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Grain storage options & your farm

Jeff Caldwell 08/03/2010 @ 11:00pm Multimedia Editor for Agriculture.com and Successful Farming magazine.

Looking ahead to a big harvest this fall? Is your grain storage ready to go?

If you still need to secure a few more bushels of storage capacity before the combines roll this fall, don't overlook any of your options. If building new bins on your farm isn't doable, there are other storage alternatives to consider, the costs of which can vary according to how much you need and how long you'll be needing it.

Each of the primary storage options -- on-farm storage, condominium storage, commercial rental storage and on-farm storage on a farm other than your own -- "has advantages and disadvantage related to the initial investment, annual operating costs, income tax considerations, the amount of time required for grain management, long-term availability of storage space and market flexibility," according to Iowa State University (ISU) Extension economist William Edwards.


Storage alternatives

On-farm storage gives farmers the most flexibility and guarantees there will be space available each year. And, there are tools farmers can use, like low-cost financing through the USDA Farm Service Agency, to make on-farm storage more affordable.

"The major disadvantages to building on-farm storage are the size of the initial investment, the need to monitor grain throughout the storage period and the difficulty of disposing of bins if the need for storage capacity decreases later," Edwards says.

Condominium storage lets the farmer lease or buy increments of storage capacity in a commercial elevator. It requires an up-front investment, though not as much as building on-farm storage. Then, there's maintenance and grain quality: The elevator will cover that. And, if you're sure you'll market your grain from the elevator where your grain's sitting, you've got a lot of flexibility. If you want more choices for marketing, though, this could turn into a setback.

"The major disadvantage of this option is that it may be difficult or uneconomical to market the grain to any other buyer or processor once it is placed in the condominium storage," Edwards says. "The resale value of the storage space is also unknown."

Don't want to build your own or buy into commercial condo storage? You can always rent commercial bin space. With this option, elevator location and capacity are more important. If it's too far away from your farm, the cost to get the grain to the elevator may ebb away at the cost-effectiveness of the rental option. But, if it works, location-wise, the lower costs make this an attractive option. You will be more at the whim of the elevator's hours of operation and other rules that make this a less flexible option than condo or on-farm storage.

"A major disadvantage to using commercial storage is that harvesting may be slowed down due to longer travel distances and time waiting to unload.  The producer is essentially locked into marketing the grain to the elevator that provides the storage, as well," Edwards adds. "If grain is routinely stored into late spring or summer, commercial storage costs may exceed on-farm storage costs."

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