Farm Progress

Manager’s notebook: Bulk input storage offers savings

Success in the current low-price environment will center on lowering input costs.

Jerry and Jason Moss

August 30, 2017

2 Min Read

We have a 5,000-acre grain operation and an old, undersized fuel tank. I have a chance to buy a used 8,000-gallon tank. I’m wondering if I should make that used tank part of a bigger new fuel setup to include 20,000 gallons. I realize we’ll have to put in concrete infrastructure to follow EPA regs, but I think this will pay for itself fairly quickly by letting me take delivery and buy when prices are low. Thoughts? — S.V., Iowa

Success in the current low-price environment will center on lowering input costs. Having both bulk diesel and LP, we have recently sustained a program of locking in prices two years out. We added three years of storage for potassium and phosphorus last spring because prices had gone low enough that it was time to lock in another layer of prepaid enhanced fertility. Having bulk anhydrous and UAN let us capitalize on some attractive overstocked prices earlier this summer.

The ability to take semi loads of product enhances your bargaining power. Accordingly, we just set up our truck highway fuel to receive semi-tanker delivery. Splitting semi loads with a local convenience store has resulted in noticeable savings.

We have also utilized all used tanks in our LP, diesel, UAN and anhydrous bulk facilities. With upkeep, the tanks should last a few decades and will pay for themselves in four to eight years.

In general, the return on investment for ag input bulk facilities is exceedingly high. The IRR (internal rate of return) is off the charts. But you must stay current on your inspection requirements.

Assess all areas of potential bulk savings, including chemicals, motor oil, and buying groups. Seed savings is largely from volume buying; this industry will pull out all the plugs to deal with individual farmers.

Jerry and Jason Moss operate Moss Family Farms Inc. [email protected]

 

About the Author

Jerry and Jason Moss

Jerry and Jason Moss operate Moss Family Farms Inc.

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