UK Grain 09: Ageing grain stores make life difficult

As well as the simple difficulty of managing storage at harvest, the state of many grain stores also highlights an expanding gap between what is available on farm and what the buyer requires, says Gary Markham, director of agriculture at accountants Grant Thornton.


At the forthcoming UK Grain event, to be held on November 3rd at the Newark Showground, Mr Markham will be explaining the options open to businesses that need to renew or upgrade existing storage facilities.


“A key point that now also needs consideration is vendor assurance,” he says. “Buyers such as the mills and big multiples all want a precise product at the right time. If a farm can’t provide that they will go to somebody who can.”


“This is making it increasingly difficult for individual farmers to market their grain to these customers, because they can sell only what’s in the barn, load it out and then have it tested only when it arrives at the buyer’s premises. In this case it is simply impossible to provide the assurance the buyer requires.


“The second key issue is logistics. The cost of fuel and transport now has a big impact on contracts, costs and even the ability to supply certain buyers. The cost of an operation that can handle only two loads a day is considerably higher than for those moving up to seven or eight loads in the same time.


Logistics


The logistics not only involve moving it out of store, but also cutting waiting times at the mill – you cannot afford to have a truck waiting two hours to tip,” he explains.


Years of underinvestment now often culminate in heaps of grain stacking up in front of an aged, overworked and unreliable drier as creaking stores and, in some cases, unsuitable, unaccredited barns filling up with wet grain.


While the farm seeks solace in the fact the storage is ‘all paid for and not costing a penny’, this is an incorrect assertion, says Mr Markham.


“You need to consider the cost of rejected loads – the loss of premium and transport costs – and the difficulty of meeting assurance standards as well as the time.


It’s often the farmer himself that runs the system simply because nobody else has the experience or expertise to keep coaxing it along. Farms need to also consider the cost of this time, effort and risk.


“In my experience the shortfalls are revealed when this type of farm joins a machinery syndicate. Some farms will have better facilities than others, but reality bites when the store’s 20t/hr pit is being asked to cope with the output of the new combine. That’s when everything suddenly starts to fall apart,” he adds.


Replacement options


There are many reasons why farms need to consider changing or updating storage, but the replacement options boil down to two or three, main options:



  • Invest in updating existing storage or a new building, with extra capacity to possibly store for neighbouring farms
  • Buy capacity in a central storage facility
  • Join a syndicate that can invest in new group storage for members with extra capacity to rent out

Whatever the route, it’s vital to also include the existing store in the equation. This will have a value and possibly offer potential to be converted to commercial storage or even offices or dwellings. This could provide the capital required for a new build or the fees for joining a central store.


Another option is to rent space in a medium-sized private store. These 10,000-15,000t capacity sites are now becoming more common and are often owned by machinery syndicates. They provide the facilities for their members’ crops and spread the cost by building additional capacity, which they rent to others, outside the original group.


But while these ventures may run a pool, they are unlikely to condition and blend loads to the same standard as a larger central store.