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Corn+Soybean Digest

Semi-Trucks Pay BIG Dividends

For southern Minnesota grower Bob Kruger, who farms with sons John and Roger, owning a semi-trailer makes simple economic sense.

He can haul almost twice the amount of grain per trip as he can with a smaller truck or grain wagon. That gives him easier access to river terminals and soybean crushing markets up to 70 miles away.

More and more farmers are transporting grain with semi-trailers, says Mark Berwick, associate research fellow at the Upper Great Plains Transportation Institute.

“Used semi-trucks have been a fairly cheap buy lately, compared to buying new tandem or tridem trucks,” he adds. “A new tandem-axle truck sells for about $50,000-60,000, whereas a farmer could buy a good used semi-tractor for $20,000 or less, and a used hopper-bottom trailer for about $10,000.”

The Krugers bought a 1991 Freightliner semi-tractor in 1997 for $15,500. It had 500,000 miles on it then, and the farm has put another 240,000 on it since. A used trailer, bought for $19,000, has since been traded for a newer model.

Transporting by semi-trailer allows the Krugers to capture higher prices than they could get selling to the nearest elevator — an average 15¢/bu. more for corn and 25¢/bu. higher for soybeans.

“We only spend about 7¢/bu. on fuel,” says Kruger. “So even with insurance costs and truck depreciation, we're coming out ahead.”

They have at least six different options for marketing their corn and soybeans in a 70-mile radius. Other Midwestern farmers need to haul farther than the Krugers to take advantage of higher prices, says Berwick.

For example, grain elevators that can load 100-car and larger shuttle trains in 15 hours or less typically pay higher prices per bushel than those that can't, Berwick says. He adds that large unit trains are more efficient, resulting in reduced transportation costs to the elevator. The savings are shared through higher board prices at these elevators.

Whether traveling near or far, grain transported via semi-trailer has many advantages over using smaller trucks and wagons, says Phil Baumel, Iowa State University (ISU) professor emeritus of economics.

“First of all, a semi-trailer helps get the crop out quickly at harvesttime,” Baumel says. “If you're under stress trying to get the crop out, it almost always pays to have a semi-trailer.”

The cost for a combine to sit and wait to unload at harvest can be expensive, depending on fall weather conditions. In some situations, Baumel says, the cost could soar as high as $150/hour.

After-harvest hauls to grain markets are also more profitable. “A farmer with a semi-trailer can travel up to seven miles to get a 1¢/bu. increase in grain price,” says Baumel. “So a farmer can profitably haul grain up to 70 miles for a bid of 10¢/bu. higher.”

According to Baumel's research at ISU, transportation costs for single-axle trucks (in cents per one-way bushel miles) are almost double those for semi-trailers. Double-axle truck costs are more than 1½ times the cost of semi-trailers while one-wagon tractors cost more than five times and two-wagon tractors cost almost three times as much.

For semi-trailers to pay, however, a farmer needs to grow at least 500 acres of corn, Baumel says. For farmers with small acreages, joint ownership with another farmer or renting a neighbor's semi are other cost-effective options.

“No farmer with a semi is captive to the local market,” Baumel says. “The semi is the ultimate answer to those who claim they are captive to their railroad. The local elevator may be captive to the railroad, but a farmer with a semi isn't.”

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