Renting Extra Grain Storage
When grain storage is in short supply, older bins and other structures that are not usually in use may be put into service. Often this extra space is available on a rental basis. Several questions arise about fair rates and terms.
Commercial storage rates often run from 2 to 3 cents per bushel per month, with a 60-day or 90-day minimum. However, elevator storage also includes handling and managing the grain, and bearing the risk of storage losses. When storage is rented on the farm, those services are usually not provided. Thus farm storage rental will generally be below commercial rates.
The Information File Iowa Farm Custom Rate Survey is a good source of rental rates. The 2007 survey showed an average rental rate of 2.0 cents per bushel per month for on farm grain storage, or 12 cents per bushel for the whole year. The ranges reported were 1 to 3 cents per month, and 10 to 20 cents per year. Owners of farm storage usually prefer to rent by the year, since they will seldom have a chance to rent a bin more than once during a crop year.
The wide range in rates reflects a variety of conditions and features. The size of the bins and convenience for unloading and loading are obvious factors. Likewise, the type of aeration available and the availability of supplemental heat can add or subtract several cents per bushel.
Other types of storage structures will generally rent for less than conventional grain bins. Flat storage, such as a machine shed, was not included in the survey. However, based on rental rates for machine storage, a charge of 5 to 7 cents per bushel is probably adequate. Of course, the owner of the grain would have to provide aeration and any other modifications needed to make the building suitable for storing grain, and assume responsibility for storage losses. Corn cribs would probably be worth a similar amount.
Another option is to store corn as high moisture corn in an air-tight silo. A survey taken a few years ago showed an average rental charge of $2.50 per ton of silage for such structures. Assuming that 30 bushels of corn takes the same space as a ton of silage, an equivalent rate for corn would be about 8 cents per bushel.
Additional information on rental rates is available in Information File Building Rental and Contracting Rates.
The actual rental rate is not the only consideration when negotiating a rental agreement for grain storage. For example, who is responsible for checking the condition of the grain and deciding when to aerate it? Generally, the renter would want to do this, but in some cases the owner of the storage might perform this function. Access to the bins is important, also. Who will be responsible for clearing snow, or moving machinery?
The cost of electricity used for aeration is usually paid by the renter. If there is a separate electric meter for the bins, the cost can be observed directly. If not, the kilowatt-hours of electrical use can be estimated by multiplying 80 percent of the horsepower rating of the motor by the hours of use. The cost per kilowatt-hour can be found on the farm utility bill.
The date and manner of payment for the rent should be specified in advance. Some agreement about the date by which grain must be removed is also important. Usually, enough time should be allowed to clean the bin before the next harvest. Finally, any storage structure should be carefully inspected before it is filled, and the responsibility for making any needed repairs or modifications established.
William Edwards, retired economist. Questions?