This is what I've been talking about

[malleefarmer]

silence from the author.... sorry john

[Hopperbin]

Yes it is. But in negotiation about how much gravel base I need. Was just told I need 18 inches of base road crush gravel. 100 yards. Plus another 75 for fill in the center of pad. 4 inches of base should be enough I thought. Hope this is not going to be the excuse when the floor falls apart. So checking into that at the moment.

[Hopperbin]

That is 175 yards gravel per bin. Almost 5,000 dollars worth per bin delivered here.

[jdepape]

I was going to add something a while back - after just a couple of posts - but chose not to. I've been arguing the marketing benefits of on-farm storage for some time, I didn't think I needed to repeat myself.

I guess I shouldn't be surprised - rather than discuss the benefits of storage as presented in the article, most posts in this thread are focused on the tax and subsidy treatment - as if that's why he likes storage and why "we" don't.

Sorry SF3 and bucket - but do your really feel that beat up and victimized?

The US may have supported on-farm storage but it makes sense even without preferential tax treatment.

I was really hoping that that message got through. Specifically:

- You've removed control from the ABCs and replaced it with farmer storage all over the nation

- "As long as farmers have good-quality corn and good-quality storage, I think they hold the cards."

- "Storage is going to pay for itself over time. Any time you maintain your possession of the grain, it opens the door for flexibility in marketing."

- If farmers sell grain at harvest instead of selling in March, May or August, they lose the opportunity to take advantage of the carry in the market

- Ruff sees storage playing a large role in future farm profitability.

- Ruff thinks managing the stored crop's condition is worth the risk. "When it comes down to it, that opportunity makes more than what it costs you, or what your risk was, by using the basis to your advantage."

- North Dakota has 2.7 bushels of on-farm storage for every bushel of commercial storage, the highest in the major corn-growing states. The mismatch often gives farmers more leverage in the basis markets.

- "A light bulb clicked on somewhere along the way and farmers realized they could capture the carry and pay themselves storage. Farmers are taking on that country elevator mindset," he said.

- "And it seems like the whole thing has changed from the 'farmer's got to sell it' to 'what do we do to make him sell it?'"

I'll repeat myself - farmers have more influence over basis than they think. I guess I should say <b> Western Canadian </b> farmers, because US farmers seem to have figured it.

[mbdog]

John...good post. It frames pretty well the positive aspects of "investing" in good storage.
Investing in the capacity to withhold production from the market can cast a large shadow on price projections/forecasts (like the wheat markets have been) if the spin is on, but the trade will talk markets up and down regardless, giving more pricing opportunities for those with the capacity to wait it out. This isn't rocket science...it simply describes the grain markets as they have always been...with the exception of wheat. Now its in the mix.
Jury is still out on whether the last six months was a shit show for producers or not if you still hold the grain. Some on AV argued it was the end of the world, but never the less, many issues got highlighted, and not all are negative...depends how you look at things. What is clear though, like it or not, is the good ship Market Driven has set sail and you need to deal with it and its volatility. Consequently, improving storage/marketing has greater significance going forward.
I pointed out before the textbook technical reversals in all the quarterly wheat charts. IMO, this markets will be bought. It would be great if a sooner-rather-than-later wheat/grain price spike would now punctuate the point of producer storage investment, but we will have to see how it plays out. We are building off a reversal, basis should improve, and there is complacency in ownership. In todays markets, this can turn on a dime with dramatic price consequences. Thats todays market reality and IMO is probably the most significant aspect of having good storage...the time it can buy if one can afford it.
Liquidity and converting to cash has been/is a seperate issue when considering storage, but definately related. Its times like this that I value my storage...it gives me the ability to act/control, not react to trade inflicted pandamonium...if I can afford it. Through time, especially post 2008 when volatility became the new normal, I've tried to manage myself into a position where I am less of a price taker...as all businesses should. Read the signals and invest/risk accordingly. For me it means assuming/owning 50% carryover capacity, and/or learning more about paper replacement strategies. Not that I want to...I'd rather cash out in the year but given the circumstances, its where I see opportunity and ROI.
The value towards harvest management is also a major issue for me though. It is hard to calculate the what-ifs when it comes to good storage, but its not a question of what it cost me, rather how much I'm saving or making on the investment in an operational sense.
Arguing the choice, which I have, whether the grainco's or me should own/invest in the storage space...I choose me hands down.
While this winter has definately cast a negative mood over the cash grain markets, it has been an interesting winter on AV.
P.S.....I don't sell grain bins.

[farming101]

I don't think there are many farms in Western Canada that cannot store the production from a good yielding crop.

The problem is that there are some areas where there have been few opportunities to sell and deliver grain and turn a profit. Farmers in those areas are contemplating building storage to care for the excess. If the grain buyers, exporters and transportation systems are to small, old, lazy, greedy or stupid to move production when there is money to be made than farmers get upset.

Modern storage is a great asset but it is not cheap. See Hopper's post. But lots of new storage is being built every year.

John, many including myself DO need educating as to how to use the markets to earn the carry. Don't give up trying to get that message across.

[farming101]

Good post mbdog

[mcdon]

A limitation of capturing storage in a futures market
that is at carry is that it requires the producer to
establish and maintain (margin calls) a futures
position. Given the large initial margins this can be
prohibitive.

[westernvicki]

Oh please, John we already have storage on farm which we do use to hold and store for the market place. Problem is at some point in time you need to sell for cash, and problem is with the current transportation system, it is still landlocked, and while those who did hold until now are happy to receive a better price, but still seeing the incredible gap between US and CAN farm prices large indeed than even when the CWB was in place.

Last week with improved liquidity wheat was an amazing: 5.50$ bu range, farmers were ecstatic to see 6.00 new crop, meanwhile it was over 7 in the USA. Reality is Canadian farmers with higher cost of production cannot afford to profitably grow wheat at these values given average yields.

And so the billion dollar question is:
How do we close the increasingly wide CANADIAN basis, which will set in like a wedge? Increased competition? Better transportation?

What does the US do better: local markets, more food processing, better farm support mechanisms, better transportation, not without problems indeed but more options than Canadian farmers.

What will address this, because you cannot grow 6.00 wheat, 10.00 Canola and &$ peas in Canada for the long term.

Suggest a solution that has value.

[wd9]

"" Reality is Canadian farmers with
higher cost of production cannot afford
to profitably grow wheat at these values
given average yields. ""

Reality is, no one cares. You'll grow it
anyway.