Assumption, IL - May 15, 2019 – A new decision-making tool to help navigate the often complex process of selecting a grain system has been introduced by GSI.
It will help commercial grain operations meet their needs and position them for a higher return on investment.
Roger Price, GSI Director, North American Grain Sales, noted that commercial grain facilities have many choices for storage structures, such as steel bins or concrete grain silos, flat storage buildings, piles, bunkers, center piles and bags, and the decision process can be difficult.
“Using GSI’s ROI tool, we can walk them through a verifiable income and expense model to help determine which option, or options, make the best economic sense for their operation,” he said.
Price said commercial grain operations currently have limited access to information, or only look at initial, upfront costs, when they plan for a new or expanded grain storage system.
“Grain storage projects are long-term decisions, and the initial capital cost is only one part of the equation,” he noted.
“Many additional factors need to be considered, because every operation’s situation is different.
"Each has specific needs, capabilities and constraints. This tool takes all of those factors into account.”
The grain storage project ROI analysis begins with a collaboration between a GSI dealer, GSI ROI tool specialist and management of the grain operation, either in person or online, to collect information about the facility and its need for additional storage.
GSI utilizes the tool to analyze numerous cost and revenue factors, as well as non-financial considerations.
This analysis includes:
Price said once all the information is plugged into the ROI tool, a side-by-side analysis is produced that compares the financial returns for different storage types.
Parameters can be changed, if desired, to see additional options.
Price said the process is not intended to recommend a single solution.
Rather, it provides several scenarios with actual experienced and expected costs along with the forecasted economic return for each over a 10-project life.
“The operation can then determine which option makes the most economic sense, not only in meeting current needs but also by providing the best return over the life of the project,” he stated.
GSI helped underwrite an in-depth cost benefit analysis of grain storage systems performed by Land O’Lakes.
Joe Nelson, a member of the Land O’Lakes project team, said the process entailed thorough research involving a dozen different ag retailers as well as other industry stakeholders.
Discovery meetings were held with a cross-section of management, including chief executive officers, chief financial officers, grain originators, and grain merchandisers and operations personnel, to analyze cost and revenue factors for different types of storage options.
Nelson said the team also worked with construction contractors to obtain the capital cost per bushel for varying grain bin sizes, composition and layouts; sampled county assessors across the country to determine the impact of grain system projects on real estate taxes; and spoke with insurance companies to understand how different storage options impact insurance rates.
“Our research resulted in some general guidelines and benchmarking to help guide decision-making, but ultimately, cost and revenue factors must be individualized to each grain operation,” Nelson said.
He added that the ROI tool is mainly designed for expansion of current grain systems, although it can also support the development of entirely new systems.
To participate in or learn more about the grain storage ROI process, commercial operations should contact GSI’s Jeff Cravens via email at Jeff.Cravens@agcocorp.com or by phone at 815-341-4559.