ON-FARM storage has proven to be a valuable tool in allowing farmers to develop a marketing program that allows them a chance to maximise the value of their grain.
However, one grain storage expert warns growers should not rush in and automatically assume investing in storage will make them money.
Grain storage consultant Chris Warrick says putting in storage is a big commitment that can’t be overturned.
“Unlike a machinery purchase, grain storage is a long-term investment that cannot be easily changed or sold,” he said.
Mr Warrick, who heads up the Grains Research and Development Corporation (GRDC) grain storage extension project and is based in Victoria, said farmers needed to crunch the numbers to see whether storage worked for them.
He said different businesses could leverage on-farm storage in different ways.
“Depending on the business’ operating style, location, and resources grain storage may or may not be the next best investment” said Mr Warrick.
Ultimately, however, he said the decision was relatively simple, based on whether or not on-farm storage could create value for the business.
“For this reason, everyone needs to do a cost-benefit analysis for their own operation.”
To make a sound financial decision, Mr Warrick said growers needed to compare the expected returns from grain storage versus expected returns from other farm business investments, such as more land, a chaser bin, a wider boomspray, a second truck or paying off debt.
“The other comparison is to determine if you can store grain on-farm cheaper than paying a bulk handler to store it.”
Considering the quality factor
Growers also need to factor in whether they can potentially add value by creating specification quality segregations not available in the bulk system, and, on the other hand, whether they will be able to manage the storage of the grain so it remains at top quality while housed on-farm.
Mr Warrick said farmers would look at different forms of storage according to what they wanted to do.
If they were simply storing to supply a feed end-user who did not have sufficient storage on their own place, cheaper options could be used, but in other cases where longer term storages is required, he said vertical storage was better.
“People often ask what the cheapest storage is - the answer is the storage that suits the planned benefits.
“Short-term storage for harvest logistics or freight advantages can be suited to grain bags or bunkers.
“If flexibility is required for longer term storage, gas-tight, sealable silos with aeration cooling allow quality control and insect control,” Mr Warrick said.
He said that while it was difficult to put an exact dollar value on each of the potential benefits and costs, a calculated estimate would determine if an investment in on-farm grain storage was worth more thorough investigation.
“If we compare the investment of on-farm grain storage to other investments and the result is similar, then we can revisit the numbers and work on increasing their accuracy.
“If the return is not even in the ball park, we’ve potentially avoided a costly mistake.
“On the contrary, if after checking our numbers the return is favourable, we can proceed with the investment confidently,” he said.
Based on the observations of the Grain Storage Extension Project team, growers across Australia who are taking a planned approach to on-farm grain storage and doing it well are being rewarded for it.
“Grain buyers are seeking out growers who have a well-designed storage system that can deliver insect-free, quality grain without delay,” Mr Warrick said.
