Everyone talks about planting data and acreage. But for many grain businesses, understanding how farmers are storing crops is just as important to have a clear picture of the operation.
Given low commodity prices combined with increasingly high yields, many farmers are relying on on-farm grain storage, with the hope that prices will go back up and they will then be able to sell. However, there's currently no evidence that prices are going to go up. Even if they did, we have no idea when that next shift in the market could be.
As a grain company, you're likely either buying grain or selling a product that helps farmers store more efficiently. In either case, the more you know about their current grain storage system, the better you'll be able to provide a helpful solution and persuade them to work with you.
Consider the following examples:
- Understanding the acreage to storage capacity ratio can give you a clue as to the storage time of the on-farm grain
- Seeing the current storage system can help you figure out where the farmer's strengths and weaknesses are -- and if there are other storage options that could improve their effectiveness
- If your product helps to prevent insects infestation or aeration systems to reduce moisture content, you can figure out the volume of on-farm grain storage that needs to be managed and, thus, have a rough idea of their price point.
If you market or sell any products that help farmers who store grain on their farm, here are some advantages that come with quality grain storage.
Objective data vs. surveys
First, it's important to note the difference between the data that's commonly used to identify on-farm grain storage versus what most agribusinesses truly need; namely survey-sourced data. This ties back to a common theme we discuss here: the necessity for accurate, objective data, not data that's survey-based.
Our on-farm grain storage data is identified through satellite imagery. Our team uses geospatial imagery to identify the bins and where they're located on the farm.
This provides not only the benefit of having a more accurate picture than self-reported data, but it gives you a physical location of the bin, as opposed to the farmer's mailing address. Understanding the location of the bin is crucial for determining whether a farmer is part of your addressable market.
Calculating count, capacity and location of grain bins
It's important to know how many grain bins a farmer has in their operation. But if you're going to get all the information you need to make a marketing or sales decision, it's important to know the storage capacity of those bins as well.
In your own market research, perhaps you've determined that your target customer is one that stores over a million bushels. In that case, you should know which farmers have over a million bushels and which ones don't so you can filter out non-viable prospects.
Identify the location of on-farm grain storage in relation to the fields and the grower.
Additionally, combining that data with the location of each bin helps you determine how far that storage is spread out. If a farmer has two million bushels of storage capacity, but half of it is 50 miles separated from the other half, that's going to impact how they approach that particular farmer.
Perhaps you sell a product that controls temperature and moisture inside the bins, and you typically do business with farmers that are 30 miles from your location. The farmer's address may be 40 miles away, but they have some bins that are just 10 miles away.
Identifying points of sale
Grain transportation is extremely hazardous. There's also the opportunity cost associated with that transportation. That's why it's important to know how far the grain bins -- not the farm, but the bins themselves -- are from your points of sale, so you can prioritize the growers that are actually serviceable.
Whether you purchase grain for commercial storage, ethanol production or animal feeds, you want to ensure that there's a short enough distance between the two points of transportation that you mitigate the risks.
In a time where on-farm grain storage is popular among farmers, it's critical for businesses who market and sell grain-related products to understand the farmers they're dealing with. The more you understand the farmer, the better you'll be able to help the improve their productivity -- which in turn means more business for you.
To learn more about our on-farm grain storage data, click here.