North Dakota's economy will lose millions of dollars in the next several years due to inadequate grain storage, according to a North Dakota State University study.
Richard Taylor, NDSU ag economist, puts the losses at $68 million through 2012.
The study – commissioned by the North Dakota Corn Growers Association -- shows that ND corn production is projected to grow to 220 million bushels by 2012.
North Dakota's grain storage capacity peaked at 1 billion bushels in 1990 and has steadily declined since. During this same time period in-state demand for corn will increase from the current 85 million bushels to 213 million bushel in 2012 due to demand from the ethanol plants.
This additional production, combined with limited storage facilities will force producers to ship corn out of state during harvest, which will force the ethanol plants to ship corn back into the state later in the year.
The added costs to ND's corn producers, local elevators and corn processing plants for storage and market losses and additional shipping costs are $9.8 million per year in 2006. This figure will escalate to $68 million per year by 2012.
The study also showed that additional storage could increase total revenue to the state by almost $48 million after 2012 for an additional 10 million bushels of storage. With 40 million bushel storage increase, the state could expect $157 million in increased revenue.
"Once we saw these figures, it was clear to us that this was an issue that was more than a corn grower issue," says Jay Nissen, Larimore, N.D., producer and President of the North Dakota Corn Growers Association.
"It appears that the state should have enough storage (almost 1 billion bushels) to handle an entire harvest, but since the PSC authorizes temporary ground storage each year (between 17 and 21 million bushels) there must be storage shortages in certain locations. The local shortages are most likely caused by storage facilities being either outdated or in the wrong location," says Taylor.
The study shows that a state subsidy on new grain facilities (4% of new purchase price) would cost between $3.2 million and $12.8 million depending on the amount of additional storage built. The cost benefit ratio would be 15 to 1 if an additional 10 million bushels of storage were built and 12 to 1 if an additional 40 million bushels of storage were built in the state.
For a copy of the study, see www.ndcorn.com.
Source: ND Corn Growers Association