At harvest, corn producers must decide whether to sell their corn “wet” and pay a drying charge that correlates with grain moisture, or store the grain themselves and incur the cost of drying the grain to a moisture content that allows the corn to be safely stored. Assuming on-farm storage is available, producers will choose to dry the grain themselves if the cost to do so is less than the charge associated with selling the corn as-is. Additional costs that producers should estimate when contemplating on-farm storage include shrink, storage facility costs, handling losses, and opportunity costs.

Field Drying or Mechanical Drying

The choice of when to harvest corn for grain depends upon conditions such as weather, acres to harvest, and costs of drying. Corn that is allowed to dry in the field eliminates the need to mechanically dry the corn; either an on-farm expense or the amount a corn buyer would charge. However, allowing corn to dry in the field reduces days available for harvest and may not be an option for producers farming significant acres. Experienced producers know that delaying harvest could prove costly if weather conditions deteriorate.

If drying is available, corn harvest can begin when the grain tests below 30% moisture. Corn will accumulate dry matter until reaching a moisture content of 30 – 35% and harvesting corn at high moisture (30% or greater) generally results in poor separation from the cob. If a producer is considering drying corn in the field, harvesting close to 15% moisture reduces drying costs. However, because of concerns mentioned earlier, some producers will be unable or unwilling to allow corn to field dry. Harvesting corn below 15% moisture increases the risk of mechanical damage during harvest. Corn grain can be stored long-term at approximately 14% moisture. Typically, corn for grain is harvested at moisture levels of 18 – 25%.

Heat Drying

For reasons of efficiency and effectiveness, a large portion of U.S. corn is mechanically dried each fall. There are numerous types of grain-drying systems that utilize heated air to remove moisture, including high-temperature bin, continuous-flow bin, self-contained batch, and self-contained continuous-flow. Each of these systems (except high-temperature bin) involves corn movement, and in some cases, the mixing of wet and dry corn. The cost associated with systems that use gas-fired driers will vary depending on the system used, the moisture of corn, and environmental conditions (e.g. air temperature and relative humidity). A gas-fired dryer using 0.02 gallons of propane per bushel per point of moisture removed is a common usage rate and can be used to assess the cost of heat-drying corn.

For example, assume that corn is brought from 25% moisture to 15% (10 point moisture reduction). Assuming a propane cost of $2.50 per gallon, the fuel cost to dry this corn is $0.50 per bushel (10 x $2.50 x 0.02). To this is added the cost of operating fans, running augers, lights, and other electricity sinks. Commercial elevators will frequently charge $0.04 to $0.05 per point per bushel for drying. For a 10 point reduction in moisture, $0.05 per point equals $0.50 per bushel.

Air Drying

Natural air-drying systems can also be used to remove moisture from corn. Similar to heat-drying, weather and other factors can make a big difference in the efficiency of air-drying systems. Low-moisture corn, shallow depth of the corn stored, and efficient fans all minimize the expense of air-drying. Low relative humidity also reduces the time required to air-dry corn and helps preserve corn quality. Natural air-drying systems require more time to remove a given amount of moisture than heat-drying systems because warm air holds more moisture than cool. Therefore, the electricity cost of drying corn using air movement will be greater than the electricity cost associated with heat-drying.

Shrink

Because corn is sold on a weight basis, the removal of water reduces the amount of grain available for sale. This reduction in weight is a cost of storage and occurs regardless of where the corn is stored. Water shrink is the loss of weight caused by drying and is expressed as a percentage of the original quantity. Corn buyers use a shrink factor to estimate the loss of weight from drying. Commercial elevators often use a shrink factor of 1.4 or 1.5. This factor (used to calculate total shrink) also accounts for additional losses associated with handling, moving, and storing grain (foreign material, cracked kernels, etc.).

More information on shrink is available in the Purdue University Extension publication Calculating Grain Weight Shrinkage in Corn Due to Mechanical Drying.

Storage Facility Costs

If corn is stored on-farm, ownership costs associated with storing and moving grain include depreciation of facilities and equipment, insurance, and maintenance. When grain is stored in existing facilities using producer-owned equipment, these ownership costs do not influence the decision of whether to store or not. These costs will be incurred by the producer regardless of whether the grain is sold at harvest or stored. Ownership costs vary greatly depending on size, quantity, and quality of storage facilities and equipment. Annual storage ownership costs vary from $0.05 to $0.25 per bushel per year.

Commercial storage facilities might charge a fixed storage rate for the first few months and then an added charge for additional months. A typical rate is an initial charge of $0.10 to $0.15 per bushel for the first 3 months of storage and an additional charge of from $0.02 to $0.05 per bushel for each additional month. Some commercial facilities charge a daily storage rate.

Opportunity Cost

Corn not sold at harvest and stored for later pricing has an opportunity cost. Producers should consider this opportunity cost when contemplating when to sell grain. For example, assume that a reasonable rate-of-return on invested capital is 6% annually. On 100,000 bushels of corn earning a profit of $0.50 per bushel, this opportunity cost is approximately $250 per month. This opportunity cost is the return that could have been earned had the producer sold the corn at harvest and the profit invested earning 6% annually.

Following harvest, corn producers have additional costs that must be taken into account. This is true regardless of whether corn is sold at harvest, stored on-farm, or stored at a commercial facility. These costs can be broken-down into storage costs such as depreciation, shrink from loss of moisture, and costs associated with energy use. Some costs (e.g. storage and shrink) will be incurred regardless of whether the grain is sold at harvest or stored. Producers who fully understand all costs associated with selling or storing grain will be well-positioned to make profitable choices.


References:

  • Edwards, W. 2014. “Computing a grain storage rental rate.” Ag Decision Maker. Iowa State University Extension, Ames, IA.
  • Edwards, W. 2014. “Cost of storing grain.” Ag Decision Maker. Iowa State University Extension, Ames, IA.
  • Gessner, H., S. Pohl, and D. Nicolai. 2009. “The cost of wet corn at harvest.” Extension Extra 5056. South Dakota State University, South Dakota Cooperative Extension Service, Brookings, SD.
  • Humburg, D.S., R.E. Nicolai, and K.D. Reitsma. 2009. “Corn grain harvest.” Pp. 93–98. In Clay, D.E., S.A, Clay, and K. Reitsma (eds). Best Management Practices for Corn Production in South Dakota.
  • EC929. South Dakota State University, South Dakota Cooperative Extension Service, Brookings, SD.
  • Nicolai, R.E. 2009. “Corn drying and storage.” Pp. 99–106. In Clay, D.E., S.A, Clay, and K.D. Reitsma (eds). Best Management Practices for Corn Production in South Dakota. EC929. South Dakota State University, South Dakota Cooperative Extension Service, Brookings, SD.

- See more at: http://igrow.org/agronomy/corn/corn-storage-costs/#sthash.8hxvMNku.dpuf