Ag Connection
Your link to the Universities for ag extension and research information


Volume 4, Number 10
October 1998
 

 

This Month in Ag Connection

Full Bins - Full Elevators:   You've grown a good crop - now where will you keep it?
Hoop Structures:  Opportunities for the Missouri Swine Industry?
Do You Manage Your Credit, or Does Your Credit Manage You

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Full Bins - Full Elevators
You've grown a good crop - now where will you keep it?

Limited storage space coupled with low prices have farmers considering temporary storage while waiting for a better market. There are two key points to remember — temporary storage requires careful management and temporary storage is... temporary.

How about Bin Rings?

Round bin rings can be conveniently and economically erected inside an existing building to provide emergency grain storage.

Two or three steel rings can be set on an existing floor. Install an unloading auger to the center of the rings for emptying. Anchor the rings as recommended by the manufacturer.

The round shape may leave building corners that are difficult to utilize, but rings can hold more grain with less remodeling. For example, a 40' square pile which is 4' deep at the walls and peaked at 23 degrees holds 8,742 bushels. Round bin rings, 40' diameter and 7'-6" high in the same building with grain peaked at 23 , hold 10,357 bushels.

Tips for Temporary Grain Storage

  • Store only high quality, cool, dry grain. Most temporary facilities are not adequate to dry grain or provide uniform aeration of the entire grain mass. Damaged grain, dirty grain, or grain with lots of foreign material will cause a storage problem — especially in temporary storage. Don’t store any grain that you suspect might cause a storage problem. Keep the best; sell the rest.
  • Maximize capacity by understanding how storage volume changes with the width, length and depth of grain. Flat storage structures don’t hold nearly as much grain as you would hope. Storage volume increases most as the height of grain against the walls increases, but walls must be properly reinforced to withstand the enormous lateral pressure of stored grain.
  • Reinforce existing walls or install bulkheads to protect structural integrity of buildings used for temporary storage. Corn piled to a depth of one foot exerts only 11.5 pounds per linear foot of wall, while corn piled to a depth of 8 feet can create a total force of 736 pounds per foot of wall — an increase of 64 times! 
          Analysis of building materials and methods for retrofitting an existing structure for grain storage can be difficult. The best approach is to adopt a set of approved and tested plans from a source such as Midwest Plan Service (MWPS) publication MWPS-13 or a commercial builder. Building manufacturers may be able to supply inside grain walls designed for their buildings to keep grain dry and to handle the pressure exerted by stored grain. Call your local extension office for assistance in developing a structure that can withstand the lateral pressure of stored grain.
  • Clean and sanitize temporary storage facilities with even greater care than you would a regular storage bin. Sheds used for temporary storage that still contain traces of livestock waste, ag chemicals or petroleum products can contaminate grain, resulting in an unacceptable or downgraded product. Protect your investment.
  • Protect grain from moisture — top and bottom. When providing temporary storage on bare soil, use plastic to prevent moisture from re-wetting grain on the bottom of the pile. Concrete floors will also allow moisture to wick up from the soil and re-wet grain unless a vapor barrier was laid before the floor was poured. Cover the floor with plastic to prevent spoiled grain unless you are confident that the floor already includes a vapor barrier.
  • Provide adequate aeration, especially for any grain that you expect to hold for more than one month. Spoilage is most likely to occur in dead zones or areas of the grain mass farthest from the aeration source. Dead zones are difficult to avoid in temporary storage, but can be minimized by proper placement of several aeration tubes on the floor of the structure.

For more information, contact your local extension office.

Author: Bill Casady, Extension Ag Engineer, Commercial Ag Program


 

Figure A

Figure B

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Hoop Structures:  Opportunities for the Missouri Swine Industry?

Pork producers are looking for lower cost structures in which to raise pigs — with an interest in so-called hoop structures or hoop shelters to house grow-finish swine. The least expensive facility to construct may not be the most profitable swine finishing facility. Economic analysis, based on animal performance, should be used to select the facility that will optimize return. Hoop structures can be used successfully to finish pigs, but producers need to know the advantages and disadvantages of this type of housing.

Hoop structures appear to be most beneficial to producers that satisfy one or more of the following criteria (Midwest Plan Service publication AED 41):

  1. View the swine industry as rapidly changing and want facilities that are versatile to match a rapidly changing industry.
  2. Moderate sized enterprises that match pig flow with hoop structure size.
  3. Intend to be in operation for the short-term, but are in need of improved facilities.
  4. Need a short-term structure that can be removed after use or adapted to other uses when not occupied by pigs.
  5. Want to keep fixed costs low.
  6. Have limited capital.
  7. Are not willing to accept additional financial risk.
  8. Want to get pigs out of old buildings or outside lots.
  9. Need an area for overflow finishing pigs or gilt development.
  10. Need an isolation area for new sows or gilts.
  11. Need an area in which to hold tail-enders of a group when using an all-in-all-out confinement facility.
  12. Prefer to handle solid manure.
  13. Have the equipment and land resources for crop residue harvest and reapplication.

