Crawford County, Robinson, Illinois | Many people do not build grain bins, as taking grain to town and storing it is much cheaper than building a bin and then paying taxes and depreciation on it. I always thought this example of changing basis and grain merchants refusing to store was one of the big justifications for building grain storage. It is true that on the face of it, one cannot really afford bins. But, bins become very valuable in saving time during harvest when there may be lines at the grain elevator, or the basis is really wackey. Bins become valuable when the elevator is full and has to wait on trains to deliver empty cars. Bins become valuable when one can write a basis contract or a cash contract for an upcoming month, locking in a profit when storage elsewhere is not an option. Bins become valuable when the grain is stored at the local elevator, and other elevators are offering premimums. When you make delivery to a destination, you are locked in to their price now and in the future until you sell the grain. When I bought my first semi and had my own grain stored on my own farm, grain merchants bid differently, knowing I had lots of options. All that is not to say that grain elevators and grain merchants are crooks, it is their business to pay as little as possible, it is good business sense on their part. It is good business sense on a farmers part to keep control of their inventory for as long as possible when prices are not adventageous to the farmer. I must admit, sometimes having my own inventory a few times meant I held the grain too long, missing the market--but it was profitable more times than not. The replies to this good thread are just good examples of what can happen if one does not have the ability to store grain. |