Jun 17, 2021

Brazil Only has 14% of its Grain Storage Capacity On-Farm

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

On-farm grain storage capacity in Brazil has always been low compared to other major grain producing countries. In Canada, 85% of the grain is stored on-farm. In the United States, it is 65% and in Argentina, 40% of the grain is stored on-farm. In Brazil, the on-farm storage capacity is approximately 14% and that has not improved for the last ten years. That is the conclusion from Thome Guth, Superintendent of Logistical Operations for Conab in their latest Logistical Bulletin.

Even though Brazilian farmers have built new on-farm storage units in recent years, the overall grain production in Brazil continues to outpace the storage construction, leaving Brazilian farmers with inadequate on-farm storage capacity.

Despite the shortages of on-farm storage, Brazil has not encountered severe storage problems due to the nature of grain production in Brazil. Brazil's two main crops are soybeans, which are generally harvested in February and March and safrinha corn, which is generally harvested in June and July. The offset nature of the harvest allows the storage units to be emptied from one crop before the next crop is harvested.

Having on-farm storage could be a financial win for Brazilian farmers. According to a recent study, Brazilian farmers could realize gains of 55% in the marketing of their crops if they stored the grain on-farm. In fact, new storage units could pay for themselves in a little as 6 years.

The biggest financial return from on-farm storage stems from the fact that grain prices are usually at their low point during harvest when farmers without storage may be forced to sell their grain or pay for storage at the local grain company. Domestic grain prices in Brazil are generally higher between harvests.

Another source of potential financial gain are lower transportation costs in the months after the harvest is complete. The demand for trucks during harvest is extremely high and truckers take advantage of the situation by increasing their freight rates during the harvest season. Freight rates may be as much as 50% lower during the off season which would go a long way to help pay for on-farm storage.

Having on-farm storage could also speed up the harvest and result in better quality grain. During the peak of the soybean harvest for example, the combines in Brazil usually dump their grain into trucks parked at the edge of the field. These trucks then make their way to the local grain company but unloading may be delayed due to long lines of trucks doing the same thing. If the trucks are delayed, the farmer must stop harvesting until the truck returns.

This delay in harvesting could be critical especially for the soybean seed quality. Many of the soybeans in Brazil are harvested during the rain season when there may only be a short window of dry weather allowing for harvest. If that harvest window is missed due to a lack of transportation, mature soybeans may set in rainy conditions for days or weeks before the next harvest window opens. The quality of the soybeans can quickly deteriorate under those conditions.

An alternative to silo construction could be the use of silo bags. In Argentina approximately 50% of the on-farm storage is in the form of silo bags.