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Cost Analysis of Potential North Dakota Subterminal Systems

Listed author(s):
  • Chase, Craig A.
  • Helgeson, Delmer L.
Registered author(s):

    The purpose of this study was to analyze the cost structures associated with subterminal facilities. An economic-engineering approach was used to determine the construction and operation costs of four different sizes of subterminal facilities operating at three different plant capacities. Profitability of subterminals was determined mainly by the volume of grain handled. If a subterminal marketed enough grain, it was able to incur both decreasing average fixed and average variable costs. The larger subterminals were found to be more profitable than the smaller facilities indicating the existence of economies of size in both the fixed and variable cost components. Profitability can be dramatically increased given the availability of internal financing for the construction cost and nondepreciable fixed costs. Upper Great Plains Transportation Institute Report No.44

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    Paper provided by North Dakota State University, Department of Agribusiness and Applied Economics in its series Agricultural Economics Reports with number 23347.

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    Date of creation: 1983
    Handle: RePEc:ags:nddaer:23347
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