Just because a farm has a grain bin does not mean it should be used.
Frayne Olson with North Dakota State University Extension says that understanding costs may be key to keeping the combines rolling in today’s tough farm finance conditions.
“I will argue when you do the math on on-farm storage and I’ve done this many, many times, it’s going to come out surprisingly close to what commercial storage is. So if you look at the commercial storage rate that the elevator’s charging, it will be pretty close to the costs for on-farm storage. It might be a little higher, might be lower depending upon your conditions,” Olson explains.
He says that there is a quick and easy solution to calculating those costs.
“So for a quick and dirty estimate for kind of a rough, rough number to use in your head as you’re thinking about what to do and when to market and what is the, you know, the cost to carry in the market relative my cost storage, that’s a pretty good number to use,” he adds.
By subtracting the elevator’s storage cost from the delivery month bid today, and then comparing that price to what you think the price is likely to be when grain is delivered, you may find that on-farm storage is ultimately not worth it.
