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Alton, Ia | I used to work off farm, implementing large capital projects for companies. One of my things was to analyze each project for returns, so I did the same for my bins. I came up with a 35% return several years ago, so I built. There aren't many places you can get 35% on your money. This was based on local elevator carry's, little cheaper drying, some annual repair expense, taxes, etc. Now, just to be fair a large benefit was from being able to expand on some identity preserved grains we already were doing.
Then along came Katrina, and damn, I was glad I had bins.
I know many people think on farm storage is nuts. I think you need to separate the act of marketing from the act of delivering. I still sell ahead, sometimes 2 years, but rarely ever deliver off combine.
Also, I think you need to "overbuild". Everyone is worried about wasting money, but around here, the basis widens so much in October, and the storage for some reason equals the carry :), that the extra bushels are sold at cost or below. I was advised to build for 'average" yields, and haul the rest to town. My bins cost $1.06/bu, so when I got ~$.70 storing until July last year, then I paid for most of that extra space pretty quickly. | |
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Why do you/or don't you have grain bins?
