Here's a post from deputy business editor Ian Ashbridge
I'm often mystified by how many farmers rubbish the idea of central grain storage. Can anyone help?
It seems to me the pros heavily outweigh the cons. Most grain storage on farms in this country is woefully out of date, hopelessly energy inefficient, is prone to packing up in the middle of harvest, and requires extra labour to run it. I can't be the only one familiar with the sight of a bigger pile of grain outside the shed than the one in it.
True, there's plenty of shiny stuff out there too. But at what enormous capital cost? Surely better to join one of the many co-operatives for a much more modest charge and let them have all the worry and hassle?
They can also dry it, treat it and blend it, and deliver it to the miller or consumer without a farmer having to drop everything because the grain merchant has arrived to sample it or there's a lorry sitting impatiently in the yard.
Sure, you can't grab the market price rallies when they come, as you could if it was sitting in your own store and you were marketing it yourself. But pool prices have been encouraging in the recent, darker years, and how much of those rallies can be lost in a screenings or rejections?
Comments (1)
For my own interest, as I still fail to understand the point/ economics of central storage.
From the article it said the buy in costs were £85.0/t or £8.50/t per year for 10 years.
If this year's milling premium was £10/t was it worth the cost of the space?
Is there a handling and haulage cost to the store, as it was not mentioned?
If a premium of more than the total store costs can't be seen in advance, would it not be easier to just grow feed and sell surplus at harvest and put an Option on to benefit from a price rise?
The seller still has not worries about the state of their store,
no men needed to look after the grain,
all the interest goes to the seller,
the building may be able to be used for another more profitable use or just keeping the machiery safe.
Most importantly, No worries of a capital loss if the market falls greater than the cost of the Option.
Pool selling/tracker selling arepoor and leads to a fluctuating net farm income. Seeling at the average price over a marketing season does not create a stable net income line.
No trader/advisor can second guess the market, even me! Those that say they can should maybe be avoided.
Comment left on February 24, 2007 2:39 PM
Posted on February 24, 2007 14:39