U.S. farmers resort to giant storage bags to avoid cheap sales
As U.S. farmers turn in record grain crops this autumn, many will have a powerful new tool - giant sausage-shaped storage bags - to help them avoid the lowest prices in years and gain more control over trade with giants such as Cargill Inc.
Demand has surged this summer for the white polyethylene bags the length of a football field and the equipment required to fill them, according to manufacturers and wholesalers.
They allow farmers to store millions of bushels of corn and soybeans at a fraction the cost of conventional silos and far more efficiently than leaving grain in the open air.
The bags, which are about 300-foot (91-m) long and 10 feet in diameter, are common on the Argentine Pampas but until recently a rare sight in the U.S. Midwest, where the expansion of big elevators and 50-foot high silos has generally kept pace with ever-expanding crops.
But with many bins still overflowing with last year's crop in the world's top grain grower, farmers are snapping up these systems as a practical necessity ahead of bumper harvests, and as a safeguard against another winter of railroad delays.
They may also be a sign that farmers will not be rushed into dumping their harvests quickly. Prices for corn to be harvested in autumn have tumbled as much as 18 percent so far this year, leaving growers hoping for a rebound.
"This year, with the Canadian and the U.S. markets both demanding product, we're running overtime and trying to keep up with orders," said Jerry Sechler, vice-president of sales at Loftness Specialized Equipment Inc, a Hector, Minnesota-based privately-owned firm that introduced bagging machines into the United States in 2008 after studying operations in Argentina.
The systems also represent the latest front in an ongoing power struggle in the rural heartland between farmers, who want more say in how and when their crops are sold, and merchants such as Archer Daniels Midland and Bunge Ltd, who control the main arteries of trade.
ADM and Bunge have cited the expansion of on- and off-farm grain storage capacity for their slumping agribusiness margins in recent quarters as it is forcing them to pay up for grain to keep exports flowing and processing plants running.
"Within the last year, that fact has had a negative impact on overall margins in the grain chain. I think it will take another good crop for that to reverse," Bunge CEO Soren Schroder told Reuters.
MORE TO STORE
Years of high prices on record production helped by fencerow-to-fencerow plantings and historic gains in yield have given farmers healthy profits that they can spend on storage to see them through rough times, like this year.
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