ASSUMPTION, Ill. (Feb... 11, 2015) – A new return on investment (ROI) calculator introduced by GSI demonstrates how farmers can earn significantly more by storing their grain on-farm and marketing it at a future date, compared to selling it at harvest time.
Introduced at the 2015 National Farm Machinery Show, this first-of-its-kind grain storage ROI tool is accessible on GSI’s website, at http://roicalculator.grainsystems.com/. It also can be downloaded as a free iPad or iPhone app from the Apple Store.
On-farm storage systems provide farmers with greater marketing flexibility, allowing them to store their grain and contract it for future sale at a price higher than what the market is offering at harvest.
On-farm storage enables higher returns because of two marketing factors: One is the opportunity, depending on the farmer’s location, for a better “basis” level (the difference between the daily market price and the price that the local elevator pays to farmers) by storing his grain and selling it at a later date, when the market has reduced supply and there is still demand from multiple buyers. The second factor is “market carry,” the higher prices that can be realized when farmers store their grain at harvest and contract it for future delivery.
Farmers considering building or expanding on-farm storage can use the calculator to determine how long it will take to recoup the cost based on additional revenues they earn due to market carry. Typically, the cost of building additional on-farm grain storage can be recovered in four to five seasons, depending on market conditions, according to Tim Davis, a GSI sales manager with 25 years of grain marketing experience.
Grain marketing consultant Adam Dryer of Blue Reef Agri-Marketing, Inc., in Morton, Ill., estimates the combination of basis appreciation and market carry could generate a premium of 45-50 cents per bushel of corn harvested and stored on-farm in mid-October 2014 and contracted for delivery in July, 2015.
For farmers who plan to store their grain at a commercial elevator for future sale, they can use the ROI calculator to compute potential revenue based on storage location, cost of storage and other expenses relating to their own operation.
The ROI calculator provides calculations for various crops, including corn, soybeans, rice, canola and wheat. Upon completing the calculations, the tool enables farmers to email and/or print customized reports and also helps them locate their local GSI dealer, who can then develop a specific grain storage solution to fit their operation.
Greater harvest flexibility
Another benefit of on-farm grain storage is that it gives producers more control over their harvest schedule. “Having 24-7 access to their own storage equipment also increases profit potential by making harvest more efficient,” says Gary Woodruff, conditioning market specialist for GSI. “On-farm grain storage enables farmers to harvest when conditions are optimal, minimizing the risk for grain damage and yield loss by allowing their crop to dry down too long in the field.”
GSI (Grain Systems Inc.), a global brand of AGCO (NYSE: AGCO), is an industry leader and manufacturer of steel farm bins, commercial storage grain bins and grain silos. In addition, GSI offers the most technologically advanced grain dryers in the industry and a large selection of material handling systems, including bucket elevators and conveyors, grain bin sweeps and chain loop systems. GSI is also a full-line manufacturer of protein production systems for swine and poultry operations. With more than 40 years of industry expertise, GSI is your proven and dependable source for forward-thinking grain and protein agribusiness solutions. www.grainsystems.com.