STEVE INSKEEP, HOST:
American farmers depend on the commodities market. The smallest change in the price of grain can increase their profit, or wipe it out. Corn farmers have done well in recent years, and some are using the cash in an effort to make themselves into players on the commodities market. They're investing in big grain bins, allowing them to hold on to their harvest until they get the price they want. Harvest Public Media's Kathleen Masterson reports.
KATHLEEN MASTERSON, BYLINE: Out on a windy winter day in central Iowa, Steve Dakin is standing in front of a grain bin he recently installed for a farmer. Dakin sells grain bins, but the name bin is a bit of a misnomer. They're the modern, souped-up version of a silo - big, hulking, metal cylinders built on concrete floors. They can cost anywhere from 100,000 to a close to a million dollars. There are seven grand bins on this farm, a few of which stand nearly four stories tall. And Dakin points to where he'll install another large one this summer.
STEVE DAKIN: He's going to put another one about where that wagon's at, same physical size of that one there.
MASTERSON: The bins belong to corn and soybean farmer Larry Stolte, a quiet, seasoned farmer with neatly combed, gray hair. If he takes his grain in to a commercial elevator, he has to pay storage fees, and he has to sell the grain through them. But if he stores the grain on the farm, taking on more of the risk, he can play the market and sell to any buyer.
LARRY STOLTE: I have one source that lists probably 20 different locations. So at night, I can go in - on a computer - and I can look that up and see who's got the best bids.
MASTERSON: Stolte checks grain prices at nearby ethanol plants, grain co-ops, and large buyers like Cargill. By shopping around, he might only make about 10 cents or so more per bushel. But for every thousand acres of corn with an average yield, that can translate into about $16,000. Sometimes, a farmer really hits the jackpot - like Stolte did in 2008. That year, he bought a $100,000 bin. He says it paid for itself by that summer.
STOLTE: It was - what, '08 when things really took off, just because we had the corn at home in the bin. Otherwise, if we hadn't had the bin, it probably would have already been sold before the run-up.
MASTERSON: He made as much as $3 more per bushel when prices skyrocketed. Now that's not typical, but it's possibilities like that that make the risks worth it to some farmers - not to mention some nice tax breaks that make reinvesting in the farm business a good shelter.
On-farm storage has been rising steadily over the last five years. Nationwide, it's gone up at least 2 percent each year since 2008. Grain bin dealer Steve Dakin says he's been getting calls off the hook from farmers.
DAKIN: Last year, we had five projects past a half-million dollars. I can remember back in the '90s, if - when I had half-a-million dollars' worth of business, I thought it was a big year. So...
(SOUNDBITE OF LAUGHTER)
DAKIN: Yeah. And we priced out a $600,000 one yesterday.
MASTERSON: But commercial grain elevators say farmers might be overestimating the benefits of on-farm storage. Jim Magnuson is general manager of Iowa-based Key Cooperative, a commercial grain buyer.
JIM MAGNUSON: If they're really honest about what it costs - the electricity to run the fans, to own the bin, to make the repairs on the augers; you know, charging for labor to empty that bin out; you know, all those things that - most farmers just ignore those costs.
MASTERSON: Still, he doesn't begrudge farmers the opportunity to make a bit more cash. In fact, Magnuson says just about everyone in the industry is building more storage.
MAGNUSON: We're building a whole new facility at our Barn City location this year, with upgraded legs and more storage and everything else. We've built a train-loading facility at Newton with high speed, high capacity.
MASTERSON: The last five years have seen some record corn yields. And trend lines show that's likely to continue. Both farmers and grain dealers know if too much corn floods the market, high prices won't last. But for now, they're eager to keep riding the wave.
For NPR News, I'm Kathleen Masterson in Ames, Iowa. Transcript provided by NPR, Copyright NPR.