When bargain bins came up for bid at auction last summer, Erik Petry was ready to jump on the opportunity. The Rochelle, IL, corn and soybean farmer already had drawn up plans to add more grain storage capacity — storage he would need to keep up with market opportunities and a changing grain market.
Petry has been keeping a close eye on plans for a new ethanol plant in the area. And he's heard that specialty soybean buyers from Japan and possibly Korea have been sniffing around the area. Foremost on his mind is Union Pacific Corporation's newly approved $181 million intermodal facility near Rochelle. The facility will meet the growing rail-truck market in the Chicago area.
“The idea is that they are going to bring all these container cars in,” Petry says. “They'll load the containers right on the farm. They are even talking about having a processing plant specifically for specialty soybeans. They'll process grain right there and put it in the containers for a direct ship across the ocean.” (See “Crops in a can,” February 2003, page 74.)
The Petry farm raises 1,000 acres of soybean seed for Monsanto. Another 4,000 acres go to corn and soybean grain, so Petry knows the challenges that come with harvesting, storing and transporting identity-preserved grain. “Seed companies have pretty much a zero tolerance policy on contamination,” Petry says. “Get one kernel of corn in the soybean seed, and we'd risk losing our contract for next year.”
Petry purchased the four used 25,000-bu. bins at $0.05/bu. “We got them cheap enough,” he says. “If you buy new grain storage today, it'll cost more than a dollar a bushel.”
Figures collected from various university extension agents indicate that per-bushel construction costs decline as bin capacity increases. The university figures show that a 5,000-bu. bin may cost more than $3.50/bu. to construct, whereas bids on a 50,000-bu. bin may be as low as $1.10/bu. Large bins provide the cheapest per-bushel storage but the highest per-bushel drying costs.
Petry saved money on his purchase. But was it still a good deal after he added up the cost of new bolts, parts, construction and concrete? Read on for his log of expenses and some of the sweat equity he and his family had to invest to earn that savings.
Petry's construction notes
Overall, the bins were in pretty good shape. But two of the four had never been painted.
These were Chicago Eastern bins; the company went out of business in the mid '70s. That posed some challenges in getting replacement parts.
About 10% of the stiffeners were bent. That could have been from when they were loaded on the truck and shipped out. I think they had been sitting in a pile for a while. Because the company no longer existed, we couldn't buy stiffeners. So we asked a fabricating shop in town to bend new ones for us. They are a big Z pattern. That's the only fabrication I couldn't do in my shop.
Existing stiffeners had to be sorted and matched with the correct panel thickness, which was time consuming. There were three stiffeners per panel, nine rings around, requiring 27 stiffeners per diameter. We also ended up having to fabricate a roof clip.
These bins didn't have floors in them, so we had to purchase new floors and an 8-in. unloading system. We spent additional money and put power sweeps in each bin. Originally, I wanted to share one sweep for all four bins; however, after completion, I am glad we put in the additional three power sweeps. The bottom rings were not drilled for a floor, so that meant even more labor.
A lot of the bottom panels had big holes cut in them where the previous owner had put in fans to aerate the grain. So I had to buy three new panels to use as pieces to cut out squares and weld new pieces in. There was a lot of work you wouldn't have to do if you went out and bought a new bin.
Sizing it up
At a 27-ft. diameter and 48 ft. (18 rings) high, these 25,000-bu. bins were much taller than what we really would have liked. But the price was so low, we figured we could make it work. But the size did present some challenges and added expense.
For one thing, when you're standing at an auction bidding on something that looks cheap, you might not think about the cost of the concrete foundation. It turned out that the tall bins require a much deeper footing. So we had a lot more money in the concrete than we had anticipated. We needed 3-ft. footing in the ground, and the outside walls are 3 ft. There's a 6-in. floor poured for each bin with false aeration floors. I would say the concrete was more than double compared with a normal 25,000-bu. bin; however, compared with one 100,000-bu. bin foundation I would say we spent roughly the same. I've never had good luck pouring concrete, so we contracted the job to professionals.
The other concern was our contract with Monsanto. A seed inspector needs to be able to come out and take samples of the seed beans in the bin. With all the OSHA regulations, an employee cannot climb the bins to probe them. He or she must be in a certified Monsanto bucket truck, which can't reach the top of these bins.
So company employees weren't too keen on coming out to sample from the top of these bins. We told them we had some tall bins, but they didn't have any idea they were 48 ft. Fortunately, I have sample doors on the sides that work, and everything worked out okay.
We priced larger, walk-in doors, but with as much pressure as there is with the tall bins, it would have cost too much. Once or twice a year I can crawl in through the little door if I have to. I don't know whose goofy idea it was to put the door on the third ring, but I'll probably end up building a ladder and a platform to make access easier.
Partly because of the height, we installed a “full” sensor in each of the new bins, about 2 ft. from the top. When the buzzer goes off, you stop the conveyor. These cost probably $70 to $80 each. We'll probably put them in all our bins. My dad, Terry Petry, usually unloads the trucks and fills the bins while I'm running the combine. He doesn't like to climb the ladders to look inside and see how full the bin is.
10-in., heavy-duty U-trough with 3/8-in. super edge flighting
Unload, 10-in. drive, 7.5 hp
13-in., heavy-duty U-trough with 3/8-in. flighting
Drive for 75-ft., 13-in. U-trough, 20 hp
Drive for 90-ft., 13-in. U-trough, 15 hp
(Horsepower can be lower because only two bins are loaded at one time. Two bins are loaded; then the motor is reversed and the remaining two bins are loaded.)
