Last spring with grain prices near 10-year highs, Mark Schwarze went shopping to fix harvest bottlenecks and increase his family’s grain farm storage capacity.
“My goal is to just be able to handle more grain in the fall,” says Schwarze, who grows corn and soybeans with dad Colby and brother Mike near Decatur, IL. “In heavy bushel years, the big challenges were storing wet grain, then having to shut the combine off and waiting to dry, and have enough dry storage to handle it all – a classic bottleneck.”
Like so many farmers Schwarze began pricing new grain bins, but price increases of 35% and 37% steered him toward used options. He purchased a nearby five-year old grain setup that included four large bins, two legs, a tower dryer, and scales. He sold existing grain equipment to help pay for the slightly used but newer bin setup.
“It was a hassle to have contractors take it down, pour new concrete, and set up it up again but compared to the cost of new bins, it was much more cost effective,” he says.
And what a difference it made. Four ‘slightly used’ bins more than doubled storage capacity from 170,000 bu. to 400,000 bu. Gone is the old batch dryer, replaced by a larger, more efficient tower dryer, rated to dry 1,000 bu. 15 moisture points per hour. Schwarze is planning to put in a drive-over scale and move the grain pit to the home farm from another location.
When it comes to infrastructure upgrades this year, Schwarze is one of the lucky ones. He had concrete poured by md-May and the storage setup was just getting finishing touches as harvest began this fall. Other farmers who purchased new bins or buildings last spring are still waiting, victims of pandemic-induced supply chain problems.
High grain prices helped Schwarze pull the trigger on the new setup, which he, his wife and two kids gratefully acknowledged with handprints and “$7.40 corn” scrawled into the concrete pad before the bins were anchored in.
Set up for growth
As Schwarze sees it, these million-dollar infrastructure investments aren’t just short-term fixes. Schwarze and his brother Mike are young operators with growing families.
“I’m just trying to get set up for growth,” he says.
Schwarze began thinking about upgrading infrastructure ever since he came back to the farm in 2006. He’s added on-farm fertilizer storage and a chemical bay. He buys fuel in bulk and last year added an 18,000-gal. propane tank for drying. He even added a new concrete pad for another dryer he expects they will need five years from now.
“We’re always looking for an opportunity to buy bulk ahead, and sometimes you can hit a home run on prices,” he says. For example, Schwarze was able to buy 28% liquid N before the big price run up this fall. That cheaper nitrogen will be applied to 2022 crops, helping to preserve profit margins.
Even with the larger drying set up he believes power costs should remain near five-year averages, in part thanks to solar panels installed two years ago. In peak energy times like cold fall or winter days, the farm’s meter runs forward, but when the drying system is off, it’s daytime and the sun is out, the meter will roll backwards.
“The solar panels bank power for us,” he explains. “Sometimes our monthly energy bill is $300 and sometimes it’s zero; it just depends on usage.”
Revamped marketing strategies
Besides fixing harvest bottlenecks, the new setup gives Schwarze more marketing options. He’s done the math on the cost of storage and potentially higher revenue from making sales throughout the marketing year.
“Nobody can predict the future, but with volatile markets, this will help me make better decisions and avoid panic selling before harvest,” he says.
Before expansion, the smaller grain storage capacity forced Schwarze to be very aggressive on pre-harvest sales. “Now I can ship a little or store a lot, and won’t be stressed out or worried about how late the local elevators are open.
“We want to use our bins as a marketing tool and take advantage of January through August prices and capture premiums,” he adds. “You do have opportunities to make money with storage, in terms of holding it through the year.
“If not, why bother?”