DELAIDE, Aus. — The sight of steel grain bins, once a rarity on Australian grain farms, is becoming as common as wool sheds and water tanks.
Andrew Weidemann, a grain grower from the Wimmera Plains region of north-central Victoria, said the importance of on-farm storage has become more evident to Australian grain growers since the end of single desk marketing.
Weidemann, who farms with his brother near Rupanyup, said his farm has been gradually increasing bin storage over the past decade.
Today, most of Weidemann’s grain goes directly into on-farm storage and stays there until it is trucked to an export terminal or a domestic buyer.
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Bin capacity on Weidemann’s farm is 8,500 tonnes, mostly consisting of 70 tonne, 100 tonne, 120 tonne and 150 tonne silos.
The brothers have also ordered two 800 tonne silos, which will bring total on-farm capacity to 10,000 tonnes, or 400,000 bushels.
As well, they have three grain sheds with pitched roofs and will use silo bags for temporary harvest storage if necessary.
“Years ago, you didn’t see too much on-farm silo storage at all,” said Weidemann.
“We still put some of our production directly into the bulk handling system, but we just feel that on-farm storage gives us more control over our production.”
According to recent figures from Grain Trade Australia, on-farm storage now accounts for 15.6 million tonnes of storage capacity in Australia.
Weidemann said the popularity of on-farm storage varies from region to region, depending on many factors.
States that export a larger proportion of their grain are less likely to have a significant investment in on-farm storage.
Capital is another factor.
On Weidemann’s farm, building and installing corrugated steel bins, including ground work and concrete, costs $84 Aus per tonne for larger storage units and up to $145 per tonne for a smaller 70 tonne unit.
“The bigger you go, the lower the costs,” he said.
Canadian bin manufacturers are marketing aggressively in Australia, he added.
John Lush, a producer from Mallala, South Australia, has also been increasing his on-farm storage capacity.
Lush said grade and protein discounts imposed by bulk handling companies can cost farmers big bucks.
Farmers who deliver milling wheat straight off the field often have no idea what they are dumping at bulk handling facilities.
If wheat misses a 13 percent protein threshold by one or two tenths of a percent, the farmer might be paid for only 12 or 12.5 percent protein.
On-farm blending is becoming more common among farmers who want to ensure they are extracting the maximum value from their crops, Lush said.
More producers tended to deliver most of their grain directly to bulk storage sites when the single desk system was in place, Weidemann added.
Today, producers pay much closer attention to quality discounts and are more reluctant to leave value on the table for exporters and bulk handling companies.
“Marketing in the deregulated environment has been a challenge, but I think more people are starting to get their heads around it and more people are starting to realize that storage is crucial,” said Weidemann.
“I think most people have made reasonable money out of storage because it gives them the ability to minimize storage costs and capture the upside of the market.”
Growers who deliver grain directly to off-farm storage sites are usually charged a flat handling fee, often around $10 a tonne. They will also pay a monthly storage fee.
Stewart Gall, a producer from Moree, New South Wales, said the benefits of on-farm storage are most obvious during harvest.
He said turn-around times at bulk delivery sites can often exceed two or three hours during harvest time.
In most cases, that means combines are sitting idle in the field while trucks are stuck at delivery points.
“We actually put in our on-farm storage about three or four years ago to help manage deregulation,” said Gall, who plants 12,000 acres per year.
“Whether that’s worked for us or not, I don’t know, but it’s definitely helped us improve our efficiencies during harvest.”
More Australian grain growers are trucking their grain directly to port in an effort to reduce bulk handling costs and ensure that grain can reach export position in a timely manner.
Weidemann spent time in mid-March trucking several hundred tonnes of malting barley to an export terminal at Geelong, Victoria, about 275 kilometres away.
Mick Keogh, a farm policy analyst with the Australian Farm Institute, said transportation and handling costs are the biggest expenses facing Australian grain producers.
Members of Grain Producers South Australia were recently told that average supply chain costs in that state, including management fees, transportation and elevation at port, accounted for nearly $82 on a tonne of wheat valued at $276 f.o.b.
Weidemann said there are risks associated with on-farm storage.
Carrying costs can be high, especially if stocks are carried into the next harvest season.
Grain pests are also a concern.
Most bins installed on Australian farms are sealed units that allow growers to fumigate their grain with phosphine.
For proper results, bins should be sealed and slightly pressurized, Weidemann said.
