On-farm vs. Commercial Grain Storage in Kansas

There has been an increased interest in grain storage in Kansas the last several years. This is primarily due to low prices and wide basis levels at harvest. Further increasing this interest is the fact that total production of wheat, corn, milo, and soybeans exceeded storage capacity for the first times ever in 1997 and 1998. Historically, the majority of storage capacity in Kansas has been commercial storage as opposed to on-farm storage. An analysis of historical returns to storing grain indicate that, on average, seasonality in prices results in low returns to storing grain. When total costs are considered, returns to storing grain based solely on price increases are higher with commercial storage than on-farm storage. However, on-farm storage may be profitable when returns to storage due to marketing flexibility and premiums on identity preserved grains are considered. BIO Kevin Dhuyvetter is an associate professor in the Department of Agricultural Economics at Kansas State University working as an extension farm management specialist. Kevin comes from a crop and livestock farm in northwest North Dakota which led to his work interests in the areas of crop and livestock production economics, marketing, and farm financial management. Kevin holds B.S. and M.S. degrees in agricultural economics from North Dakota State University and Iowa State University, respectively, and his Ph.D. in agricultural economics from Kansas State University