One friend in Kentucky just sold corn out of his bin for $8.22 and another friend in Iowa is trying to deliver 160,000 bushels for $8.27. It takes a lot of trucks and a lot of coordination to store, save, unload and deliver that amount of grain. A quick calculation shows we are talking big money in reward.
Grain bin management is something they don't teach in school or ag college. The closest I got was my agricultural engineering classes on grain drying, air flow and mathematical calculations. The real test is right on the farm.
The best way to learn is from a seasoned veteran. There are several on ag talk who have and can store grain for years safely. Actually doing the work side by side an experienced person is the way to learn. Learning at a warehouse is one thing but if I wanted to learn how to increase my income and efficiency by storing grain, I would want to learn from a good farmer who knows.
This farm had 65,000 bushel storage when we bought it. I had never been around grain bins enough to appreciate their use or value. I am learning by the school of hard knocks after $50,000 in repears and too many months of $1000 electric bills. I could have increased our income at least a half million dollars by storing grain longer and selling at these "hammer highs" of $7 plus corn, $16 soybeans and $10 wheat. It takes conviction and fortitude to do that. And it takes knowledge.
I have had a couple of close calls on spoiled grain but nothing like was in the bins when I bought them. They were half full of moldy corn I sold for a pitance to clean them out and get them going. If you are going to grain farm, you need to learn to produce and store the highest grain quality possible. That's the job.
Most don't do it. I know many who don't even own grain bins and sell out of the combine. They cry when they sell corn for $5 and corn goes to $8. I know many who don't even own a corn planter or a corn head! They are stuck with cereals and soybeans in their rotation and some of them do pretty darned good!
Bin managment is paying off big time. It should! We can't consume the October crop in one month, it takes all year!
Ed
It makes sense economically to have the elevators handle all the grain storage and sales, they have all the infrastructure and can benefit from lower costs because of the higher volumes.
ReplyDeleteWhat doesn't make sense is that farmers don't benefit when the sale price is $8. Are there no elevator that work as a cooperative? In France, most elevators are owned by the farmers. They are managed by real managers and traders, not by the farmers, but any benefit made by the elevator is shared with the farmers, after the elevator takes out its own share.
Grain bins are another management tool, IF the farmer had known the "future" he could have sold corn for $7.50+ of the combine and then bought a futures position and made much more. I believe the last few years are an exception too marketing rules. And can many afford to store 160k bu. of corn until following July? keep up the good work Ed.--regards-kevin
ReplyDeleteNow you are thinking, Kevin. Farmers are entrepreneurs, not just growers or producers. We have a huge opportunity to make more money from what we grow if we will think outside the box. The fellows I am speaking of were never given a dime, nearly went broke and have worked extremely hard to get where they can do that. I could have stored mine and just paid interest on the operating loan, the banker said OK. I just sold out a little early. We have to be ready for opportunities like these last few years because they are once in a lifetime, if ever!
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