Interview: Namık Kemal Parlak

As food security, market stability, and global trade become increasingly interconnected, licensed warehousing has emerged as a crucial element in protecting our food systems. As Ned Bergman, former Chief of Warehouse and Commodity Management Division at the USDA, explains in his exclusive interview with Miller Magazine, ensuring safe grain storage is not just about protecting physical commodities—it’s about securing the future of the agricultural sector itself. With decades of experience, Bergman offers a comprehensive look at the evolution of the U.S. warehouse system, its current challenges, and the potential for future advancements to meet the growing demands of the global market.

In a world where agricultural markets are increasingly volatile and global food security remains a pressing concern, the role of licensed warehousing is becoming more crucial. Grains, the foundation of global food systems, are harvested in a short window but consumed year-round, making efficient and reliable storage essential for ensuring stability in supply chains, managing risk, and protecting both farmers and consumers.

Few understand this better than Ned Bergman, the Former Chief of the Warehouse and Commodity Management Division at the U.S. Department of Agriculture (USDA). With decades of experience overseeing the U.S. Warehouse Act, Bergman has played a pivotal role in shaping the policies and standards that govern grain storage in one of the world’s largest agricultural economies.

Ned Bergman
The Former Chief of the Warehouse and Commodity Management Division at the U.S. Department of Agriculture (USDA)

Recently, Bergman visited Turkey to attend the LIDAŞDER Conference, facilitated by the USDA Office in Ankara, where he shared his vast expertise with industry professionals and policymakers. As one of the leading figures in licensed warehousing, his insights provided valuable guidance on warehousing infrastructure. During the conference, we had the opportunity to sit down with him for an exclusive interview, where we discussed the evolution of licensed warehousing in the U.S., the challenges facing storage facilities today, and the role of technology in transforming the sector. From the importance of regulatory oversight to the need for financial resilience, his reflections highlight why a well-structured warehousing system is fundamental to a nation’s agricultural success. The U.S. Warehouse Act, enacted in 1916, laid the foundation for the first licensed warehouse in 1919. Over the years, this system has evolved to standardize operations, facilitate commerce, and optimize the use of stored commodities. With its long history, the U.S. offers valuable lessons in the field of licensed warehousing.

As Ned Bergman explains in the interview, a strong licensed warehousing system is a cornerstone of food security and economic stability in any agricultural economy.

Mr. Bergman, why do you believe licensed warehousing is critical for ensuring food security, maintaining market stability, and supporting global trade in agricultural commodities?

Since the harvest period for grains is typically short—usually between two to four weeks—but consumption occurs throughout the entire year, warehousing becomes essential to the process. Food is critical to sustaining life, and a structured system must be in place to safely store grain until it is needed for consumption and processing.

There must be an entity that owns the commodity while it is in storage. This could be a farmer, a merchant, or even a government agency. With ownership comes risk, which necessitates risk management and mitigation strategies. The most effective way to achieve this is through a system of public warehouse licensing, which ensures financial stability and establishes standardized operating procedures and policies for storage facilities.

A useful analogy can be drawn with the banking industry. People deposit their money in banks because they trust them to be safe and secure. In many rural and agricultural communities, the value of grain stored in local warehouses often exceeds the amount of money held in local banks. Given this significant value, it is crucial to have public warehouse licenses, certifications, standardization, and regulatory oversight to safeguard storage, ensure security, and minimize risk.

THE BIRTH OF LICENSED WAREHOUSING

Could you share insights into the historical development of licensed warehousing in the U.S.? What were some key milestones in its evolution?

The program I administered was the U.S. Warehouse Act, which was passed by Congress in 1916. The first warehouse was licensed under this act in 1919. That decade was marked by significant development in public infrastructure and regulatory oversight systems, both in banking and agriculture. The primary goals were standardization, enabling capitalization of stored products, aligning operators under a unified system, and facilitating commerce—especially in the grain industry.

What is the current state of licensed warehousing capacity in the U.S.?

I can provide rough estimates. In the United States, both federal and state governments play a role in licensing public warehouses. The federal government oversees the U.S. Warehouse Act, while individual states also have programs to license public storage facilities. Under the federal U.S. Warehouse Act, there is approximately 6 billion bushels of grain storage capacity, which equates to around 163 million metric tons. This federally licensed storage accounts for about 55% of commercial storage space. State-licensed storage facilities account for another 40% of commercial storage, translating to approximately 120 million metric tons. The remaining 5% of commercial storage is privately operated and does not require public licensing.

Additionally, in the United States, 50% of grain storage capacity is classified as on-farm storage, meaning it is managed directly by farmers. This segment represents an additional 160 million metric tons of storage capacity, with farmers assuming all associated risks. 

