Some of the ‘top producers’ in my area have beautiful grain setups that are efficient, help with logistics and are expensive. Others have a fleet of trucks and haul their crop to local elevators or cooperatives. Neither is wrong, and both sides of these operations do a great job farming, managing people and logistics and growing good crops.
Why, then, is there a stark difference in these operations? One of the key components is storage. With storage considerations come a few key questions:
- What is your operational geography?
- How much do you like working on trucks?
- Would you rather manage a bin site or more people?
- Do you prefer cash or long-term assets?
- What are your tax consequences?
- What are historical basis and carry levels?
To help give an answer, we built an excel file that calculates the costs of storage, what you stand to benefit and how storage could fit into your operation.
Key considerations are geography, basis, and carry in the market, especially with higher interest rates than recent years. Locally, basis in river markets or high-producing areas can drop significantly during harvest. Even if deliveries are put into commercial storage versus cash sales, storage rates are expensive.
Local end-users should be rewarded when things like basis push, low shrink and free or cheap drying are offered. Storage bins often make delivery when these pushes come much easier for the farmer to take
advantage of.
Find Out If Storage Is Right For You
Regardless of your preferences or past assumptions on storage, please reach out to run your numbers in the tool and see if new storage or more storage might make sense in your operation.
My parting thought is about the years ahead. In the past three years, doing nothing and waiting on the market has been rewarded. I think we will see a shift away from that. In fact, many producers got burned this year with this mentality in their marketing plan.
These cycles come and go, and the top producers I know are making a mindset shift and planning for the future. You should, too.
Email Shay at shay@agviewsolutions for the new storage tool that calculates storage costs, the benefits and how it could fit into your operation.
