The need for more grain storage was the most obvious reason Adam W. and his dad added a new 105,000-bushel grain bin this past summer to their farm in their southwest Missouri community.
“Even with five other bins that hold 30,000 to 40,000 bushels each, we were having to rent bin space from other farmers,” Adam explains. “We just decided it was time to put the money into our own property. Plus, I was tired of having to tow the auger down the road.”
Adam adds that they raise corn, soybeans, and wheat. However, because of insufficient storage capacity, they had to move wheat out of the bins within weeks so they could make room for the corn harvest. Now, with at least a third more storage space and a bigger auger, they can make financial decisions based on the markets rather than space.
Adam’s family isn’t alone. According to a recent USDA report, on-farm storage has increased by 1.6 billion bushels (14%) in the last 10 years for a total of around 14 billion bushels, with the greatest increase in the Midwest.
On-Farm Storage Considerations
One of on-farm storage’s biggest advantages is it gives the producer flexibility in where and when to sell grain, since grain prices tend to be higher later in the marketing year than at harvest. Harvesting may also progress faster if grain need not be delivered to an off-farm location.
“The costs for any type of grain storage can be classified as either fixed or variable,” says Chad Hart, professor and Extension economist at Iowa State University. “Fixed costs are those that occur regardless of the degree to which the capacity is utilized and for how long. Variable costs are those that increase or decrease in relation to the number of bushels stored and the length of time they are stored. Generally, investing in on-farm storage involves both fixed and variable costs.”
The major cost of on-farm storage structures is the initial investment in the bin, Hart says, plus the costs of site preparation, wiring, fans, concrete, transfer legs, and augers. However, he points out, this investment can be spread over the life of the bin in the form of depreciation, as well as interest on the invested capital.
Costs for new on-farm grain storage have increased over the past two years, along with interest rates. According to one Nebraska dealer, a 50,000-bushel bin with a concrete foundation hits the “sweet spot” at around $2.25 per bushel, depending on the options. While the economy of scale makes a larger bin less expensive, the extra concrete pushes the cost a little higher, up to around $2.50 per bushel in Wolf’s case. A smaller bin, on the other hand, doesn’t save a proportionate amount on labor.
“Other fixed costs include insurance, property taxes, and maintenance,” Hart adds. “Note that once on-farm storage is constructed, fixed costs are locked in. It’s the variable costs that matter when comparing the cost of utilizing it versus other storage options, or when deciding how long to store grain each year.”
Variable costs associated with grain storage include electricity to operate fans; insecticides and fungicides; fuel to operate augers; and the operator’s time for handling the grain in and out of the bin, as well as monitoring grain condition. On-farm storage always entails some risk of quality losses due to spoilage and foreign material.
Enhancing On-Farm Storage with OPI Blue
OPI Blue offers a powerful solution for managing grain storage effectively, reducing risks, and improving efficiency. As farmers seek to optimize their on-farm storage capabilities, OPI Blue’s automation and grain management system efficiency are game-changers.
By integrating grain storage automation solutions and automated grain management, OPI Blue helps monitor grain conditions such as temperature, moisture, and airflow across your bins, whether you’re managing a single bin or multiple locations.
With grain quality optimization as a top priority, OPI Blue automates grain conditioning by controlling fan operation based on real-time data. This ensures that the grain stays at optimal conditions throughout the storage period. No matter what grain type you’re storing, whether it’s corn, soybeans, or wheat, OPI Blue provides grain conditioning systems that work seamlessly to protect your crop and maintain its quality.
The system’s grain quality management systems allow for remote monitoring, providing farmers with the flexibility to manage grain from anywhere. This system delivers peace of mind by offering precise control over all aspects of storage, from aeration to temperature regulation, so you can be sure your grain is being stored optimally and safely.
Weighing the Costs of On-Farm Storage
Storage costs are “definitely” increasing, Hart says: “Interest is higher, weather events have caused insurance to go up, and labor and material costs have increased. But farmers must also consider opportunity income, which has decreased in many situations.
“In other words, we’re not only betting that grain will increase in value while it’s in storage,” Hart says, “but we’re betting that it will increase in value by a greater amount than if we sold it earlier and invested the money somewhere else.”
OPI Blue helps reduce some of the financial risk by optimizing the management of grain conditions, increasing the overall efficiency of your storage system. With more accurate and real-time data, OPI Blue helps make your decision-making process easier, enabling you to make better financial choices for your business.
Fortunately, several university Extension websites include forms to help calculate the cost of storage in different situations. You can find one from Iowa State by following the link at extension.iastate.edu/agdm/crops/html/a2-33.html.
On-farm storage offers growers the flexibility to make better financial decisions and gain more control over their crops. However, managing grain quality and maintaining system efficiency can be a challenge. With OPI Blue, farmers can automate their grain management processes, reduce spoilage risks, and ensure that grain is stored at optimal conditions, increasing profitability and minimizing waste. Whether you’re managing a single bin or a complex system of multiple storage units, OPI Blue’s grain storage technology integration solutions and grain storage automation solutions are designed to meet your needs.
This blog was written from a previously published article. Full version available here.