Prior to the advent of the grain elevator, grain was handled in bags rather than in bulk.
Grain elevators are a constant sight in the grain-growing areas of the world, such as the North American prairies. Larger elevators are found at distribution centres, such as Chicago, where it will be sent for processing, or loaded aboard trains or ships to go further afield.
Originally each small town had its own small grain elevator that would serve the local farmers. The classic grain elevator was made of wood and had 12 rectangular bins arranged in a 3x4 pattern. In more recent times with improved transportation, centralized and much larger elevators serve many farms. The loss of the grain elevators from small towns is often considered a great change in their identity and there are efforts to preserve them as heritage structures. At the same time, many larger grain farms have their own grain handling facilities for storage and loading onto trucks.
Grain elevator operators buy grain from farmers, either for cash or at a contracted price, and then sell futures contracts for the same quanity of grain, usually each day. They profit through the narrowing basis, that is, the difference between the local cash price, and the futures price, that occurs at certain times of the year.
Before economical truck transportation was available, grain elevator operators would sometimes use their purchasing power to control prices. This was especially easy since farmers often had only one elevator that was within a resonable distance of their farm. This has lead some governments to take over the administration of grain elevators. An example of this is the Saskatchewan Wheat Pool. Many elevators were purchased by cooperatives.
A recent problem with grain elevators is the need to provide separate storage for ordinary and genetically modified grain to reduce the risk of accidental mixing of the two.
An interesting problem the old elevators had was that of silo explosions. Fine powder from the millions of grains passing through the facility would acumulate in the air, a spark could spread from one floating grain to the other creating a chain reaction that would destroy the entire structure. To prevent this elevators have very rigorous rules against smoking or any other open flame.