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On-farm grain storage keeps profit on farm

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Published: March 12, 2015

A new grain storage calculator that helps farmers decide if buying big bins is good business has been made public.

The calculator from Grain Services Inc. is available for free at roicalculator.grainsystems.com/. It can also be downloaded as a free iPad or iPhone app from the Apple store.

GSI spokesperson Tim Davis said it is the first return on investment tool that focuses on grain storage facilities, dealing with a full range of crops and market scenario.

“The calculator lets the farmer plug in the whole wide range of factors he has on his specific farm,” said Davis.

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“He can work it on the basis of every acre he has. He can look at it on the basis on every acre he can’t store on-farm today. Or he can set it up and say, ‘I want to put up a 30,000 bushel gain bin,’ and back into it that way. He enters his commodities, his acres and his yield on the first page. That gives him a production number.”

Davis said farmers then enter a number on the second page that represents an educated guess of what they think the market carry will be. They enter a price for fall harvest and prices for deferred delivery in spring, summer or next fall. For example, a producer might enter $3.40 and $3.80, which means a 40 cent carry.

“Then the calculator asks questions about what’s happening to those bushels today,” he said.

“If the farmer is selling them across the scale at harvest, then it’s a simple calculation to find the number of years for payoff. If the farmer answers that he pays commercial storage, then he enters storage fee per month, number of months and there’s also a wait time cost. This is a general discussion, and every grower will be different, depending on whether he has to add more trucks because of the distance or because of the rail lines or other factors.”

Davis said farmers take the third page to their GSI dealer after the numbers have been entered, who will use it to work out project costs.

The calculator then determines the number of years for payback.

“Typically, the cost of building additional on-farm grain storage can be recovered in four to five seasons, depending on market conditions,” said Davis.

Dave Wall of Wall Grain in Winnipeg said farmers instinctively know that on-farm grain storage pays in the long run.

“You increase the risk factor every day you leave your crop out in the field waiting for it to drop a few points,” Wall said.

“If you have enough on-farm storage, you can get the crop in earlier, then use your aeration to dry it down. Farmers with big bins on-farm say they return about a dollar per bushel per year. They break it down as 30 cents just for the convenience and another 30 to 50 cents per bu. on the capture of the weight. And marketing opportunities can give you anything from 20 cents to a buck.”

For more information, visit www.grainsystems.com.

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Ron Lyseng

Ron Lyseng

Western Producer

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