Digging into the cost of drying grain

Having enough drying capacity is critical in a year like this one, but it still helps to have a handle on the costs

How do your grain-drying costs compare? There are many factors to consider but provincial experts estimate the usual range is 10 to 16 cents per bushel per percentage point drop in moisture.
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There are a number of factors that determine the cost of drying grain.

They include the type and size of the drying system, the amount of moisture to be removed, weather conditions during the drying period, and operating costs (fuel, electricity, repairs and maintenance, labour, shrinkage and hauling).

“Knowing the costs of on-farm drying is important for those evaluating the potential purchase and for those who already have a system in place to compare on-farm costs to commercial drying rates,” said Dean Dyck, a provincial farm business management specialist

Fuel is the largest cost but “the amount of fuel used will vary widely with the type of system, the type of grain or oilseed dried, the outside air temperature and the moisture removed,” he said.

However, repair and maintenance costs are usually low — about 1.5 per cent of the cost of the system for every 100 hours of use.

“Most drying systems use electricity to power fans and move grain,” said Dyck. “Multiply the horsepower of the electric motors by 0.75, then by the current electricity rate to calculate the cost per hour.”

The amount of labour required to operate a drying system will vary by the type of system.

“High temperature, fast drying systems will require frequent monitoring, while a slower system may not need to be checked as often. The labour cost per bushel can be estimated by dividing the typical farm labour wage rate per hour — usually about $20 per hour — by the number of bushels dried in an hour by the system.”

The cost of grain shrinkage during the drying and hauling process is often overlooked.

“It can be calculated by using the Grain Shrinkage Calculator and multiplying the percentage of shrinkage by a future cash price.”

For a link to the calculator, go to www.alberta.ca and search for ‘Grain Shrinkage Calculator.’

Ownership costs, including depreciation and the cost of investment, will vary depending on the size and investment in the drying system.

“The initial investment can include the purchase price of the drying unit, surge bins, plus any auxiliary equipment such as augers, wiring and concrete,” he said. “Depreciation on the dryer and auxiliary equipment can be calculated at the rate of 10 per cent per year. If you have surge bins, depreciate them at five per cent per year.”

So what is the bottom line when it comes to drying grain?

“Calculations done by the farm management specialists at the Ag-Info Centre suggest a range of 10 to 16 cents per bushel per percentage point drop in moisture,” said Dyck. “For example, drying canola from 17 per cent to 9.5 per cent will cost between $0.75 and $1.20 per bushel.

“There are many factors that go into the cost of drying grain, so doing your own calculations is highly recommended.”

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