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Building on-farm grain storage: Factors to consider

Agriculture.com Staff 11/18/2008 @ 2:01pm

Volatile grain markets and high crop yields have led to the need for and construction of a lot of on-farm grain storage in the last few years.

For the farmer on a tighter budget, throwing together an all-new storage and drying facility may not always be the easiest task to tackle all at once. That's just the situation Agriculture Online Farm Business Talk member Boarsnest1 finds himself in. He's a young farmer who says he's go "a fair amount of debt and not a ton of equity."

But, he wants to start building a large-scale grain storage and handling facility that he can rely on for years into the future. What's the best way to go?

"I am considering a 100,000-bushel cooling bin, dryer, 30,000-bushel wet bin and a leg," he says. "Dad says maybe I should cool it and pay off debt rather than taking on more. Anybody think that this would pay, or be more hassle and expense than it is worth?"

Boarsnest1 has several options, farmers say, all of which vary in terms of how much debt he'll take on and how much value he can glean from the new facilities. Though he says he's light on equity and not as well prepared to handle large amounts of additional debt, it's not the kind of decision that will pay to put off, says fellow Farm Business Talk member 4wd2917359.

Building costs will likely continue to increase in the future, so while constructing a large facility now will carry a considerable debt load with it, the young farmer would be better off building sooner than later, he says.

"If you have the need for such a large setup now, then why would the need go away next year or the next?" 4wd2917359 says. "And, do you think steel will be cheaper and those bin guys will work cheaper next year or the year after? I say go for it."

Volatile grain markets and high crop yields have led to the need for and construction of a lot of on-farm grain storage in the last few years.

Instead of bailing in with a new storage system all at once, one alternative might be to phase it in over time, thereby spreading the additional debt out over more time. Doing so in the right pieces can make it financially worthwhile without leveraging too much financially, says another Farm Business Talk member idalivered.

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