Spring Farm Guide
Economical grain storage Brenda Stefanson, PAg Farm Business Management Specialist Regional Services, Ministry of Agriculture Watrous Regional Office What is the most cost effective way to increase your storage capacity? Ministry of Agriculture staff have made some calculations to help inform your decision. This article provides a cost comparison on three types of storage options: (1) steel hopper bottom bins with steel foundations and aeration, (2) steel flat bottom bins with concrete floors and aeration, and (3) grain bag system. The calculations are based on pricing information gathered in early 2011. The actual investment costs will vary based on the prices you negotiate with your supplier. To enable a cost comparison, several assumptions are made. It is assumed that the farm requires 120,000 bushels of storage capacity, based on 4000 seeded acres with an average yield of 30 bushels per acre. The cost of augers for loading and unloading is included in the cost of bins. The cost of the grain bag system includes the cost of a loader, un-loader and grain cart. The cost of spoilage in bins is not included but spoilage is included in the cost of the grain bag system because it can be a significant cost especially when storing a commodity with a high market value. Let’s look at the total investment cost of the dif-
ferent storage options. To store 120,000 bushels, you will need approximately 22 hopper bins with a capacity of 5390 each. With the cost of foundations, aeration and auger included, the total investment is estimated to be $459,184.60 or $3.83 per bushel of storage space. You will need just 9.6 flat bottom bins with 12,500 bushel capacity, to store the same amount of product. Including the cost of concrete floors, aeration and augers the total investment cost would be approximately $293,500.00 or $2.45 per bushel of storage capacity. Grain bags can also store up to 12,500 bushels so 9.6 bags will store 120,000 bushels of grain. The total cost of the bags would be $7,584.00 but this purchase must be made yearly. You won’t need foundations or aeration but you will need a bagger, un-loader and grain cart. Including these costs, your total initial investment is $112,584.00 or $0.94 per bushel. Assuming that bins will last approximately 25 years and augers, grain baggers, un-loaders and grain carts around 10 years, we can calculate the annual cost of the various storage options. The annual cost calculations include depreciation, opportunity cost, repairs and maintenance and interest on investment. The annual cost of the grain bag option includes the yearly cost of bags and an allowance for spoilage. The total annual cost of steel hopper bins with
steel foundations and aeration is approximately $70,437.32 or $0.59 per bushel of storage capacity. Flat bottom steel bins with concrete floors and aeration show an annual cost of $45,916.00 or $0.38 per bushel. The annual cost of the equipment (bagger, un-loader and grain cart) necessary in a grain bag system is $24,360. This comes in at just $0.20 per bushel but adding in the yearly purchase of bags and cost of spoilage, the estimated annual cost of the bag system is $0.37 per bushel. This does not include the cost of the tractor required to power the equipment. This analysis seems to indicate that grain bag systems and flat bottom bins are lower in initial investment costs and annual costs. However, there may be other factors that influence your decisions on grain storage. You might also be considering the ease of unloading hopper bins or the convenience of onfield storage provided by grain bags. Environmental factors may also be of concern and you will want to watch for information from the grain bag recycling pilot project currently underway. For more information on this subject contact: • Mike Pylypchuk, Provincial Business Management Specialist (306) 787-5963 • Brenda Stefanson (306) 946-3214 • Agriculture Knowledge Centre (1-866-457-2377) or • Visit our website at www.agriculture.gov.sk.ca.
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