The ins and outs of having your own storage facilities

In this article, Cobus du Plessis discusses what you need to know before investing in on-farm silos.

Back in the early 1900s, there were barely any places to store grain. The few facilities that did exist were owned by milling companies, like Premier Milling. These companies built some of the first storage areas, but they were small and used for flour, imported wheat, and grain they bought from local farms. Things changed after the South African Marketing Act passed in 1937. This law led to farmer co-operatives working together to build bigger storage facilities. These co-ops functioned as agents, storing grain for the government’s agricultural control boards, also created by the 1937 Act.

Between the 1950s and 1990s, South Africa saw major advancements in grain storage techniques, even becoming a global leader in some areas. This progress came to a halt in the 1990s, however, when the government dissolved the marketing boards.

With this, grain storage responsibility shifted back to private companies. Farmers, traders, and processors now had to pay for every storage space they used. This shift transformed grain storage into a competitive business. Former farmer co-operatives, now operating as agribusinesses, vied for clients by offering the best grain handling and storage services. Farmers, who used to be co-op members, became paying customers, responsible not only for storage costs but also for additional services like grading, weighing,and drying. This new system forced agribusinesses to compete for farmer loyalty.

CAPACITY

Most individual farmers and processors did not have the capacity to store much grain themselves. Before the rules changed, they did not need to. Farmers were conveniently located near co-operative storage, and processors could order grain as needed. Processors only kept enough grain on hand to last about a week. There were no grain traders, and any profits from storing grain went back to co-operative members. A 2016 report by the Department of Agriculture, Land Reform and Rural

WIKIMEDIA COMMONS ABOVE: Silos are a major capital investment but will make a farm more valuable.