Pictured Above: Photo courtesy of IntelliFarms
“I grew up in Missouri and the old school approach to storing grain was to turn the fans in your bins on for 2 weeks and let them run. Then you’d shut them off in the middle of winter and then run them for a week, shut them off, then you run them for another week in the spring and you were good to go. We needed to get away from this type of practice,” says Ian Wade, director of the dealer division for IntelliFarms, a firm that manufactures systems and equipment for monitoring stored grain.
Like Wade, Adam Gittins, general manager of HTS Ag, a precision technology dealer based in Harlan, Iowa, also grew up on a farm and still farms today. He explains, “A whole bunch of farmers, myself included, thought the best thing we could do would be to freeze our corn. You’ve never had anything spoil in the freezer, have you?”
He discovered that approach created some significant quality issues with the crop. “If you’re going to keep it into the summer or later in the year, you’re going to dry it twice. It’s also going to condensate as it warms back up and thaws out. As it does, those bins will sweat and you’re going to actually create more fan runtime. Also, if there’s moisture in the kernels when you freeze them, they can start cracking and create some crop quality issues,” says Gittins.
“We found the best storage practice is to get the grain to 40 degrees. At this temperature all the insects go dormant and we can keep our corn in really good condition,” he adds. As a result, HTS Ag carries grain management products developed by OPIsystems.
Both Wade and Gittins agree that properly storing grain requires knowing what’s going on inside the bin. Without that knowledge, it’s all guesswork, which many farmers and elevator operators relied on in the past. This has given rise to the development of grain monitoring systems.
Farmers Invest in Storage
- Growth in the number of grains bins, as well the their larger size, presents equipment dealers with opportunities to get into the niche market of grain management systems.
- It will take educating farmers who for years “eyeballed” the condition of their grain in storage to help them understand the new systems are really insurance for their investment in harvested grains.
- In most cases, the ROI is only about 2-3 years.
- A whole range of systems are available, from simple hand-held devices to fully automated fan and heat control equipment.
On-farm storage of grain has increased and taken on new importance in the past decade. In addition to the high yields farmers have achieved in recent years, their continuing investment in grain storage has occurred for a number of reasons.
According to Harvey Kuhar, sales and marketing consultant for IntraGrain Technologies Inc., in addition to giving farmers greater flexibility to market their grains, commercial storage operators are also changing.
“Delivery points where farmers take their grain to sell just aren’t storing near as much grain, as a percentage of production, as they used to. To improve efficiency and profits, and to reduce risk, they are using fewer high throughput facilities and a ‘just-in-time’ delivery strategy,” says Kuhar. “In relative terms, there’s less storage occurring in commercial operations and this is contributing to the need for farmers to invest in storage and to store more grain longer. This is good news for producers because with more on-farm storage, a producer has greater control and marketing opportunities.”
In addition to these factors, the rising costs to produce grains, farmers have more reasons than ever to take good care of their investment.
Ag economists at Iowa State University estimate that 2015 production costs for corn after corn was nearly $5 per bushel, up from $3.53 in 2007. For soybeans following corn, 2015 costs were estimated to be $10.67 per bushel, up from $6.73 in 2007.
David Bryant, grain handling sales and service specialist for Robertson Equipment, a Case IH dealer in Colerain, N.C., calls the purchase of a grain monitoring system “cheap insurance” for farmers.
Kuhar adds that there are few, if any, options for insuring grain once it’s in storage. For this reason alone, he says, it has become imperative to invest in a grain bin monitoring system to effectively maximize aeration systems, grain quality, bushel weights, as well as, to prevent grain spoilage and loss. “A proven and reliable monitoring system is a much better option than insurance, anyway. It gives farmers, and commercial operators, peace of mind not having to worry about what’s going on inside their storage facilities. Every storage facility is a like a bank. Whether you have thousands of dollars’ worth of grain or thousands of dollars in cash, in there, it makes good sense to secure and monitor every bin. Considering the ROI alone, it’s one of the best investments anyone storing valuable commodities, like grain, can make,” he says.
Wade also points out that, while these systems were developed for grain storage, they also provide dealers opportunities to step outside of their traditional ag markets. “We’re working with about 150 different commodities right now. If it can be stored in a grain bin, if you’re going to be drying inside of trailers, these systems can accommodate it. Along with the major ag products, we’re now working with peanuts, pistachios and pecans. We’re even working with wood pellets. These systems are very flexible with different commodities and storage structures,” says Wade.
Along with monitoring grain temperatures and moisture levels, some of the available higher-end systems can aid in conditioning grains in storage. “With automated systems you can set the controls for the desired temperature and moisture. You can set it to dry the grain, hydrate it or just monitor it,” explains Wade.
“Let’s say you want to dry your corn down to 14.5%. The system can collect the data from the cables inside the bin, look at the weather outside the bin, and then it will determine when and how often the fans need to run,” Wade says.