Capital Cost Comparisons

By equitably comparing different types of grow-finish facilities, a swine production operation can determine what style of facility best matches their needs and preferences. A 200-210 head hoop barn costs around $14,000 to construct. Bedding costs run near $4.00/pig and feed efficiencies in well managed facilities are 3.53 pounds of feed per pound of gain in winter and 3.43 in the summer (3.48 average).

A 200 head total slat grow-finish facility costs around $42,000 to construct . Feed efficiencies in well managed buildings average 3.1 pounds of feed per pound of gain.

A summary of facility comparisons in Figure A demonstrates the information needed to determine the style of facility required. From this data and experience gained in Missouri, hoop structures can be constructed at lower capital outlay per pig space/year. However, hoop structures do not allow pigs to convert feed to pounds of pork as efficiently as totally slatted environmentally controlled confinement facilities.

The best performance that can be expected with the hoop barns is comparable to the worst performance in a total slat facility (Figure A). This suggests that total slat facilities that are not managed all-in/all-out and sanitized between groups result in a decreased ADG (average daily gain) and an increased FE (feed efficiency).

A well-managed hoop barn with a strict all-in/all-out protocol may still have some pathogen contamination from previous pigs as a result of dirt floors and wooden walls. The values here represent expected ranges between the two production systems that have been observed in Missouri.

Hoop barns may serve as "tail-ender" facilities in conjunction with total slat facilities. By removing 15% of slower growing pigs and placing them in hoop structures we can increase the number of "turns" that the total slatted barn will allow in a year's time (Figure B). Increasing the number of turns from 2.86 to 3.1 in a total slat barn increases the net return per pig space by $4.85. However, the sort loss associated with this practice will need to be less than $0.71 /cwt ($1.56/head) before the producer will lose additional revenue associated with selling all hogs after 17 weeks of finishing. When the sort loss exceeds $0.71/cwt then a producer may consider an additional 30-day finishing time in the total slat facility.

The sort loss for tail-ender pigs will need to be greater than $1.75 per cwt before the net return per space in a hoop structure w

ill provide additional revenue to the value of the market hog. In this example, one 200-head hoop structure could finish the "tail-enders" from six 600-head total slat confinement facilities.

Hoop structures may allow producers to get into pork production with less capital commitment and less financial risk, but the best net return to the dollars invested in facilities over time will be to those pigs that are raised in well managed total slat grow-finish facilities. However, debt incurred during times when market prices are low will also place highly leveraged units at great risk.

Authors:  James Rogers, Livestock Specialist; Thomas J. Fangman DVM, MS; and Joseph Zulovich Ph.D., P.E., Commercial Agriculture Program, UMC


 

". . . there are another three C’s which are not given enough respect: communication, communication, and communication"

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Do You Manage Your Credit, or Does Your Credit Manage You?

The higher your level of credit leverage (debts to assets), the greater the scrutiny your financial situation will receive from your lender.

A lender evaluates a borrower for repayment ability, liquidity, solvency, profitability and financial efficiency. These points of financial review dovetail into the traditional five C’s of lending: character, capacity, capital, collateral, and conditions. For existing lines of credit, there are another three C’s which are not given enough respect: communication, communication, and communication.

Well prepared financial statements document and communicate the last four of the five C’s: capacity, capital, collateral, and conditions. However, character is best evidenced by prior actions and performance.

Three basic financial statements should be prepared by every business, for internal use as well as for their creditors, to monitor the financial development of the business: balance sheet, income statement, and cash flow statement.

The income statement is the best tool for analyzing repayment capacity and profitability. The revenues of a business remaining after deducting the operating expenses are the funds available to pay for family living expenses, make new investments, and provide for debt reduction. Income statements prepared with adjustments reflecting change for receivables, inventory and prepayments more accurately reflect the financial results of each year.

The balance sheet provides information for analyzing the liquidity and solvency of the business. One of the best measures of liquidity is the current ratio, which is the current assets divided by the current liabilities. This ratio varies substantially during the production cycle, thus most lenders prefer to have balance sheets prepared on a similar date each year.

The balance sheet also provides information needed to measure the solvency or percent equity of the business. Equity represents the owner’s investment that is at risk and the greater the percentage of equity, the less the lender’s funds are at risk.

The cash flow statement is the third basic component of a financial report. Cash flow statements facilitate the periodic monitoring and comparison of the actual revenues and expenditures to what was budgeted.

Prior year cash flow statements are utilized to more accurately generate a projected cash flow statement. A projected statement identifies periods of anticipated cash shortage and surplus.

A well-prepared financial report (income statement, balance sheet, and cash flow statement) can be one of the most valuable tools of the farm manager for internal decision-making and communication with creditors.

Author: Parman R. Green, Farm Business Management Specialist

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University of Missouri ExtensionAg Connection - October 1998
http://outreach.missouri.edu/agconnection/newsletters/is-98-10.htm -- Revised: April 20, 2004
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