Applied Economics Teaching Resources

an AAEA Journal

Agricultural and Applied Economics Association

Case Study

Negotiating for a Grain Elevator Purchase: Valuations of Willingness to Buy and Willingness to Sell

Austin Liepold(a), Marin Bozic(b), and Michael A. Boland(b)
Ceres Global Ag.(a), University of Minnesota(b)

JEL Codes: A21, M21, Q14
Keywords: Agribusiness, case study, finance, oats, net present value

Publish Date: February 10, 2022
Volume 4, Issue 1

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Abstract

North America Small Grains Trading Company (NASGTC) is a North American grain trading company investigating grain elevator location prospects to expand their grain origination territory. In 2021, NASGTC purchased grain at a premium from third-party suppliers or country elevators in North America to fill their terminal space at various locations or directly ship to their small grain (defined as oat, hard red spring wheat, rye, durum, and canola) end-user customers with a focus on identity-preservation to help support consumer label claims. Since its founding in 2013, NASGTC has operated terminal elevators efficiently without any origination locations. The NASGTC is in initial diligence to acquire the assets of a Canadian grain elevator to originate additional oats. The objective of this case study is to determine whether it is economically feasible to acquire a grain elevator to own more of the margin in the oat supply chain.

About the Authors:Austin Liepold is a Business Development Manager at Ceres Global Ag. Marin Bozic is an Assistant Professor in the Department of Applied Economics at the University of Minnesota. Michael A. Boland is a Professor in the Department of Applied Economics at the University of Minnesota (Corresponding author: boland@umn.edu). The authors are listed in reverse alphabetical order.

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