Regarding rehydrating grains, Shane Maller, district sales manager for OPI-Integris USA, explains, “If the grain is too dry, and if the correct ambient conditions are present, the system can reintroduce moist air and rehydrate the grain. We do this more in the southern regions and commodities like rice and soybeans reaccept moisture pretty well. The cereal grains typically don’t do that as well especially when you get up into the northern regions where with dryer air.”
But the bottom line, says Maller is, “The sooner the farmer get his grain in condition, the longer he can carry it before marketing it. It opens up some more windows as far as extending contracts.”
Like many new things, most producers are skeptical about investing in something they’ve done without since they started farming. “The biggest objection we get is it’s too expensive,” says Chris Hoffmann, sales and daily operations manager for P&C Ag Solutions in Reese, Mich. “Even before we get to price, we’re hearing, ‘It’s too expensive and I don’t want to talk about it.’ But we can set them up with a simple system for as little as $4,000 for a 40,000 bushel bin.”
Hoffmann characterizes P&C Ag Solutions as an agricultural technology company. “We’re interested in selling and servicing anything that requires a higher level of technology. We are very good at consulting with the farmers. Even if we don’t sell the product, I want to be the consultant to at least talk things through to see what makes sense for our growers.”
The dealership began carrying the OPI grain monitoring system 3 years ago when they could see sales of other precision farming products begin to tail off. “We were looking for something to fill our downtime,” says Hoffmann.
To get over farmers’ initial hesitancy to purchase grain monitors, Hoffmann says they installed a system at their own 2,600 acre farm where they grow corn, soybeans, wheat, edible beans, pickles and sugar beets. “Once we did this, we could show them how it works and sales picked up.”
Between August and November of that first year, the dealership sold four systems. Since then they’ve averaged about six per year. “We have a fully automated fan control system on a half-million bushel storage bin. The price on that one was about $50,000,” Hoffmann says.
As it’s relatively new to the area of Michigan that P&C Ag serves, Hoffmann says much of the skepticism he’s encountered is to be expected. Examples of questions that Hoffmann has heard from potential customers include: “Can I view what’s going on in my bins if I go to Florida for a month?” Or, “Are there temperature restrictions if we install the moisture and temperature cables in our older top-dry systems?”
On the first question, the answer is “Yes, you can view everything going on in your bins on your smartphone or tablet depending on which system your install.” As for the second question, he says, “The cables can handle temperatures of 300-plus degrees, so that isn’t a problem.”
Getting Past Old Habits
Traditionally, Iowa has led all states in the production of corn and annually vies with Illinois for the top spot for producing soybeans. As a result, the market for grain storage there is a huge advantage for dealers like HTS Ag.
Gittins says his dealership that specializes in precision farming technology, started selling OPI grain monitoring systems in 2009. “Sales were really slow that first year when we sold only two or three systems. Most of it was probably due to getting started with a new product line, as well as the learning curve for our staff,” he says.
“Today grain management accounts for nearly half of our business as a company. So we’re into much more than just the farm market. We also have 2 guys fulltime who just work in commercial grain management, so they’re calling on co-ops and elevators” he says.
A big part of that initial learning curve had as much to do with understanding how to properly manage grain as much as it was in understanding the operation of the grain monitoring system itself. That required HTS staff to spend a lot of their time educating farmers in the best practices of grain management. Much of that was aimed at getting them to change their thinking of how grain should be handled.
Gittins admits that the process needed to start with himself, as he also approached grain management the same way his dad and many other farmers had been doing for a long time.
“I’ve been actively involved in farming since I was a very young kid, and I’ve been financially invested in farming for 16 years. Like my father, managing grain to me was putting the corn in the bin and turning the fans on and letting them run for a week. Then any time it was cold out, we would run the fan some more to get the corn as cold as we could. That was always our strategy until I understood better what was happening.”
Getting customers to understand and to adopt best practices for managing grain was the biggest obstacle HTS Ag faces in introducing grain monitoring systems to its customer base.
“We see a lot of the same thing here that we did when auto-steer was a newer product. I think a lot of guys really struggle with the idea that technology can do some things better than they can. Automated fan control has that same effect. It is hard for some of them to believe that turning the fan on and off automatically would be that much better than what they could do manually,” says Gittins.
System Cost vs. Crop Prices
Another real hang up, he says, has been price. Previous systems required the installation of a dedicated high-end PC and the use of 900 MHz radios. Plus the farmer needed to buy the software and all the things that go with it. “With cloud-based systems today, the price has really come down over the last couple years,” Gittins says.
At the same time, he doesn’t believe the issue should simply come down to the front-end price of a grain management system. “I look at it this way. When corn was $7 it was easy for somebody to deliver grain and if they took a dollar a bushel hit on it because it graded out as #3 or #4 yellow corn, I don’t think anybody cared too much. They were happy with $6 and moved on.
“Now, if you do that with corn that’s $3 or less a bushel, you can’t afford not to have a grain monitoring system. When you start talking about a 50 cent or a dollar a bushel problem because your grain isn’t of good quality, whether it’s spoiling or cracking or there’s a lot of fines or whatever that may be, that changes the whole equation. If grain hasn’t been managed well and not kept well, there’s a lot more at stake here. So to me, it’s a lot easier to write a check for the system when you have $7 corn, but at $3 corn you can’t afford not to have it,” Gittins says.
