad equipment. In 1995, the Legislature exempted services used in construction of new homes, and last year exempted services for home remodeling.

The third proposal would expand a law legislators approved last year. It gave elevators an income tax credit equal to 15 percent of the property taxes they pay on machinery and equipment. The law does not apply to railroads, Devine noted.