More grain bins going up in Midwest
With bigger crops, full commercial storage, and the desire to control their own crop for better marketing, Midwest farmers are building more on-farm storage, grain bin industry representatives told Agriculture Online.
A near - record shortage of storage due to large crops in 2004 and 2005, unmarketed old crop, and river barge disruptions from hurricanes, highlighted the need for increased on-farm storage in 2005.
From September 2004 to September 2005, U.S. corn storage demand increased 120%, for soybeans it was 127%.
Burl Schuler, general manager of grain sales for GSI Group, Incorporated, a manufacturer of grain bins in Illinois, said there seems to be overwhelming demand for grain bins and related accessories, drying equipment, and commercial storage.
"Our dealers who were busy already are reporting their customers want storage that can immediately be built versus waiting for next year's crop," Schuler said.
Farmers lacking on-farm storage run the risk of selling during a harvest low if a local elevator's storage is full and the farmer is asked to sell the crop as it's delivered.
Brian Hanson, V & H Construction president, a grain dealer in central Iowa, said the interest in farmers wanting to control their own crop has nearly doubled his new bin construction sales in the past two years.
For example, a recent customer admitted that his corn stored in the local elevator could have sold for $0.35 per bushel more in another market within the local area had it been stored on the farm.
"At 100,000 bushels of corn, that is real money," Hanson said. "Sure, he will spend $150,000 building a bin this year but after a few years of paying for it he will be able to start putting the money in his own pocket."
For farmers who control their crop, selling at a $0.20 to $0.30 per bushel premium to nearby ethanol plants is becoming more of a reality, Hanson said.
"Ethanol plants will only have so much storage and the farmers will be contacted on demand," Hanson said. The plant (order buyers) will say this is when we need that corn and the farmer will have to deliver it at that time, even if it's months away. You might have to deliver it in November of the current year or in July of the next year."
So, what happened to the days of just hauling grain to town and selling at the local elevator?
Hanson said increased storage costs, docking fees, and delays of hauling during harvest has changed the face of crop control.
"With larger farmers, they have so many acres they have to get done quickly. If you have to haul 35 miles to the elevator that slows you down," Hanson said.
As a result of bigger farms, the grain bins Hanson sells are getting bigger as well. In the past few years, grain bin sizes ranged between 10,000 to 80,000 bushels with an average of 40,000. For the upcoming year, the smallest size Hanson has sold is 45,000 bushels.
"Another thing that is happening is the farmer that used to put up three 20,000 bushel bins is just building one 60,000 bushel bin," Hanson said.