As growers continue to expand on-farm grain storage,
the question of economic viability gains significance.
There are many examples of growers investing in
on-farm grain storage and paying for it in one or two
years because they struck the market at the right
time, but are these examples enough to justify greater
expansion of on-farm grain storage?
To make a sound financial decision, we need to compare
the expected returns from grain storage vs expected
returns from other farm business investments, such as
more land, a chaser bin, a wider boomspray, a second
truck or paying off debt. Calculating the costs and
benefits of on-farm storage will enable a return-on-investment
(ROI) figure, which can be compared with
other investment choices.
Using the template on page 6, a cost-benefit calculation
can be done to compare different storage types or
varying storage scenarios. For example, the four option
columns could be used to compare silos to bunkers or
compare varying combinations of planned benefits. More
templates can be downloaded and printed by visiting
The key to a useful cost–benefit analysis is identifying
which financial benefits to plan for and costing an
appropriate storage to suit that plan. To compare the
benefits and costs in the same form, work everything
out on a basis of dollars per tonne ($/t). It is also helpful
to reality check each figure as we go – ask ourselves if
the number we’re entering is realistic. Don’t get caught
up on figures that need to be estimated – we could
debate all day on what the grain market is going to do.
A more productive approach is to use averages based
on medium-term to long-term trends.
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