Four MFS York bin floors with steel supports
Four Hutchinson 8-in. unloaders with power sweeps
48,000 bolts and nuts ($0.12 each)
(Diamond Vogel) 200 gal. (includes catwalks)
(including concrete fasteners, steel, missing or bent stiffeners)
Cost of used bins
Another consideration is that four bins means more conveyors. If we had put up just one big 100,000-bu. bin, we'd need just one conveyor to load it.
Because we grow a lot of seed beans, segregation is a big issue. We decided to make a way to unload not only these four new bins, but also two other existing bins by reversing the unloading U-troughs. We can fill and unload through our 4,000-bu. overhead bin, or we can reverse the motors and load out onto a conveyor, which is a lot gentler on the seed beans.
All the conveyor motors can reverse. I can either unload these bins via the overhead or use a belt conveyor to load a semi. It's nice because I don't have to worry about contamination through the rest of my setup. Next year, if we decide to put corn in the bins, we can run it up the leg and into the overhead. It's a versatile system.
The big job
We bought some hydraulic bin jacks and used them to raise the bins. It took most of the summer with help from my dad, a full-time employee and two high-school kids.
We had to do at least three panels a day and put stiffeners in so we could let the bin down. We couldn't let it down with just the panel alone or it would buckle. So we started early in the morning, and by 4 p.m., we wanted to have those stiffeners bolted in so we could set the bin down and go home. Some days it depended on how sparky the high-school kids were.
We built the roofs first. I had all the cradles made on top of the bin roofs. The catwalk would set down on top of these. We hoped we had it all designed right so all we'd have to do was set it down and clamp it in.
Because the exact dimensions from the center of one bin to another were unknown, I wanted to fasten the “hoppers” with the valves in place on top of the bins, then mount the U-troughs on top and weld everything together on top of the bins. This is where my Lincoln 175+ welder was very useful.
It is a small MIG welder and is lightweight enough to hoist up to the catwalk. It worked great on the 10-gauge material I was working with. After I welded the hoppers to the U-trough, I simply cut out the bottom of the U-trough, exposing the hopper and valve. It was a little tricky welding up there, but I am glad I did it that way. I don't think an arc welder would have done as good a job as that little MIG.
After the bins were built, it was time to hang the catwalks and U-troughs. We hired Pierce Welding of Kings, IL, for the crane work and miscellaneous construction. I had fabricated cradles on the bin roofs when they were at ground level for the catwalks to fasten to. I had it planned so we could install the catwalks in three sections. The first section was the longest of the three, spanning from the first bin cradle to the second bin cradle. We just needed to bolt the second catwalk to the first and then set it down on cradle number three, and so on.
After the catwalk was installed, the towers were set into place. The catwalk from the leg to the catwalk over the bins was put together on the ground and was put in place with one “pick.” I had our electrician run a 220v and 110v plug to a center location on top of the catwalks and also on the ground to make future repairs and construction easier.
Good planning before the crane arrived saved us money on hourly crane fees. Plus, we didn't want to have a crew working 60 ft. in the air doing something that could have been done on the ground two weeks earlier.
We priced a new catwalk at $40 or $50/ft. I built it from scratch for $15/ft. Most of my cost savings really came from erecting the bins, catwalk and tower. Ordinarily, the steel we used would cost $0.50/lb. if we just walked in and bought it. We bought in advance, in bulk, so the steel price was closer to $0.25/lb.
When all was said and done, we probably had $0.50/bu. invested compared with $1.00/bu. for new. And that's including the loading and everything. But I didn't count my labor as an expense. By the time we put paint on this project, we did a lot of work! I guess it depends on how aggressive a guy wants to get in order to save 50 cents.
One product we didn't try to skimp on was the paint. We used a Diamond Vogel primer/paint that contains a lot of zinc. It did a great job killing rust and sealing the metal.
You run into a lot of little things that add up. For example, we purchased a new airless sprayer for this project, a Wagner. Because the paint contained zinc, it was hard on the seals of the sprayer, and we only could get about 50 gal. of paint to a set of seals, compared with 150 to 200 gal. the company claims I should have been getting. There was a small war between Wagner and Erik Petry over the $600 sprayer. I did get one free $50 rebuild kit for my trouble.
We're looking to pick up some more used bins. I've already got the blueprint drawn out, and if we end up finding what we need, that's good luck for us. If not, we might just end up buying new next time.
Insurance for used bins
The old saw “bin-busting yields” is supposed to put a smile on farmers' faces. But it's not such a happy thing if your bin actually fails.
If you are thinking of buying used bins for your farm, you'd be wise to check with an insurer first to make sure the bins you buy are covered. Or, if you choose to self-insure, at least find out what the insurance companies are shying away from.
In November 2001, the Elevator Subcommittee of the Illinois CPA Society's Agribusiness Committee reported that property and casualty insurance for grain elevators is becoming difficult to secure in the state of Illinois. Although insurance for small on-farm grain storage may be somewhat easier to obtain, it's worthwhile to consider where trends in bin insurance might be heading in your state. Because of the insurance industry's recent weather-related financial difficulties, grain bin coverage may become more restrictive and expensive in the future.
The Illinois CPA subcommittee stated that some of the changes in insurance coverage from the major companies have been due to bin failures. It reported that there were problems with Chicago Eastern bins as well as Brock bins. Some insurance companies were not insuring for replacement cost but were insuring for depreciated cost.
Information concerning various states' grain laws, including insurance issues, can be found at www.aawco.org.