RP92-217 No. 19 Cost of Grain Storage

Grain marketing decisions are among the toughest the farm owner/operator or manager must make. Grain producers store grain to speculate on receiving higher prices, earn a return above storage costs, or to take advantage of government programs. Prices must increase enough to cover the additional costs, or forward contract prices must exceed current prices by more than the cost of storage in order to justify forward pricing. The gain in prices received can come from both changes in price level and changes in basis. This research publication discusses all the areas of the cost of grain storage.

Measuring the Performance of Cooperative Equity Redemption Plans

Cooperatives differ from other businesses in that they are owned by their patrons and net margins are distributed to patrons on the basis of use instead of capital investment. For financing, cooperatives often rely on allocated equities from retained patronage refunds. Retained patronage refunds are noncash allocations of net margins reinvested in a cooperative by patrons. Under an ideal program of equity formation, equity is held by patrons in proportion to patronage. Each patron’s share of financing the cooperative is equal to the share of benefits received. Equities of former patrons are retired as active patrons take on more of the responsibility of financing the organization.