He adds another thing dealers need to point out to customers who rely on their past experience to determine the condition of their grains in storage is the fact that bins have gotten much larger and any losses through spoilage can be much larger as a result.
“Our bins were built in the ‘70s and a 24 foot diameter bin was a really big back then. No one is building them that small now. Small bins today are 32, 36 or 42 feet in diameter, which means you have a lot more bushels in one bin. The principles of managing the larger volumes of grain are not the same.
“You can’t just turn the fan on and smell it and think you’ll be able to smell a problem. There could be something going on inside that bin that you’re not aware of until it’s way too late. There’s a lot more dollars at stake in that great big bin,” say Gittins.
When price is the issue, he says one way to get customers over the hump is to start small. “They’re the same cables no matter what system they decide to run. So we can hang the cables in the bin and start them with the hand-held and that’s a very inexpensive system to start. We can then just rewire those cables into a node and add a node and a gateway if they want to go to a cloud system in a year or two. We’ve had a lot of guys do that.”
It’s All About ROI
The dealers agree that in many cases a 2-3 year return on investment is acceptable to most farmers. “Oftentimes we can see an ROI that’s 2-3 years depending on the size of the grain handling system,” says Gittins.
Hoffmann adds, “I think 3 years or less is about what most guys like to see. Anything much over that they start seeing better ways they could spend their money.”
Bryant, who specializes in grain handling sales and service for Case IH dealer Robertson Equipment, says some of his customers will consider a 5 year payback, but he’s seen much shorter ROIs.
Now in his fifth year handling monitoring systems, he estimates he’s sold and installed more than 60 systems. He also works with bin manufacturers GSI and Sukup. Through the first 8 months of 2016, he reports selling 28 units. “This year’s been our best because the market prices are so low, people want to hold onto the grain.”
Like the other dealers interviewed for this report, it was a slow go the first year. “It took some blood, sweat and tears,” he says, “because nobody in my area had ever heard about grain management systems, and nobody wanted to be the guinea pig.”
After acquiring a unit produced by IntelliFarms of Archie, Mo., to be able to show area farmers what was involved, Bryant was able to get one of his customers to install the system. “It worked great and I finally got another farmer to buy a couple, and the next thing I know it just took off like a rocket.”
Since then he has also installed systems for monitoring moisture and temperature in four warehouses that each hold over 800,000 bushels.
Bryant says being able to demonstrate a good return on investment is important to farmers. He says, depending on the system, customers will typically see a 2-3 year ROI, though, in some cases it can be a bit longer or shorter.
“I’ve seen systems pay for themselves twice in one year,” says Bryant. “I had a customer who had some seed beans. When he picked them, they were anywhere between 10.5-11% moisture. We put them back in the bin and set the system to rehydrate. He only had 3 or 4 weeks before the seed company was going to get them. When we pulled them out and he carried them off, they pulled 1,000 bushels more than they put in there. So that system paid for itself the first year.”
In another case, someone accidently put a load of wet corn in a 400,000 bushel bin and the farmer got a text from the system telling him he had a 135 degree hot spot. “He thought there was something wrong with the system, and I had never seen this happen before,” say Bryant.
“They started pulling corn out of the bin. As he did, you could actually see the heat start going down in the system. The guy told me, “Well, this thing sure paid for itself this year,” Bryant says. “If he didn’t had the system, there’s no telling how much grain he would have lost.”
He adds that he’s heard the same objections to investing in a grain monitoring systems as the other dealers. “They’ll say, ‘I’ve been doing this for 20 years and I’ve been getting by just fine.’ And I tell them stories like these. It only takes one time where you went from doing fine to where you just lost a couple hundred thousand dollars. That’s why I preach that it’s the cheapest insurance they’ll ever buy. Regardless if you’re using the system for automatic fan and heat control or use it mainly just for monitoring, it’s cheap compared to what they can lose.”
Grain Storage Growing
Continued expansion of on-farm grain storage is one way farmers are attempting to improve their leverage when it comes to volatile commodity prices. This has laid the groundwork for increasing sales of effective grain monitoring and management systems.
“There are more grain bins that have been built and still being built in our area than what I ever thought possible,” says Gittins whose dealership is located in Iowa. In addition to the growing demand for grain storage facilities, he believes another factor in play is a large inventory that bin builders are currently sitting on.
“I think a lot of them had inventory that they took on through some early order programs, so they’ve been sitting on this stuff. So the pricing is very competitive to put up storage, and what are you going to do with sub $3 corn? You’re going to store every bushel of it you can,” Gittins adds.
A look at the bigger picture also offers clues as to why grain management systems will play a key role in farming in the future. Maller explains, “Grain and management systems will provide another key piece of data that farmers need to collect to help make their farms more efficient and protect grain quality.”