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Consider all costs when using or renting grain storage

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Grain Bins

From the Alberta Ag-Info Centre

Knowing all the costs of grain storage is key in your grain marketing plan or asking the right price to rent out your bin.

During harvest, many producers are able to sell their grain directly off the combine for the right price. However, due to contract requirements, delivery or shipping opportunities, that may not be possible. Alternatively, some producers have excess bin space and see an opportunity to rent this space out to their neighbours.

“The most significant ownership costs of grain storage are depreciation, return on investment, repairs, taxes, and insurance (often called the DIRTI 5),” says Dean Dyck, business management specialist at the Alberta Ag-Info Centre. “Depreciation is the loss in value of the asset over its lifetime due to wear and tear and obsolescence. Typically, flat or hopper bottom bins depreciate at 4% per year over a 25 year lifetime.”

Return on investment is a calculation of the interest on money tied up in the storage facility. ”The rate of return on investment can be the rate at which money is borrowed. This is multiplied by one half of the original purchase price because over the life of the bin, its average value is only half of its purchase price.” Dyck adds repairs are needed to maintain the storage in reasonable condition. “As a guideline,” Dyck says, “use 1% of the purchase price for grain bins. Taxes and insurance can be estimated at 1% of the original purchase price.”

Using these calculations, says Dyck, producers can calculate the cost of owning their bins or determine the minimum amount to rent them out. “For example, flat bottom bins, with a lower purchase cost per bushel, generally rent between 1 and 1.5 cents per bushel per month, or 12 to 18 cents per bushel per year. More expensive hopper bottom bins generally rent between 1.5 and 2 cents per bushel per month, or 18 to 25 cents per bushel per year.” Dyck points out these suggested rates are guidelines only; producers should calculate their own rate based on cost of their own bins.

A study published by Alberta Agriculture and Forestry’s Economic and Competitiveness Division also calculated the cost of grain rings and grain bags. “Grain rings are the most economical solution for grain storage at 10 cents per bushel per year but are temporary solutions with a high risk of pest, wildlife and moisture damage and loss,” says Dyck. “Grain bagging systems have a high investment for the bagger and extractor, high spoilage and depreciation costs and low salvage values. The study estimated the cost at 53 cents per bushel per year.” Read the Grain Storage Considerations study.

Dyck says if you are holding grain in the bin for later sale, interest is a significant cost, adding the actual interest cost depends on the producer’s cash flow. “To calculate the monthly interest cost, a general guideline is to use your operating loan interest rate times the value of grain per tonne divided by 12. For example, if the cash price of #1 CWRS 13.5 is $221 per tonne and with a 5% operating loan, the interest cost of holding that grain equates to 92 cents per tonne per month.” Dyck says this cost can become significant if grain is held for a long period of time and can decrease your profit.

“Grain storage costs, the potential for price erosion, quality risks and balancing cash flow needs are all important components of a grain marketing strategy,” says Dyck. “Taking time to review your costs is a useful first step.”

Connect with the Alberta Ag-Info Centre:

Hours: 8 am to 5 pm (open Monday to Friday, closed statutory holidays)
Toll free: 310-FARM (3276)

 

After 15 years as a TV reporter with Global and CBC and as news director of RDTV in Red Deer, Duane set out on his own 2008 as a visual storyteller. During this period, he became fascinated with a burgeoning online world and how it could better serve local communities. This fascination led to Todayville, launched in 2016.

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Agriculture

Alberta needs to fill agriculture jobs, amid a Covid- 19 created foreign worker shortage

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Albertans out of work because of the COVID-19 pandemic, have a new resource to find a work in the province’s essential agriculture businesses and companies that make-up the food supply chain.

“There are great job opportunities on Alberta farms and ranches.” Devin Dreeshen, Minister of Agriculture and Forestry announced at the Alberta Legislature as the government launched a new web-based support page called, Agriculture Job Connector. Dreeshen added, “this new website will help Albertans find an exciting new job in this essential service.”

A pork farm worker in an open sow housing unit in Alberta. Photo Courtesy/Maple Leaf Foods

Alberta is not the only jurisdiction in Canada and around the world that is having problems filling farm and food supply chain jobs.

In the United Kingdom, due to temporary farm worker restrictions during the COVID-19 pandemic, farmers have been scrambling to find workers so the crops can get planted and to stop crops from rutting on the trees or in the fields. Britons, usually make up only one percent of the temporary farm workforce. Citizens have responded to calls for a “new land army” to help fill the farm and food chain jobs. Up to 70,000 workers are needed. People looking for work have flocked to websites, searches for terms including “fruit picker” or “farm worker” surged by 338% and 107% respectively, with applications up 83% in the last month.

Alberta’s beekeeping industry and honey producers depend on temporary foreign workers during the busy season. Photo Courtesy/Alberta Beekeeper Commission

Family farms and companies throughout Alberta’s food supply chain rely on the “federal temporary foreign workers (TFW) program” to hire seasonal and full-time jobs that Albertans do not historical fill. Although the federal government recently announced loosing some of the TFW rules, the industry is nervous about a worker shortfall.  The coronavirus’ on-going world-wide travel restrictions, along with a mandatory 14-day quarantine, once a foreign worker arrives,  has raised serious concerns about a possible pending foreign worker shortage.

