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by Daniel Munch, Economist, American Farm Bureau Federation
Mississippi River water levels have reached record lows in the first half of October. At Memphis, for example, the river stage, or height of the river’s surface relative to the zero-stage level of 189.9 feet, fell to a record low of minus 11.5 feet on Oct. 11. This is lower than last year’s record low of minus 10.81 feet at Memphis.
These low river levels have reduced and delayed barge traffic and increased transportation costs for farmers during peak harvest season. One factor that helps mitigate the impact of transportation disruptions is the quantity of available grain storage in on-farm and off-farm facilities. Understanding trends and regional differences in storage availability provides insights on how well grain stocks and newly harvested grain can be held when transportation conditions are uncertain.
From ocean port congestion and labor strikes to low river levels, railway service shortfalls and a nexus of state and federal freight regulation, farmers and ranchers are well acquainted with transportation disruptions. One effective albeit costly way to buffer against these disruptions is investment in on-farm and off-farm storage.
Having sufficient storage capacity close to agriculturally productive regions means farmers can have a place to offload harvest if downstream transportation options are too expensive or unavailable. If storage is unavailable, farmers will be forced to absorb elevated transportation costs, face steep price cuts to get product moved or risk crop quality losses.
USDA’s latest Grain Transportation Report from the Agricultural Marketing Service highlighted National Agricultural Statistics Service data on grain storage capacity for both on-farm (including bins, cribs and sheds used to store grains and oilseeds on farms) and off-farm facilities (including elevators, warehouses, terminals, mills and crushers).
As of Dec. 1, 2022, the U.S. had 25.4 billion bushels worth of total grain storage capacity: 11.8 billion (47%) of off-farm storage and 13.6 billion (53%) of on-farm storage. Figure 1 displays the total capacity for grain storage (on-farm and off-farm) by state as of Dec. 1, 2022. As expected, the bulk of grain storage is in heavy grain-producing heartland states. Iowa leads with 3.57 billion bushels worth of storage capacity followed by Illinois (3.15 billion) and Minnesota (2.37 billion).
As of Sept. 1, 2023, farmers and commercial grain facilities held 3.69 billion bushels of grain in storage, a marginal 16-million-bushel, or 0.4%, decline from last year but down 25%, or 933 million bushels, from the prior five-year average. On-farm grain stocks made up 39% of total grain stocks. Combining current grain stocks with expected fall harvested crops (corn, soybeans and sorghum) puts total grain supply at approximately 23.12 billion bushels.
Comparing this to the total storage capacity of 25.4 billion bushels shows the U.S. has about 2.18 billion bushels of surplus grain storage space. Any supply dynamics that would cause stocks to breach this 25.4-billion-bushel threshold would exceed existing storage infrastructure.
The concept of a grain storage surplus, however, is not uniform across all states. Some states have a storage deficit, making them more susceptible to the impacts of transportation disruptions. Figures 2 and 3 display state-by-state grain storage capacity surplus or deficits based on current stock and production estimates.
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