More than a decade ago, farmers began building more grain bins for on-farm storage, says economist David Widmar. On-farm storage gives growers more flexibility in terms of when to sell their grain. But grain processors and warehouses also expanded their storage capacity, Widmar writes at the blog Agricultural Economics Insights. The end result is that on-farm storage capacity, at 13.1 billion bushels, is 55 percent of total U.S. capacity, down from 58 percent in the late 1990s.
Widmar says construction of new bins appears to reflect the growth in U.S. crop production over the past 15 years, rather than the ethanol boom or high farm income in recent years. Corn output is up by 28 percent in the past decade, he says, while U.S. grain storage capacity is up by 20 percent. “So while all those shiny new bins sure stand out on the horizon, it doesn’t appear that increases in grain storage have radically outpaced crop production,” he says.