Margin in drying grain

idunnoshur

Good evening all, myself and the brother are having a bit of an argument here about whether or not lads purchasing grain, drying it and selling it on are making money.

I reckon they're not making much considering the price of diesel. On the other hand my brother thinks that they're making a fortune as the prices jump up considerably after the harvest.

About all we know is that a big loader costs our friend 23eur an hour. If someone could enlighten us about the other costs involved it would be great such as cost of drying 1 tonne of grain by 1% moisture, how much the grain increases in value by after the harvest and a rough idea of the cost to hire or run a lorry.

Thanks
ids

Casinoking

I worked it out a couple of years ago and it cost around €20 - €25 per tonne to dry from 20% to 15% when you take everything into account. The big cost is diesel, which works out at about a tenner a tonne, but you also have to take into account the weight loss in the grain itself, depreciation on machinery and the wage cost of having a man with the drier at all times. I can't see much of a margin in it for buying in green grain, drying it and re-selling because there's obvously a storage cost involved as well for the shed space you'd need to handle large quantities. The merchants charge around €4/tonne per month. There is something to be said for it when dealing with your own grain though, at least it gives you the independence to play the markets a bit and not be tied in to the green price off the combine.

nilhg

Casinoking has it about spot on I'd say, the price of diesel is the big factor in drying and there is nothing you can do about it.

Quite often the merchants have no much choice but to take the grain and dry it though, they'll be owed money for inputs.

The whole way grain is traded in this country has changed in recent years, many merchants were badly caught in recent years on stored grain so most of them now tend to hedge it off on the futures market either physical or through a broker onto the LIFFE or MATIF , that way they take a lot of the financial risk out.

johnstown

A few questions.....

When harvesting grain, I assume it’s best to get it dried as quickly as possible. But say you harvest at 17% moisture and store it aerated, then I assume you can store it without any major issues once you monitor well? Does this storing with aeration result in moisture reduction (by virtue of the aeration)?

If drying, then are the mobile diesel dryers efficient versus other dryers?

nilhg

johnstown wrote: »

A few questions.....

When harvesting grain, I assume it’s best to get it dried as quickly as possible. But say you harvest at 17% moisture and store it aerated, then I assume you can store it without any major issues once you monitor well? Does this storing with aeration result in moisture reduction (by virtue of the aeration)?

If drying, then are the mobile diesel dryers efficient versus other dryers?

The 17% grain will store fine as long as you can keep the temperature as low as possible, normally you'd do this by aerating on cool evenings/nights, you won't add moisture back into the grain as long as the temperature of the grain is higher than the incoming air. If you want to dry the grain as well then you'd be looking at using a much higher volume of air than for aerating and possibly also adding some heat, there are a lot of variables here and you need to know what you are doing, it's possible to dry the bottom of the heap and have the moisture condense in the top causing it to spoil.

Mobile dryers usually need a tractor/generator with electric motor to drive them, most of the energy consumed there goes to moving the grain and not to drying so the process is by definition less efficient. The moving grain allows higher temperatures to be used which is faster to dry but also less efficient.

idunnoshur

Sorry for the delay in replying lads, I didn't want to use my phone for a longish post like this and laptop was unavailable and then I had the problem of the car yesterday.

I'm going to try and work out what the man that we sell all the grain to is making. I know that he has to draw the grain about 11 miles and he uses a 7430 John Deere. She pulls a 24 foot Braughan that holds about 21 tonne. A 6830 does between 7 and 8 MPG so I'm guessing a 7430 is fairly similar so I'll say it does 7 MPG. From my calculations that works out at 0.68 litres/tonne (I'm going to leave it all in L/tonne so it'll do from year to year).

Casinoking wrote: »

I worked it out a couple of years ago and it cost around €20 - €25 per tonne to dry from 20% to 15% when you take everything into account. The big cost is diesel, which works out at about a tenner a tonne, but you also have to take into account the weight loss in the grain itself, depreciation on machinery and the wage cost of having a man with the drier at all times. I can't see much of a margin in it for buying in green grain, drying it and re-selling because there's obvously a storage cost involved as well for the shed space you'd need to handle large quantities. The merchants charge around €4/tonne per month. There is something to be said for it when dealing with your own grain though, at least it gives you the independence to play the markets a bit and not be tied in to the green price off the combine.

