ISU Extension News

Extension Communications
3614 Administrative Services Building
Ames, Iowa 50011-3614
(515) 294-9915

9-21-98

Contacts:
Roger Ginder, Dept. of Economics, (515) 294-6260
Charles Hurburgh, ISU Grain Quality Lab, (515) 294-4600
Elaine Edwards, ISU Extension Communication Systems, (515) 294- 5168
Extension Engineering Field Specialists (see list below)

WHAT TO DO WITH ALL THAT CORN?

AMES, Iowa--As they enter what's expected to be a record soybean harvest and near-record corn harvest, Iowa farmers have several options, says an Iowa State University farm economist.

"Storage could be a problem, even with a lot of elevator storage space available, because 30 percent of last year's crop is still on the farm," says Roger Ginder, ISU professor of economics. "The real question is where that corn is stored and what local markets, if any, it could impact."

Ginder outlined three standard options for farmers to handle the large expected harvest. Farm program-related options also may be worth consideration, he added.

  • Store grain temporarily on the farm. "The biggest concern is whether you have the ability to maintain quality in temporary storage on the farm," he explained. "There are numerous ways to handle emergency storage on the farm but if the grain begins to spoil, the loss may cost you as much as it would cost for short- term storage elsewhere."
  • Sell grain under a credit sale contract. Also known as price- later contracts or no-price-established contracts, credit sale contracts allow the price to be set at a later date. Credit sale contracts are not new and often are used to move grain when storage problems exist, however, Ginder advised farmers to be cautious.

    "Under a credit sale contract, you turn the title of the grain over to the elevator," he explained. "You must have confidence in who you're dealing with, especially if the elevator experiences financial difficulties later on. These contracts are not guaranteed by the Iowa Indemnity Fund."

    Farmers should expect some service charges by the elevator issuing the contract to cover costs. If there is no service charge, or a very low service charge, the elevator may be assuming additional risk, he said.

  • Store grain in an elevator under a warehouse receipt. Fees are generally higher than credit sale contracts, but all payments are guaranteed under the Iowa Indemnity Fund. Farmers with warehouse receipts receive 90 percent protection up to $150,000.

Ginder said elevators have emergency approval from the Iowa Department of Agriculture and Land Stewardship to store grain under warehouse receipt contract outdoors this fall. Normally, warehouse receipt grain cannot be stored outside, but Ginder suspects some elevators will take advantage of this emergency provision to ease storage and transportation concerns.

"The same emergency measure was taken during the 1994 harvest," Ginder said. "Likewise, this year elevators must put a surety for every bushel of warehouse receipt grain stored outside. The grain must be off the ground by the end of January."

The combination of a large carryover and early harvest will mean that temporary storage options will be used earlier this year while the weather is still warm, said Charles Hurburgh, director of the ISU Grain Quality Lab. Even though the overall crop quality is good, he said, warm grain spoils more rapidly and must be well aerated to prevent abnormal rates of deterioration.

For more information about marketing options, contact your county Iowa State University Extension office or field extension agricultural engineer.

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ENGINEERING FIELD SPECIALISTS:
Greg Brenneman, Johnson County, (319) 337-2145
Kris Kohl, Buena Vista County, (712) 732-5056
Dan Meyer, Fayette County, (319) 425-3331
Shawn Shouse, Wallace Center (Lewis), (712) 769-2600
Brad Woerner, Mahaska County, (515) 673-5841

9/21/98 - lm
ml: isufarm


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