By DOUG SCHMITZ
Iowa Correspondent

DES MOINES, Iowa — According to the USDA’s Jan. 15 report, on-farm grain storage capacity increased 2 percent from the previous year, at 12 billion bushels, with Iowa leading the nation in both on-farm and off-farm grain storage capacity of nearly two billion bushels.

As a result, Iowa Secretary of Agriculture Bill Northey said state farmers would be seeing a return on their investment in new grain storage facilities in 2009 that have been built for the 225 million bushels in 2008.

In fact, in 2008, the USDA said total on-farm grain storage capacity in Iowa increased from 1.85 to 1.95 billion bushels, followed by Illinois with 1.37 billion bushels and Minnesota with 1.3 billion bushels. (Kansas and California saw decreases in capacity of about 5 million bushels each.)

As for the total U.S. off-farm grain storage capacity, the Dec. 1, 2008, USDA report said that reached 9.35 billion bushels, up 3 percent from the previous year, with the largest increase occurring in Iowa, where the total hit 1.33 billion bushels.

“When farmers profit, they invest that money right here in the state, which is a significant benefit to Iowa’s economy,” he said. “These facilities represent a significant investment in Iowa.”

Although Northey didn’t indicate where the funding for the new facilities came from or where they were built, he said Iowa farmers invested about $200 million in storage capacity in 2008.

Northey said these numbers don’t include any new facilities built to replace existing capacity, which only counts total storage.

Because Iowa’s total storage capacity has been expanding and has now more than 3.275 billion bushels in capacity, Anamosa, Iowa corn grower Gary Edwards said the investment in new storage facilities couldn’t have come at a better time.

“The main determining factor for the amount of required storage is the crop size,” he said.

“Iowa’s per-acre corn production continues to increase every year and there is every reason to believe the trend will continue up.
“At the same time, end users of corn are using just-in-time management style where it is cost-effective to pay others to take the risk of storing corn rather than add to their fall usage capacity,” said Edwards, who’s also Iowa Corn Growers Assoc. president.
As the crop size increases, while spot usage remains the same, Edwards added that the need for more storage to spread out the usage over the entire year has become evident.

“Iowa’s agriculture has responded by increasing the size of covered storage to reduce the risk of spoilage found when corn is stored in outside piles subject to the changing weather conditions,” he said.
Edwards said the ethanol industry has also added an overwhelming amount of annual usage since 2004 and would continue to increase demand for corn in the future.

“In 2005, we had a huge carryover of 2004 crop with little forecasted increase in demand,” he said.

Despite the concern in 2004 that there wouldn’t be enough room to store the 2005 crop, Edwards said there was little concern that the industry could manage the storage of the 2009 crop – especially with the increased storage and overall increased usage last year.
“There may be areas in the state that had a huge increase in production in 2008 that will have a storage problem,” he said, “but generally, statewide, I would perceive adequate storage for next year’s crop.”

Due to the reduction in corn acres in 2008 and slightly lower yields due to weather, Grant Kimberley, director of market development for the Iowa Soybean Assoc., said storage capacity in Iowa wasn’t a major issue in most locations last year.

“The biggest problem was drying capacity of the wet corn and maintaining its quality,” he said.

“If inputs and prices remain as they are, it is more likely that less corn will be planted in 2009 and more soybeans. That would naturally require less storage.”

With the late harvest and decreased fall nitrogen application last fall, Edwards said Iowa farmers have the ability to switch crop planting intentions.

“The market will predict the amount of 2009 production needed (corn-soybean price ratio) and farmers will switch to the more profitable crop,” he said.

“The initial crop planting intentions report indicates less-acres-to-corn, thus resulting in less storage needed,” he said. “Until the final crop ratio is determined, the amount of storage needed is unknown.”