Client Corner: How do I calculate the cost for storing grain?

Contributed by Don Hofstrand, co-director Ag Marketing Resource Center

hofstrandHow do I calculate the cost for storing grain?

The cost components of storing grain versus selling at harvest are:

  • Storage facility cost
  • Interest on grain inventory
  • Extra drying of corn
  • Extra corn shrinkage
  • Extra handling cost
  • Quality deterioration
  • Storage facility cost

If grain can be stored in existing farm storage facilities, the ownership costs (depreciation, return on investment, maintenance, insurance, etc.) of the farm storage facility are not included in the analysis of whether to store grain in a particular year.

These costs are incurred whether grain is stored or sold from the field at harvest. Therefore, they do not affect the annual decision of whether or not to store grain.

However, if grain is stored commercially, the commercial storage charge should be included in the analysis because the charge is incurred only if grain is stored. Storage charges vary among elevators, but usually are a fixed charge for the first few months with an additional charge for each additional month thereafter. Some elevators charge a daily rate.

Read more on the Cost of Storage at: http://www.extension.iastate.edu/agdm/crops/html/a2-33.html. Or use this decision tool to project the cost of storing grain past harvest in existing storage facilities or commercial storage: http://www.extension.iastate.edu/agdm/crops/xls/a2-33.xls.

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