Thinking about putting up more grain storage? Prepare to get in line and wait awhile. And investigate low-interest Farm Storage Facility Loan opportunities via USDA's Farm Service Agency.
The current grain storage building boom is far from over if long-term national corn and soybean yield trend lines are any measure. USDA's yield trend lines suggest that corn yields are increasing 2.32 bushels per acre per year. Soybean yields are rising at a not-so-spectacular 0.45-bushel clip.
But an analysis by CoBank, a Denver-based Farm Credit cooperative bank, reports that billions of dollars more must be invested in new storage to handle peak grain production between now and 2019. In just the Corn Belt, grain storage must be expanded to handle 2.3 billion more bushels of grain, according to Dan Kowalski, lead analyst at Co-Bank's Knowledge Exchange Division.
More than half of that extra storage is expected to be built off-farm, costing an estimated $3.8 billion. Most of it'll be built in the Corn Belt states of Illinois, Iowa and Nebraska.
The report, "Change on the Rural Horizon: Managing the Expansion of Grain Storage in the Corn Belt" estimates that roughly 80% of U.S. grain storage capacity is located within the 12-state Corn Belt region. And, the region accounts for 90% of new capacity added since 2005.
Off-farm storage now accounts for 42% of Corn Belt capacity. Its share grew nearly twice as fast as on-farm storage.
That suggests, according to Kowalski, that most producers are opting to take on less risk and less leverage by utilizing elevator storage. Meeting the evolving needs of grain producers will be critical to the future survival and success of grain handling firms, he says.
The average commercial grain storage facility has grown by 30% since 2005. Even before 2005, the grain storage/merchandising business model was shifting toward larger networks and storage systems encompassing multiple counties. Continued success will depend on the ability to offer sufficient storage in optimal locations, faster/newer technology and competitive rates, he concludes.