Released October 2, 2009
PINE BLUFF, Ark. - Don Plunkett tells the story of a Jefferson County grower who began to bring in his crop, while his neighbor "circled like a buzzard," suffering from "harvest envy."
The difference between the two growers is that one had grain bins in which he could immediately cut and store his crop. The other grower didn't.
"People that traditionally had not used grain bins in the past have now put them in," said Plunkett, Jefferson County extension staff chair for the University of Arkansas Division of Agriculture. "They start crowing and bragging that ‘I can go out there and harvest when other people are just sitting still or when I'd normally be sitting still'."
The shiny metal cylindrical bins with conical caps have been popping up like mushrooms in row crop areas.
"On-farm storage has been growing in popularity for the last 10 years, but has surged in the last five," said Scott Stiles, extension economist-risk management for the U of A Division of Agriculture.
There are several reasons for the increasing popularity of the grain bins:
- The basis, the difference between the cash or local price and the futures price, and commodity prices can be weakest at harvest, when the majority of growers are delivering crops. "With storage, you could possibly capture some improvement in both price and basis by holding crops a few months after harvest," Stiles said.
- A switch in the state's crop mix. "We used to have more than 1 million acres of cotton in the state and corn was practically non-existent," Stiles said. "With the transition to more grain and less cotton, the storage building boom started."
- A financing program from the Farm Service Agency is offering growers low-interest loans to help them construct bins of their own.
The grain bins have other advantages too.
"You stop paying custom drying charges," said Glynn Guenther, a Jefferson County corn and rice producer. "You can dry rice for half of what the elevators charge."
The same goes for corn, he said. Much of what's been harvested so far has 17 percent to 17.5 percent moisture and higher.
"You can dry it, then haul it down to Tyson or whoever and you won't have to take any dockage" for corn that's too moist, Guenther said.
Bill Groce, executive director for the Farm Service Agency in Jefferson County, said there are a couple of lending options for producers for construction and use of the bins.
"Loan amounts have been recently increased. If a farm or entity qualifies, then a loan could go up to a half-million dollars," he said. "If it's a really big farm, it's possible they could qualify for multiple loans."
Groce said producers can also look into FSA loans on bin-stored crops.
"Store the grain, come to us and we'll make a loan on that grain," he said. "Interest rates are low - a percent and a half. A producer could take that money and pay off higher interest rate production loans and wait for the basis to get better."
Groce said information about the loans is available by contacting the county FSA office.
The bins offer more control over time and equipment.
"In the past at harvest time, we'd have great big, long lines at the grain elevators and farmers were content with that," Plunkett said. "Then the economics started changing and farmers begin to think that time is money" and waits up to 12 hours meant trucks were tied up and fuel was being burned."
Growers find bins are worth the investment, he said.
"Most farmers I've talked to say they'll pay for themselves in a short number of years," Plunkett said.
"They're a great marketing tool," Groce said.
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http://www.uaex.edu/news/october2009/1002grain_bins.htm
Contact: Mary Hightower, (501) 671-2126, mhightower@uaex.edu
