Revise Your Budget Now for Higher Drying Costs

Factor in higher propane costs to keep expenses in line this harvest. ( AgWeb )

Factor in higher propane costs to keep expenses in line this harvest.

In an ideal world, this year’s challenging crop season would have a grand finale of a warm, dry and late fall. Unfortunately, farming conditions are rarely ideal. As such, it’s smart to think through how a delayed harvest might affect your drying capacity and costs. 

“We’re late across the country,” says Bryon Parman, North Dakota State University Extension assistant professor. “Depending on weather conditions this fall, we could run into some scenarios where drying costs are really high.”

Consider the numbers. If propane prices run as high as $1.50 and $2 per gallon this winter, it will cost around 3¢ per point of moisture removed per bushel of grain. If you dry down 26% moisture corn to 16% moisture, you’ll hit 30¢ per bushel. If you have 100,000 bu. of grain to dry, your total drying costs would be $30,000.

“It’s not uncommon for somebody to have 15¢ cents in drying costs, and 15¢ per bushel is more than the profit margin in some cases,” Parman points out. “These are not insignificant numbers.”

A Proactive Plan. Talk to your propane supplier now to see if they are still offering any prepricing programs, Parman suggests. Also, see if flexible delivery options can help reduce your prices.

When locking in prices, secure as much supply as possible, says Davis Michaelsen, Pro Farmer Inputs Monitor editor. Fill all the storage capacity you have on your farm, which will help you manage against any potential supply shortages.

Analyze your on-farm storage capabilities and weigh those costs against commercial drying, advises Nick Horob, owner of Harvest Profit, a farm management technology company. “The most efficient on-farm drying system can be as low as 1¢ per point of moisture per bushel versus commercial drying at 4¢ to 5¢ per point per bushel.”

If you are drying a lot of corn at the elevator, see if you can negotiate drying rates and lock in terms now, Horob says. If you have neighbors who did significant amounts of prevent plant, see if they could dry grain for you. You might be able to save money and simplify logistics.

You could potentially leave corn out in the field to dry longer into the winter, Horob says, but factor in the pros and cons. “You may save 15¢ per bushel in drying costs, but have a 20% yield loss,” he says.

Visit with your lender about your outlook for drying costs. “You want to make sure you have capacity on an operating note,” Horob says. “You don’t want to all of a sudden run out of liquidity to pay for propane.” 

For tips to handle and dry high-moisture grain, visit AgWeb.com/wet-grain

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