We’re getting a grain bin!
Here’s where it’s going to go, and thanks to Maria’s Dad and our friends the Bronks, we cleared the space in no time.
It seems so simple to say we’re getting a grain bin, but there’s so much that has and will go into this. It’s a good example of what smaller farms like ourselves have to go through when they are starting out, trying to grow and expand AND trying to sustain an existence let alone the environment and everything else. You see, people often ask questions about why aren’t you doing this, or why don’t you do that yet and they’re great questions, really. The hard part about answering them is that we want to be these things, but so many of the decisions that come with starting any business–let alone a farm–boil down to money. Can we afford it? Is it even worth it? Does it help us become more efficient, save money or meet some other goal or set of goals?
So, let me answer some of those questions for you and illustrate what this will mean for us. First, we can afford it. We’ve paid off the loans we had out for our walk-in freezer and our high tunnel, and the farm is doing well enough that taking on another loan won’t be a major issue. That is, other than being able to throw that chunk of money into the profit zone, haha. Which brings us to the fact that this grain bin is very worth it. Sure, it will be the biggest loan we’ve taken out thus far for equipment, but it will allow us to store the corn we grow. Hence, we will be more efficient because we will have taken some degree of control over a chunk of another chunk of our expenses (see under: “Feed”). It will also help us save money because it costs us a LOT less to grow non-GMO corn than it does to buy it on the market and have it trucked to the mill……if you can FIND non-GMO corn that is. How much less? Well, it’s often said that non-GMO corn on the market is about 150% the cost of the round-up ready varieties. If we went off of today’s price for next year’s round-up ready corn, say May 2014 corn, then a bushel of that corn will go for $4.65. To give you an idea of how volatile corn and other commodities are, corn you buy today is around $6.00 per bushel and last summer it set a record at over $8.35 per bushel. Anyway, we’ll stay conservative with the $4.65. If we take that price, 150% of it is $6.98 per bushel for non-GMO corn. In case you were wondering, organic corn is often 200% the cost of round-up ready corn, sometimes more.
On our farm, we are smalllll potatoes. Well, small corn. We’re growing 13-14 acres this year and hopefully every year from now on. If we assume a harvest of 100 bushels per acre, we could get 1,300 bushels of corn. It will probably be less, but let’s roll with that number. 1,300 bushels of non-GMO corn trading at next year’s price that is currently $6.98 per bushel means we have $9,074 dollars of corn in the field. What did it cost to grow that corn?
All figures approximate (i.e. based on memory)
$550 for seed corn
$1350 for spreading Environmentally Safe Nitrogen (ESN) and Potash & starter fertilizer
$250 for fuel (this is high because the disc we used to till worked at ~65% and required more passes)
$500 for custom tillage, planting & cultivation (our neighbor helped us out with his tractor)
$500 for custom harvest (we’ll have to hire a combine operator)
We’ll also have to borrow a couple of gravity boxes to transport the corn from field-to-bin, hopefully borrow a grain auger to get the corn into the bin and borrow a grain cleaner to run the corn through before we put it in the bin. If we can’t borrow the auger and cleaner, that will likely run us another $1,000 or so depending on what we got. A good gravity box can cost a lot, but if we went with a couple of smaller versions, we could probably get them for $2,000-$3,000. This year, we’ll borrow them. This is equipment we’d reuse for a long time too, so we shouldn’t include it in the costs above (it should be counted overall though!). Of course, we also had to buy a corn planter (4-row), a cultivator to weed most of the field, and a disc to till with. I got great deals on all of those, so we ended up spending $2,750 on them.
Anyway, we’ve got (eventually) $6,000+ in equipment that we need to actually be in this corn growing business, and $3,150 spent to plant, weed and harvest the corn. So, the corn we planted this year will net us $24 in savings, assuming we purchase everything I listed above and get smoking deals. If we just look at input costs though, we would save $6,024 with this year’s corn. That’s not bad at all! I should add here that the corn price per bushel I listed above is pretty low. It’s not devastatingly low, but let’s just say that it has a lot of major corn growers pretty anxious since they may end up making 50% of what they did last year when corn was setting all-time highs. I should also add that there have been a lot of bad years for cash crop growers and farmers in general too. There is a lot of news about how much money they’ve been making recently, but this is most likely an anomaly and this bubble will also pop, but I digress…
So now we’ve got the bin to take into consideration. How much is a grain bin? Well, based on the numerous quotes I received this year, a bin in the neighborhood of what we wanted ran anywhere from $21,000-$27,000. Holy Corn! Granted, this price includes everything one needs to store the corn (the bin itself), dry the corn (fans, heaters if you buy them, stirators if you buy them), all of the ‘small stuff’ involved and eventually what you need to unload the corn so it can be used. It also counts the labor involved, and I’m definitely paying someone to put it up since I never have and there tend to be these little clauses in manufacturer’s warranties about how valid they are if you put it up vs. they put it up. It also counts the concrete, rebar and fill gravel one would purchase. It certainly doesn’t help that metal costs a lot more than it used to.
This is a brand new grain bin too, and it will last as long as I’m alive…probably longer. One can buy used bins if they can be found, but finding the size you need is pretty difficult. A lot of them are HUGE or very small…not much in between. This is the plight of the modern small farm in America for almost all of the equipment they use. Anyway, if you find a bin, it tends to be in North Dakota or something like that. So, you also have to drive there, take it down, put it on a trailer or a semi, transport it back to the farm and then pour the concrete (etc) and put it up. You can hire that labor out too, but that will still run you at least $2,500 unless your uncle is a grain bin putter upper. You see, it is possible to save money this way, but you have no warranty, you’ve bought someone else’s problem and you’ll still have to buy fans, dryers, stirators, unloaders and many other things. It all depends on the ‘deal’ you manage to find.
Ok, so now we’re getting to cost recovery on this thing. If we’re saving $6,000 per year, we can pay it off pretty quickly with money we would’ve spent buying the corn we grew on the market. Four years or so seems reasonable. If we assume that this year’s corn buys the equipment and covers the costs, we can buy lottery tickets with the $24 we net in savings, hope for the best and pay it all off in five years.
Does it meet one of our goals? This is probably the most important one for us, and this has been a goal of ours for quite some time. We just weren’t in a place where we could actually do it. Now, we can grow most of our own feed, and we have a bin that will hold two-and-a-half times the amount of corn that we need per year. That means we can either grow into the bin’s capacity, or we can use that space for something else. We could play the markets and buy/sell grain with that space (ugh), we could buy non-GMO corn on the market when it’s cheap and use ours when it’s expensive (yay), we could even help people by drying their corn or other crops and/or storing their corn with ours. This last one is great because if we can help other people, then we can help them get to a spot where they too can buy a bin, or they can keep using ours and use the money they didn’t spend on a bin on expanding their farm.
In the end, no matter how you look at it, getting a grain bin is a major step for our farm. There has been an incredible amount of research, talking with those who know and hand-wringing over this all too, but we’re excited about getting this bin and we wanted to share the news with you. The reason this post is so long is because I wanted to try and give you an idea about everything that goes into something that can seem as innocuous as “We’re getting a grain bin!”.