During this pandemic, the Ministry of Agriculture and Forestry is working to reinforce that the, ‘agriculture and agri-food industry has never been more critical to the health and safety of Albertans and to our economy.’ Dreeshen added, “Thank-you to all who continue to work that keep our food supply safe.”

A combine works a field of wheat in Alberta. Photo Courtesy/Alberta Wheat Commission

Alberta’s Agriculture Job Connector has opportunities for both skilled and non-skilled workers. Some posted job openings are for one person, others need up to as many as 50 new hires. Job openings in Alberta can be found through these links, Alberta Alis, AgCareers.com, Career in Foods, Alberta Cattle Feeders’ Association and Grasslands Recruitment Specialists. A sampling of some of the openings in Alberta, with the offer salaries can be found through the  links below.

A woman works at a beef cattle operation in Alberta.

Some of the jobs open in Alberta from the links above;

Click here to read more on Todayville Edmonton.

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Business

Saskatchewan to Invest $11 Million in Funding for Ag Crops

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tomato and syringe

By Emily Folk

Saskatchewan to Invest $11 Million in Funding for Ag Crops

CropSphere is an annual conference, held seven years running in Saskatchewan, designed to inform and empower the Canadian agricultural industry on the latest developments, partnerships and technologies.

One of the most important news items out of the conference tends to be the announcement by the Saskatchewan government of its latest investments in the Agriculture Development Fund (ADF). This tradition continued on January 14, 2020, when Agriculture Minister David Marit announced a slate of crop-focused research initiatives to further empower the ADF as well as farmers and industrial growers across the country.

$11 Million for 47 New Ag Research Projects

The Agriculture Development Fund is part of the Canadian Agricultural Partnership (CAP). CAP is a federal-provincial funding system that’s on track to spend $388 million over five years on strategic agricultural research across Saskatchewan. Agriculture Minister Marit said of the ADF’s efforts, “We know these investments pay off. In fact, for every dollar we invest in research, there is a nine-to-one return on our investment.”

One of ADF’s goals is to increase the production of Saskatchewan crops to 45 million tons by 2030, and the value of those crops to $10 billion by the same year.

The $11 million in ADF funding comes from federal and provincial governments. Plus, additional money — to the tune of $8.7 million — comes from partners such as Western Grains Research Foundation, the Alberta Wheat and Barley Commission, Saskatchewan Forage Seed Development Commission, Genome Canada and many others.

These 47 new agricultural technology and methodology projects cover a wide range of opportunities and concerns. Each one supports the overarching mission of raising the value of crops produced in Saskatchewan and beyond and improving the yield of Canada’s primary agricultural products, including wheat, corn, soybeans, barley and oats.

The announced projects include research in the following areas:

  • Mitigation techniques for herbicide-resistant crop plants.
  • New methods for detecting and controlling clubroot and other diseases.
  • New technologies to efficiently separate starch proteins from different types of flour.
  • Ways to improve the diversity and stability of wheat crops to ensure they won’t fall victim to disease.
  • Methods for screening lentil and pea variants for resistance to root rot, fusarium avenaceum and other fungi.
  • Visual analytics tools to reduce labor costs, improve the effectiveness of crop inspections and spot problems.

Receiving funding for ADF projects involves competing with other researchers. Interested parties must demonstrate how their product or methodology solves an existing pain point or addresses the larger goal of boosting crop outputs.

No avenue of scientific research is off the table as long as it demonstrates merit. The material sciences regularly turn out new products for dealing with crop spoilage, pests and other factors that cause harvested crops to spoil before their time. Other projects focus on demystifying the genome of key cash crops and creating new variants that can shrug off environmental stresses.

A Call to Arms to Feed the World Sustainably

Sustainability is one of the major undercurrents any time the ADF announces a new round of agricultural research funding. Data indicates there will be 3 billion more people to feed in 2050 than in 2010. Experts also predict a 56% food gap between the calories produced by agriculture in 2010 versus the calories required to feed the population by 2050.

Research like this reveals that business-as-usual isn’t sufficient. Agricultural experts cannot meet needs without ongoing research into crop yields and resistance, soil health, efficient ways to use water and fertilizers and new crop variants that resist extreme weather.

As Agriculture Minister Marit indicated, the ROI from funding these scientific efforts is high. However, putting a price on feeding the world’s hungry is more complicated.

I’m Emily Folk, and I grew up in a small town in Pennsylvania. Growing up I had a love of animals, and after countless marathons of watching Animal Planet documentaries, I developed a passion for ecology and conservation.  You can read more of my work by clicking this link:   Conservation Folks.

 

 

 

Other stories from Emily Folk:

What the USMCA Might Mean for Agriculture and Biotechnology?

Extreme Weather Patterns Causing State of Agricultural Emergency in Canada

 

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