Storing or selling - think about the economics

Date: 05 Dec 2016


GRDC North Panel member and agronomist Andrew McFadyen said there are a number of variable costs for growers to consider when weighing up whether to store grain on-farm against using the bulk handling system

With a bumper 2016-17 harvest tipped and cereal prices at near-record lows, many growers will be carefully considering their grain marketing options this year.
 

However, the Grains Research and Development Corporation is encouraging growers to do their sums on selling versus storing grain after harvest and to investigate any alternatives which might be available.

GRDC North Panel member and agronomist Andrew McFadyen said there are a number of variable costs for growers to consider when weighing up whether to store grain on-farm against using the bulk handling system.

“It is really important that growers understand what it costs them to store grain on farm, not just financially but the time cost as well,” he said.

“Storing grain is not a set and forget system, and ensuring hygiene, moisture and pest management is undertaken frequently and carefully is key to good grain storage.

“If growers are using temporary storage systems, such as silo bags and bunkers, the grain should only be stored for a short amount of time. The longer it is stored the more likely issues will be encountered.”

Dichlorvos, a contact insecticide, is no longer available for use, meaning there are no options available to control insects in temporary storage. The only option is fumigation which requires gas-tight storage, and growers can also use protectants such as Conserve™ Plus or K-Obiol®.

Grower Greg Morris will be utilising 2800 tonnes of on farm storage, plus grain bags to allow for greater freedom in selling his grain this season.

Grower Greg Morris farms 1200 hectares of land near Gunnedah, NSW and says he will be utilising 2800 tonnes of on farm storage, plus grain bags to allow for greater freedom in selling his grain.

“We had a rough start to the season, having missed out on the rain others further north got, but a soft spring has mostly made up for that, and we are pulling a good amount of grain off at the moment,” he said.

“We don’t use the public system, not only to give us more flexibility, but because where we are it’s overstretched and getting trucks in is very difficult, particularly during a big harvest.

“We sell grain all year round and will be holding this year’s crop until we can get the price we need to cover our costs.”

It’s an approach which Mr Morris said doesn’t always work out, with finances sometimes dictating the need to sell at a less than ideal price, but he points out that the investment he has made into his storage systems means he can maintain quality for longer periods.

“You have to be able to afford to do it, there is no point in going to the trouble of storage if you can’t hold out for better prices. The time cost are greater than you would expect and you often find yourself out loading at inconvenient times such as harvest and planting,” he said.

“But even growers who don’t normally store grain, will most likely need to this season even for a short period given the big harvest and subsequent pressure on trucks and public storage, but unless you have an airtight storage in which you can fumigate, you need to sell that grain by January.

“If you don’t, you will be causing yourself a huge headache in the new year, because even one weevil will cost you when you do go to sell.

“I don’t think the low prices will continue, because we just can’t grow it for these prices, so the trade will buy what they can, but what does get effectively stored won’t be coming out until the price is right.”

Andrew McFadyen said many mixed farmers will be considering feeding grain to stock, and for those with barley or lower protein wheat it could be a viable option.

“Again I would stress though to consider all points, and look to the forward estimates for grain and livestock markets. Prices for grain may well go up next autumn,” he said.

“Growers considering buying livestock in to feed cheap grain should also consider the current high livestock prices, and run the numbers where future markets may go when it is time to sell. Sound economic principles should form the foundation for this management decision. 

“It’s been a hugely variable season, and to see many growers ultimately achieving good yields prompts discussion about where to now. For that discussion to occur, growers need to understand their metrics, their inputs, the cost of their time and pressures from other industries.”

Further information on grain storage is available from the GRDC’s Stored Grain Information Hub at http://www.storedgrain.com.au

The GRDC’s Stored Grain National Information Hotline is also available to help growers with all their grain storage investments and practices. By phoning 1800 WEEVIL (1800 933 845) growers will be put in contact with their nearest grain storage specialist.

To support growers with their on-farm grain storage preparations, the GRDC has released a Stored Grain app for iPhones and iPads. It can be downloaded for free from the iTunes store, or via this link.

Contact Details 

For Interviews

Andrew McFadyen
0428 763 023
andrew@mcfadyenagconsulting.com.au

Contact

Ellen McNamara, Cox Inall Communications
0429 897 129
ellen.mcnamara@coxinall.com.au

Region North