The U.S. produces around 20 billion bushels of grain annually. In reality, you almost need a bushel of grain storage space for every bushel produced. However, there is a certain degree of recycling of storage space. For example, wheat can be stored during the summer months and shipped out before the fall harvest, allowing the same storage facilities to be used again. 

CHALLENGES IN LICENSED WAREHOUSING

What are the most pressing challenges faced by licensed warehouses today, both operationally and in terms of policy?

There are quite a few challenges. One of the biggest is access to operating capital. You need substantial funding, often requiring operating loans from banks, to manage storage facilities effectively. Another major challenge is meeting regulatory requirements, particularly in areas such as insurance and safety. Insurance companies determine coverage based on the market value of grain, so as grain prices fluctuate, so does the need to adjust insurance limits.

Additionally, natural disasters such as fires, earthquakes, and tornadoes pose significant risks. Managing insurance needs in such an environment is a constant challenge. Beyond that, market volatility remains a key concern. In the United States, the vast majority of public warehouses also operate as merchants, unlike in Turkey, where there is a clearer separation between storage and trade. Because of this, U.S. warehouses must constantly manage market fluctuations while ensuring they maintain profitable margins and meet market demands.

Transportation is another critical issue. The U.S. grain industry moves massive amounts of bushels from inland areas to ports for export or processing. This creates a heavy dependence on rail and barge transportation, both of which come with their own complexities and logistical hurdles.

Labor availability is also a growing concern. In rural areas, it is becoming increasingly difficult to find skilled workers to operate storage facilities properly. Safety is always a priority, and ensuring continued investment in storage infrastructure remains essential to maintaining an efficient system.

THE TRANSFORMATION OF LICENSED WAREHOUSING

How do you perceive the changes in the licensed warehousing system? Do you see any emerging technologies or trends that could further transform the licensed warehousing sector in the U.S.? 

In the United States, we have witnessed significant market consolidation and mergers over the years. For instance, let’s take North Dakota—perhaps not a widely known state, but a good example. A hundred years ago, there were around 900 grain warehouses across the state, mostly small, independent facilities. Today, that number has decreased to approximately 200 large warehouses. Local warehouses have been expanding in size and consolidating. When I started in this industry 50 years ago, I could visit a small community and find four different grain warehouse merchants operating. Today, that number has shrunk to just one. While there is now less competition for grain bushels, the remaining warehouse is often part of a much larger conglomerate.

In the U.S., country elevators or local grain elevators are now predominantly operated by farmer cooperatives—companies that are owned and managed by the farmers themselves. That means, for example, that a single remaining warehouse in a community might actually be part of a company running 70 different elevators and warehouses across 70 different locations.

What are your thoughts on the licensed warehousing system in Turkey, and what recommendations would you offer to further enhance its efficiency and contribution to the agricultural sector?

I don’t believe I have had enough exposure to make a detailed assessment of what could be improved, but based on my experience working with Turkish delegations in the U.S. and my visits to Turkey, I can share my impressions. The public licensed warehouses I have seen in Turkey are quite advanced. The facilities I visited were newly constructed, well-built, and operated with a high degree of professionalism. They effectively utilize modern technology to maintain grain quality, ensuring that what goes into storage is preserved and delivered at the same high standard. It’s evident that a great deal of thought has gone into these systems.

After attending the conference presentations over the past two days, I can say that Turkey’s licensed warehousing system has a strong structural foundation. All the key stakeholders necessary for a successful warehousing and licensing framework seem to be in place.

The real challenges are inherent to the agriculture and grain industries worldwide. This sector is highly volatile, influenced by unpredictable factors such as weather, market fluctuations, and political events. The key to success is resilience—having the foresight and adaptability to navigate these uncertainties effectively.

From what I’ve observed, the Turkish government has played a crucial role in developing agricultural infrastructure. The progress from my first visit in 1999 to now is remarkable. At that time, Turkey relied heavily on horizontal storage, and much of the vertical storage was outdated and underutilized. However, in the last 25 years, a significant transformation has taken place, with new, modern facilities being built across the country. Such development requires capital and investment, and it appears that the Turkish government has provided a solid foundation for the industry’s growth. 

KEY STRATEGIES FOR ENSURING FOOD SECURITY AND STABILITY

You have been in this industry for 50 years, as you mentioned. If you were advising today’s policymakers or warehouse operators, what strategies or policies would you recommend to ensure the resilience and and improve food security?

Well, let me just say this—maintaining a strong and resilient food system requires continuous effort. It is not something that can ever be taken for granted. Success in this sector depends on the cooperation of all stakeholders across the entire supply chain.

