Grain Storage an Investment Worth Considering

Payback will be there through 2010.

The next few years should offer good payback for storing grain, especially corn, says Chris Hurt, Purdue University ag economist and marketing specialist. He made the statement during his talk to the Purdue Top Farmer Crop Workshop held at Purdue last week. The workshop is an annual event, held during the third week of July each and every summer.

"Our projections show that storing corn will pay over the next few years," Hurt says. "We're basing this largely on our predictions that demand for corn is going to grow as more ethanol plants come on line."

Many of these plants don't intend to store much corn on site. The largest soy diesel plant in the world, scheduled to open this fall at Claypool, will only have storage for a 14-day supply to run the operation on site.

One farmer at the workshop seemed to confirm what Hurt was saying. He noted that from his eastern Indiana farm, he could have three ethanol plants up and running within a couple years. Construction is already underway on at least two of these plants. In fact, he's already contracted corn for delivery to one of the plants. Fortunately for him, he has enough storage already for his production, so he won't be looking at new bins or other means of getting corn under roof or in a safe place.

Prices will likely be lowest at harvest. That's when basis typically gets the widest, Hurt notes. It's one of the reasons why he thinks farmers should take a hard look at storage facilities as a possible investment for the next few years.

However, he's quick to add that he's not saying build storage at all costs. "It's one fo the tools- one of the possible investments that I think a farm operation would want to consider if it doesn't have adequate storage now," he says.

There are many other places to invest money, including land or another piece of equipment, he notes. What he suggests is that farmers get serious about budgeting and deciding which use of their funds that they can invest will have the biggest likelihood of providing payback.

"More dollars invested in storage ought to be one of the options that you consider," he says. "That's all we're saying."

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