You couldn't tell me how many litres it takes to dry 1 tonne of grain by 1% moisture could you? It's a family run operation so I'd reckon wage costs are minimal. Wouldn't the weight loss in the grain be accounted for in the reduction of the price for the moisture? I'll ask a couple of contractors about depreciation figures during the week. Would the dryers themselves depreciate by much? As this man has the sheds built 15 years I'm fairly sure that they're paid for.

nilhg wrote: »

The whole way grain is traded in this country has changed in recent years, many merchants were badly caught in recent years on stored grain so most of them now tend to hedge it off on the futures market either physical or through a broker onto the LIFFE or MATIF , that way they take a lot of the financial risk out.

Could you tell me more about LIFFE and MATIF please? This is the first I've heard of them.

nilhg

idunnoshur wrote: »

Sorry for the delay in replying lads, I didn't want to use my phone for a longish post like this and laptop was unavailable and then I had the problem of the car yesterday.

I'm going to try and work out what the man that we sell all the grain to is making. I know that he has to draw the grain about 11 miles and he uses a 7430 John Deere. She pulls a 24 foot Braughan that holds about 21 tonne. A 6830 does between 7 and 8 MPG so I'm guessing a 7430 is fairly similar so I'll say it does 7 MPG. From my calculations that works out at 0.68 litres/tonne (I'm going to leave it all in L/tonne so it'll do from year to year).



You couldn't tell me how many litres it takes to dry 1 tonne of grain by 1% moisture could you? It's a family run operation so I'd reckon wage costs are minimal. Wouldn't the weight loss in the grain be accounted for in the reduction of the price for the moisture? I'll ask a couple of contractors about depreciation figures during the week. Would the dryers themselves depreciate by much? As this man has the sheds built 15 years I'm fairly sure that they're paid for.

While it's a good idea to try and work out what your buyer's costs might be I'd imagine you'll find it very hard to figure out what his profit margin might be, how will you know what he's paying for fuel or what his sale price might be?

IMHO worrying about what the buyer of your produce might make is counter productive, put your energy into figuring out how you can make more out of it yourself before you sell. Have you the finance (fuel will have to be paid for on the day for the best price, grain might have to be stored for a while) and facilities to dry and store yourself? Any other prospective buyers out there, even just to push up the price a bit?

idunnoshur wrote: »

Could you tell me more about LIFFE and MATIF please? This is the first I've heard of them.

LIFFE, MATIF.

You'll see the prices here

idunnoshur

nilhg wrote: »

While it's a good idea to try and work out what your buyer's costs might be I'd imagine you'll find it very hard to figure out what his profit margin might be, how will you know what he's paying for fuel or what his sale price might be?

He buys the diesel from the same place that we do and the father has all of the dockets kept from last year, that'll give me a rough guide. I'll get the father to ask him about his selling price, he's very open about that but not about his costs.

nilhg wrote: »

IMHO worrying about what the buyer of your produce might make is counter productive, put your energy into figuring out how you can make more out of it yourself before you sell. Have you the finance (fuel will have to be paid for on the day for the best price, grain might have to be stored for a while) and facilities to dry and store yourself? Any other prospective buyers out there, even just to push up the price a bit?



LIFFE, MATIF.

You'll see the prices here

I'm not worrying at all, this is just to resolve an arguement between the brother and myself . There's no shed for it on any of the 3 farms and they're too spread out to draw it all back to one of them. Dairygold is the only other buyer near that farm and the father refuses to let them earn a cent out of him.

nilhg

idunnoshur wrote: »

He buys the diesel from the same place that we do and the father has all of the dockets kept from last year, that'll give me a rough guide. I'll get the father to ask him about his selling price, he's very open about that but not about his costs.



I'm not worrying at all, this is just to resolve an arguement between the brother and myself . There's no shed for it on any of the 3 farms and they're too spread out to draw it all back to one of them. Dairygold is the only other buyer near that farm and the father refuses to let them earn a cent out of him.

Fair enough,

Mecmar say here that their dryers would use 1lt per %moisture per ton, you'd have to add in enough fuel for the tractor driving it and the loader keeping it fed and emptied, and labour, maintenance and depreciation.

A rule of thumb generally used is to allow 1.25% weight loss for every 1% drop in moisture.

HTH.

idunnoshur

nilhg wrote: »

Fair enough,

Mecmar say here that their dryers would use 1lt per %moisture per ton, you'd have to add in enough fuel for the tractor driving it and the loader keeping it fed and emptied, and labour, maintenance and depreciation.

A rule of thumb generally used is to allow 1.25% weight loss for every 1% drop in moisture.

HTH.

Just spent 20 minutes with a pen and paper trying to work out this mans margin and it's proving far too difficult, I'm missing far too many figures, I'm going to leave it off.

Thanks for all of the help anyway!
ids