You need fertile soils, which means you need soil scientists. You need advanced seed genetics, requiring the expertise of geneticists. Farmers must be willing to farm, and they need to earn a sustainable income to make a living. Beyond production, a robust infrastructure is essential. This includes licensed warehouses with the professionalism to maintain grain quality. You need merchants, fumigation systems, efficient transportation networks, and reliable support services. A strong banking sector is also crucial—it must understand the agricultural industry and recognize its capital needs.

One of the best ways to manage financial stability is by using stored grain as collateral for loans. This provides banks with security and reduces their risks when lending to the agricultural sector. Additionally, governments must play an active role by setting and enforcing financial regulations, ensuring fair competition, and maintaining clear certification standards. Every participant in the system must adhere to the same rules to create a level playing field.

Another critical factor is an efficient transportation system. The entire process—from farm to storage to distribution—must function to ensure stability in food supply chains.

In my years in the industry, I was heavily involved in warehouse examination, auditing, and compliance. This was a crucial aspect of ensuring food security. We conducted inspections of licensed warehouses to verify that the grain stored was present in the expected quantity and quality. We checked recordkeeping systems to ensure accuracy and reliability.

Warehouses also needed the right equipment—grain grading tools, silo monitoring systems, and precise weighing scales. Proper hygiene was another key factor, with strict measures to control rodents and insects.

Another issue that we haven’t discussed much is agro-terrorism. This is becoming an increasing concern. What do I mean by agro-terrorism? If someone wants to instill fear and panic among a population, one of the most effective ways is to target their basic needs—especially their food supply. Food is one of the most vulnerable areas in terms of national security. In the United States, we have conducted extensive research on assessing and mitigating the risks of terrorism within the food supply chain. I’m not sure if this is something that has been thoroughly examined in Turkey, but it’s an important issue to consider. 

HOW TO PROTECT GRAIN QUALITY AND MEET BUYER EXPECTATIONS

Speaking about examination, when we talk to some flour millers, and they are complaining that the quality of the grain they receive from licensed warehouses is not good. They say the warehouses are not protecting the grain properly and are not keeping their commitments.

The examination system should ensure that the quality is maintained at a high standard. That’s a tremendous challenge. If you look at any grain elevator or silo, you’ll see multiple silos filled with grain. But that grain has likely been sourced from hundreds of different farms. It’s a fungible commodity that gets co-mingled in storage. When you pull grain from that many producers, the wheat quality will naturally vary within a certain range. One of the challenges is that when grain is stored, operators try to put wheat of similar quality in the same silo. Another challenge is ensuring that similar protein levels is stored together. For example, they group it by protein content. It can range anywhere from 16% down to 10%.  However, when it comes time for delivery, grain is pulled from the bottom of the silo, meaning the miller is receiving whatever happens to be in that section at the time. The miller is buying warehouse receipts with specific quality specifications, but since the grain has been mixed with many different sources, it can be difficult to ensure that the delivered product matches those specifications.

That’s one of the biggest challenges for warehouse operators. So, the analysis must be accurate. This is a universal problem, and we face the same issue in the United States. Warehouses can maintain grain quality by protecting it from insect and heat damage, but ensuring that the delivered grain matches its original quality specifications is always a challenge.

In the U.S., large grain warehouses rely heavily on blending. When a buyer places an order, the warehouse receives a delivery request specifying test weight, damage limits, foreign material, and protein content. Many of the large U.S. wheat warehouses have concrete storage systems, allowing them to pull grain from multiple bins—sometimes eight or ten at a time—to blend and meet contract specifications.

In Turkey, from what I’ve observed, blending capabilities are more limited. If a warehouse has 16 or 20 bins, it’s much harder to blend effectively. That was one of the questions I asked—how well they can blend different grain lots—and it seems like they don’t have strong blending capabilities.

As a result, the buyer receives whatever grain is loaded from the bottom of the bin. That’s a challenge because the only real options are to either reject the shipment and start over or, in some cases, accept a discount for lower-quality grain.

In the U.S., contracts typically include quality specifications, and if the delivered wheat doesn’t meet the required standards, the price is adjusted accordingly. However, that doesn’t solve the problem for the miller, who still has to process and mill lower-quality wheat. So, I completely understand the issue, but unfortunately, I don’t have a perfect solution—other than continuing to improve storage management and quality control.

Is there anything you would like to add or share with our readers or industry stakeholders?

I would just say that I’m really impressed with the quality and professionalism of the Turkish grain industry. Just by attending this conference, I can see there is tremendous interest and effort going into developing the industry to its fullest potential. Everyone has their own ideas—some may work, some may not—but the interest and dedication are clearly there. Once again, I’m very impressed with the current state of the Turkish grain industry.