Hmmm. We are running really tight on space.
By Dayton Jagiela and Allen Smith
It is that time of year again, the combines are running, grain trailers are rolling up and down the highway, and the leaves are starting to turn color. Let us not forget about the fantastic soups and chilis.
Between getting back and forth to the elevator for work, supporting your son or daughter’s high school football dreams and probably supporting a 4H effort, life is hectic and blessed at the same time. The term "extra time" becomes a distant notion.
Harvest is well underway across the country by now. Inventory levels are starting to rise, space is starting to fill up.
How much exact space do you have left in your elevator? or across all of your facilities? When do you open up the ground pile?…. It can be a very tough decision. Last week, Central Illinois Springfield region received a downpour of 5 to 7 inches over 2 days. Can you imagine if you were left to a decision whether or not to open a corn ground pile to save space in-house prematurely? I have to speculate a few elevator managers in Illinois had to make a similar decision very recently.
What do you really lose if you make the incorrect choice in this circumstance? Suppose it was only a small amount of corn you sent to the ground, 100,000 bushels for example, that had not been ran through a dryer previously.
100,000 bushels: moisture started at 14.5%
After it rained, you need to pick up the pile. It would take about two days to pick up with a large front end loader. Taking into account fuel and personnel cost, the total added cost would be $800 to $1000.
The corn would need to be dried again, so you would move it to the wet bin.
1% Handling Shrink going out, 1% Handling Shrink coming back in, 2% Handling Shrink from the dryer.
100,000*.04= 4,000 bushels of handling shrink. This will mostly come out as FM during load out, which will make things harder on the operations team to load, hit the moisture target, and capture OEP premium if applicable. Let us just say it cost you .2% on moisture target for demonstrable purpose.
440,000 Bushels (estimate on train) *.002 (missed moisture) = 880 Bushels of technically water, that you can never get back.
Let’s assume that you lose 300 bushels of grain which we will consider unsaleable.
Dryer Shrink- The grain will probably go into the dryer at 15.5 to 16.5% moisture on average, and at the speed you need to run the dryer at to remove any odor, it would be hard to remove less than 2 points of moisture. Let us assume the corn comes out of the dryer at 13.5%.
100,000*.01 = 1,000 bushels of dryer shrink. You never get that back.
Total Actual Bushel Lost- 1000 + 880 + 300 = 2,180 bushels
Corn is currently trading $3.50 per bushel.
2,180*$3.50 = $7,630
$7,630 + $1,000 (fuel and personnel cost) = $8,630.
We have to add the fuel cost to operate dryer. Let us assume your dryer runs 6,000 bph (bushel per hour).
100,000/6,000 = 16.6 hrs
Industry experts estimate a loss of 1 to 2 cents per point per bushel with an average fuel price. So let us split the difference and say it cost you 3 cents a bushel to dry all 100,000. ~$3,000 loss in drying the corn.
Total estimated loss = $8,630 + $3,000 = $11,630.
(Of course, you may need to add in the cost for heartburn medicine too… and the grief you might receive from your staff and peers.)
Now imagine if you had up to the minute inventory numbers from binSight for your elevator - and all of your company's grain facilities - on your computer. Sometimes you have to know exact amounts continuously, to avoid the prior situations completely.
I know, you were probably thinking I was going to propose a solution to provide the harvest community with extra time, sorry to disappoint.
I can only imagine what it would be like to run elevators today with a tool like binSight giving you visibility across all grain operations. You might be able to actually enjoy that high school football game for a change.