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November 18, 2020

Agricultural Business Management: Benefits of On-Farm Crop Storage

U.S. crop production is growing and farm storage needs to grow with it.

Crop storage is a perpetual balancing act each year for American farmers and 2020 is no exception. The importance of a strong and resilient domestic food supply is at the forefront of this year with on-farm crop storage a vital component of its fruition.

When crop production is high, cost and demand for proper crop storage grows. The USDA projected record corn yields this year at 181.8 bushels per acre. If projections hold, the U.S. is on track for corn production to rise above 15.2 billion bushels—the most corn on record and 12 percent higher than 2019 production levels.

As crop production grows alongside a growing world population, adequate access to high-quality storage will be needed to minimize crop waste and protect our nation’s food supply.

Why Invest in On-Farm Storage?

There are many benefits of on-farm storage for crop yields—the most beneficial being that of financial gain. The operational costs associated with transportation and logistics shrink as crops no longer need to be transferred to off-site grain elevators. These freight costs typically skyrocket in harvesting seasons, incentivizing on-farm storage even further.

Using on-farm storage also puts farmers in more control of crop sales and builds resilience against fluctuating market prices. Proper grain storage on the farm means farmers can afford to wait out suppressed market prices and sell when prices are good. Moreover, it provides flexibility in grain storage that allows for incremental harvesting or early harvesting as needed, which can hedge against the risk of potential crop damage such as flooding or drought.

Through on-farm grain storage systems, farmers can build operational resilience, lower production costs, and minimize crop loss risk.

Factors to Consider with On-Farm Crop Storage

Crop Storage Infrastructure

Before installing on-farm crop storage infrastructure, you will need to estimate the diameter and size of storage needed based on your average production rates. It is also important to secure the labor needed for assembly as soon as possible. As the rate of on-farm crop storage system implementation increases, access to the labor and supplies needed will grow in demand along with it. One bin manufacturer estimated that farmlands will lack an estimated 30 percent of the storage needed for this year’s crop and will have to resort to temporary storage infrastructure.

Risk Prevention

When installing on-farm crop storage, quality temperature control is essential in the storage of healthy crops. Extreme temperature fluctuations can cause a collection of condensation and lead to quality issues such as insect infiltration or grain spoilage. However, these automated systems do not replace consistent and thorough inspections on a weekly basis. Crop insurance is also highly recommended and used by many farmers as it gives them a buffer against the volatile nature of the industry.

Safety Management

Safety management factors to consider with on-farm crop storage include minimizing the number of times you enter the storage bin as well as the number of people doing so. When inspecting stored crops, respiratory protection equipment should be used to reduce dust and vapor inhalation. Depending on the size of your storage infrastructure, it also may be worth considering installing safety cages for ladders once they reach a certain height to minimize worker injury risk.

Investing in the Resiliency of Your Farm Operation

While on-farm crop storage systems require an upfront initial cost, it’s an investment that pays for itself over time. Storing crops on your farm operation gives you more control over selling crops and more flexibility when harvesting them.

As a proud champion for the future of agriculture, AgAmerica understands the ebb and flow of the industry. Many of our team members have deep roots and personal ties within the agricultural community. Through this holistic understanding of both finance and farming, we stay committed to providing the best resources to support the long-term success of farmers and ranchers nationwide.

If you are interested in partnering with a lender who knows agricultural business management and  pushes beyond the boundaries of traditional finance as an advocate for the future of the American family farm, contact one of our ag land lending specialists today.

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