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Grain Management Decisions at Harvest

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  1. Grain ManagementDecisions at Harvest Garrett Stoerger Paul Ellinger gstoerge@uiuc.edupellinge@uiuc.edu University of Illinois April 2, 2008

  2. Harvest time FAQ’s • Where should I deliver my grain? • How do I structure and organize my grain marketing decisions? • Should I be adding on-farm storage to my operation?

  3. Answers to these questions • The University of Illinois team of agricultural economists have developed a set of tools to assist educators in the delivery of effective educational programs for farmers

  4. How the tools are used… • Grain marketing and management tools are taught in a classroom style setting with each participant having computer access • Often taught at Annie’s Project • Laptops or computer labs • Class size ranges from 10 to 25 • Smaller groups allow for more interaction • Use of developed case studies

  5. Teaching Goals and Objectives • Let participants dictate the class speed • Spreadsheet tools can be tedious for first time users • Get them started in the right direction • Having participants start on their own records in the classroom can lead to success at home • Utilize case studies • Don’t make it a typing lesson – time is limited

  6. What is FAST? • Farm Analysis Solution Tools are a comprehensive set of Microsoft Excel spreadsheets designed to assist those in agriculture make better decisions via user-friendly computer programs • Over 50 spreadsheets have currently been developed to aid farmers in their decision making

  7. FAST is easy… • Each spreadsheet has been developed with the end user in mind • Input friendly • Tools can be personalized • Program Descriptions (user guides) are easily accessible • Available through a CD or the internet • Quarterly update service for subscribers • Support team available for questions

  8. FAST Categories • Financial Analysis • Investment Analysis • Loan Analysis • Farm Management • Grain Marketing and Management • Risk Management, and Yield and Land Database Tools

  9. Grain Management Decisions at Harvest • Marketing tools that complement one another in an academic setting • Grain Delivery Model • Grain Inventory Management • Grain Storage Purchase Analysis

  10. Why the tools are used… Grain Delivery Model • The growing ethanol business has provided new opportunities for delivery locations • Grain delivery points should be analyzed using more than the spot delivery price • The current commodity prices are forcing many elevators to change storage costs • How do your local elevators compare?

  11. Why the tools are used… Grain Inventory Management Tool • Women in the record keeping role are looking to improve the quality of their records • Allows an active role in record keeping • A simple data entry method can keep track of multiple locations with ease • Provides grain production statements for all grain owners • Quick and easy way to impress your landlords • Improves communication • Spouses • Landowners

  12. Why the tools are used… Grain Storage Purchase Analysis • The current economic environment in agriculture lends itself to on-farm storage • What are the economics? • Building costs • Maintenance • Utilities • How does it compare to commercial storage facilities?

  13. Grain Delivery Model • Designed to aid grain owners when comparing delivery point alternatives • Calculates net price received after drying, storage, transportation, and other costs • Elevator specific inputs such as shrink factor and drop charges built in • Computes a breakeven price level for grain that is placed in deferred storage

  14. Grain Delivery Model Summary

  15. Projected Price ModuleBlack-Scholes’ Model

  16. Grain Inventory Management • A program designed to make quick and easy work out of tracking grain from field to bin • Eliminates grain inventory “headaches” • Produces summaries of acreage planted, yields, grain fed to livestock, etc. • Data can be queried by farm, storage location, landowner, etc. X

  17. How it works… • Transactions • Records everything from production to transfers to the sale of the commodity • Reports • Gives details of total acres planted, bushels produced, and sales records by owner or location • Keeps a “paper- trail” for all grain transactions • Inputs • Information about the grain owners, storage locations, farm locations, and planted acres

  18. What it reports… Elevator 1 Elevator 2 Report of Productions by Location • Production • Summary of the crop’s status • Remaining crop • A report of what bushels have not been marketed

  19. Grain Storage Purchase Analysis • A tool designed to calculate the costs associated with adding on-farm storage • Calculates costs in terms of overall costs and per bushel • Can also evaluate thecost/benefit of on-farmstorage when comparedto commercial storagelocations

  20. Grain Storage Costs • Cost per Year • Summary of costs in yearly terms • Cost per Bushel • Summary of costs in per bushel terms

  21. On-Farm vs. In-town • Cost Comparison • Drying Charges • Shrink Costs • Storage Costs • Transportation Costs • Quantity and Quality Premiums

  22. FAST Spreadsheets Lets take a look at a few of the spreadsheets