This study analyzed the operational efficiency of the Alberta primary elevator industry for the crop years 1975-79. The study looked at elevator costs and elevator receipts of grain for each year and for a four year period at approximately 150 grain elevators within Alberta. The central focus of this research was to determine the impact of the present number of domestic grain grades, as defined under the Canada Grain Act, on the operational efficiency of primary elevators. In addition, economies of scale and regional effects present in the primary elevator system were examined. The principal hypothesis was that the present number of domestic grades put unnecessary cost pressure and throughput restrictions on the primary elevator system in relation to the market advantages producers and buyers obtain from such a system. The single most important factor in decreasing operational costs was found to be the handling to capacity ratio. As this ratio increased, average costs decreased significantly. The study found that· the current elevator system is efficiently handling the 800 different grades of grain graded within Canada.