On February 24^th, your Board of Directors approved construction plans that will improve Souris River Cooperative capacity by approximately 1.5 million bushels. We intend to construct two 250,000 bushel steel tanks at all three rail locations including Lansford, Russell and Kramer.

 

Necessary land was purchased last summer and in the case of Russell back in 2008. We do not have to purchase additional land at this time and we have room for expansion beyond the current plans should the need arise.

 

Gateway Building Systems Inc. was awarded the construction contracts and work has already begun. It is our sincere hope that all space will be built in time for the 2010 harvest. If all space is not ready, we will increase car counts on shuttle trains to those locations that are not complete by harvest and we will not sell our 13” ground piling augers until we understand how the expansion projects are progressing.

 

This type of expansion will provide flexibility in many ways. It will give us the opportunity to offer Delayed Pricing deeper into the harvest which means we will not have to move to cash as quickly. It will provide marketing opportunities for the cooperative that we have not been able to capture due to space constraints. It will also give us flexibility in the commodities we are able to handle. Soybean acres seem to be increasing in our trade territory and are currently offering Hedge-to-Arrive soybean contracts we did not feel we could offer in the past. We also think canola delayed pricing will be offered in more volume.

 

Barley is a separate subject. We sincerely hope we can store more barley and will utilize some additional space to negotiate a larger barley handling agreement with Malt Europ North America Inc. (MENA). Europ is spelled correctly in this case.

 

We also believe this expansion will help us to take more high moisture grain. We will fall short of purchasing new drying equipment at this time however all bins will have aeration which will allow us to take more high moisture grain than we have in the past.

 

Spring wheat from Antler will be trucked to Lansford more than Russell dependant on protein content grown at each location. This will shorten the hauling distance and allow for more efficient use of our road trucks. Of course barley will continue to be shipped to Russell for processing.

 

Conveyor equipment to the new bins will be rated at 30,000 bushel per hour. We will not change out existing receiving legs so grain going into the new bins will continue at 10,000 bushel per hour in the case of Lansford and Kramer.   However, we will be able to bring grain back to the load out systems at 30,000 bushel per hour. In many cases, but not all, Kramer and Lansford will now be able to receive barley while loading out a spring wheat train. 

 

Additional track space at Kramer is currently being negotiated. If successful, the Kramer location will be able to load a 75 car milling exploder train independent of the other rail locations. Lansford will have the same load out capacity as Kramer however we will continue to pool trains out of Lansford with Russell and Kramer due to track constraints.   

 

Please feel free to call if you have any questions.