Earlier this month, USDA forecast the nation’s 2009 corn crop to fall just shy of 2007’s record production. With October now drawing near, some experts are predicting the 2009 corn crop to easily surpass 2007’s production. Either way, many farmers will likely be thinking about adding to their current on-farm grain storage capacity this fall.
However, farmers should avoid making the decision to build a new grain bin on the needs for just one year, cautions Kevin Dhuyvetter, Kansas State (K-State) University Extension economist. Rather, the decision should be based on the needs for both this year and many years ahead.
Dhuyvetter gives the following five best reasons for increasing on-farm grain storage:
1. Capturing seasonal price moves. “The main reason producers store grain is to take advantage of postharvest market rallies,” he says. “Generally, seasonal price moves will cover most, but not the entire cost to build new bins. So, you’ll need more benifits than this one to justify the cost.”
2. Lack of nearby commercial storage. “Rising crop yields and an increase in corn acres are producing more bushels of grain that require storage compared to historical needs,” notes Dhuyvetter. “In some parts of the country, the expansion of commercial grain storage has lagged behind the increase in production, and thus farmers need to add storage capacity on their own farms.”
3. More choices for sales after harvest. “Extra storage space allows farmers to shop their grain around to the highest bidder during winter and early spring,” he says. “These opportunities have especially increased as more farmers now have semis – which lowers hauling costs – and with the increased number of buyers, such as ethanol plants, in some areas.”
4. Better accommodation for identity-preserved grains. Where lucrative premiums are available for specialty corn or seed production, new storage bins might make sense, he says.
5. Avoiding harvest bottlenecks and waiting times. Some local grain elevators lack the infrastructure to allow for speedy unloading during times of high demand, says Dhuyvetter. Having more on-farm storage could help bypass this bottleneck at harvest, thus avoiding potentially costly delays, he adds.
For more information from K-State to help corn growers make decisions about buying new grain bins, go to the K-State Department of Agriculture and Economics. To read a recent article on grain storage costs and rental rates from the University of Nebraska, read their PDF. To learn about a USDA farm storage facility loan program, go to the Farm Service Agency.
If you’ve recently built a new grain bin or bought equipment to bag grain in plastic (see related article in this issue) and have found it to be profitable, I’d like to hear from you. When writing, please let me know your name, where you farm, how this equipment has helped your bottom line and whether or not I have permission to use your comment in a future Corn E-Digest newsletter. You can contact me (John Pocock) at: firstname.lastname@example.org.
As always, you’re welcome to write to me if you have a comment on any topic related to corn production or if you have concerns or questions about this issue. I look forward to hearing from you. Stay safe, stay profitable, thanks for your readership – and farm on!