New Storage Alternatives Help Grain Farmers

A common sight in farm country during the 2014 harvest was massive piles of harvested corn and soybeans as big harvests overwhelmed storage capacity at grain elevators and co-ops.

Big crops have overwhelmed total amount of storage available in the United States. The U.S. Department of Agriculture (USDA) says total U.S. storage capacity is only 13 billion bushels. In comparison, the USDA estimates the corn and soybean harvest for the 2014/15 marketing year to be a little north of 18 billion bushels, according to the February supply and demand report. That is record output.

But the image of outdoor grain piles at co-ops has begun to change as more producers seek to store crops on their farms.

Since May 2000, USDA has helped farmers increase their on-farm storage with low-interest loans, which has added an additional 900 million bushels to on-farm storage since then. In 2014, the agency enhanced their farm storage facility loan program to make it easier for producers to build or upgrade permanent facilities to store commodities. Traditionally farmers have held crops in galvanized-steel bins, and that’s how USDA counts stored crops.

Farmers, though, are getting creative.

“Storage rates are 30 cents a bushel. When a farmer is getting $5.50 or $6 for corn, he doesn’t mind paying 30 cents for storage. When he gets paid $3.50 for corn, it’s a different story,” says Karl Setzer, market analyst at MaxYield Cooperative.

During the 2014 harvest season, there was a big interest in grain bags, which are poly fiber material and can temporarily store anywhere from 10,000 bushels up to 50,000 bushels. These look like long tubes when filled.

Daniel Fritz, who works in product development at Big John Manufacturing in Osmond, Neb., said this was probably the fifth year they’ve offered the bags, and they saw their biggest demand ever for them.

“We just weren’t prepared for what happened (during harvest). We thought we might have enough built up, but the amount of grain out there must have not had any place to go along with the lower prices,” he says.

The grain bags are vacuum-sealed so they create their own environment and are tough enough that if there is a puncture the bag won’t completely tear open. Grain can be stored for up to four to six months, he says, which gives farmers a chance to weather the lower prices usually seen at harvest.

There are other storage options, too. Grain rings and tarps can also offer protected storage, and look like mini-circus tents when filled.

Fritz said grain bunkers are another option, but are usually too large for farmers. The bunkers can be used for temporary or long-term storage of dry grains and can offer aeration.

Setzer said he’s heard of many creative uses for storage.

“I’ve even heard of farmers who are parking their equipment outside and using the machine shed to store grain,” he says.

Debbie Carlson has focused on commodities for much of her writing career. She spent more than a decade at Dow Jones covering the Chicago-based futures exchanges. As a Dow Jones editor, she worked closely with The Wall Street Journal and Barron's in planning commodities coverage.

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