soybeans
UT agricultural economists have recently developed an Excel-based decision aid that allows users to estimate grain hauling costs for different locations. The “Grain Hauling Cost Calculator” is available on the UT Crop Economics website: http://economics.ag.utk.edu/crop.html.


With the harvest complete, many producers are looking at different marketing options to sell corn and soybeans in the New Year. Because price differences and transportation costs between locations can be substantial, Aaron Smith, an assistant professor with the University of Tennessee Agricultural and Resource Economics Department and UT Extension specialist, says producers should be cognizant of how different prices and distances from storage to market affect their bottom line.

Smith says the UT agricultural economists have recently developed an Excel-based decision aid that allows users to estimate grain hauling costs for different locations. The decision aid allows users to enter distances travelled, loading and unloading times, wage rates, machinery costs and fuel use to assist in estimating the cost per bushel, total cost or cost per mile of hauling corn, wheat or soybeans from storage to market. The decision aid is called the “Grain Hauling Cost Calculator.”

Smith provided this example of the cost estimates that can be calculated using the decision aid:

A producer has 10,000 bushels of corn to sell. Elevator #1 is offering $4.25/bu and is 20 miles from the producer’s storage facility. Elevator #2 is offering $4.35/bu and is 50 miles from the producer’s storage facility.  Estimated cost per bushel to haul corn to Elevator #1 is $0.15/bu. (The producer receives a net price of $4.10/bu.) Estimated cost per bushel to haul corn to Elevator #2 is $0.29/bu. (The producer receives a net price of $4.06/bu.) Even though the producer received a greater cash selling price per bushel at Elevator #2 ($4.35/bu vs. $4.25/bu), the transportation costs incurred resulted in a lower net price ($4.06/bu vs. $4.10/bu) received than if he/she would have sold to Elevator #1.

The “Grain Hauling Cost Calculator” is available on the UT Crop Economics website: http://economics.ag.utk.edu/crop.html.

Also available on the website is a list of grain elevators and purchasers located in Tennessee and adjacent states that can be utilized to locate marketing opportunities in various counties and regions. “By locating markets close to them and accurately estimating hauling costs, Tennessee producers can significantly improve their net returns,” said Smith.

UT Extension provides a gateway to the University of Tennessee as the outreach unit of the Institute of Agriculture. With an office in every Tennessee county, UT Extension delivers educational programs and research-based information to citizens throughout the state. In cooperation with Tennessee State University, UT Extension works with farmers, families, youth and communities to improve lives by addressing problems and issues at the local, state and national levels.

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Contact:

Dr. Aaron Smith, UT Department of Agricultural and Resource Economics, 865-974-7476,
aaron.smith@utk.edu

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