Shedding light on storage costs
first published July 2011
With energy prices rising, it’s more important than ever to get to grips with how much it costs to store potatoes. There are also simple steps you can take to reduce bills.
How much does it cost you to store your potatoes? If you can’t put a figure on it, then join more than half the growers in Britain, who are similarly in the dark when it comes to storage costs.
This was one of the main findings of a benchmark survey we carried out back in 2006. When asked ‘how much does it cost per tonne to store your potatoes?’, 58% of growers replied they did not know. Only 12% gave figures that tally with current best estimates for pre-packing and processing.
“It’s quite a worrying statistic that only one in eight potato growers have a firm and realistic idea of how much it costs to store potatoes,” comments Adrian Cunnington from the Potato Council’s Sutton Bridge Crop Storage Research centre. “But, as energy prices in particular are spiralling upwards, it’s becoming increasingly important to be able to measure these costs.”
Much of the problem stems from the hidden costs of storing potatoes. “It is difficult to measure factors such as depreciation and finance charges, and it’s not as if you receive a bill for storage losses, for example.” Many running costs are also hidden – labour is often hard to allocate, and few growers have a dedicated electricity meter for their potato store.
To help growers get a more realistic picture, benchmarking software has been developed that is available to download. Every aspect of storage costs, from ventilation to finance charges, have been factored in, with figures drawn from industry best estimates.
“Every store is different, which means this is quite a complex tool – you can tailor it to your store and plug in any figures you know to give you a figure that is as accurate as possible,” explains Mr Cunnington. The software has been distributed to the Potato Council’s supply chain team, who can work through the program with individual growers.
The results could be something of an eye-opener – total costs vary from around £20 per tonne for short duration, bulk stores for the processed market up to £54 per tonne for nine months’ refrigerated box storage with 15% outgrades going into pre-packing.
So, once you have worked out what the costs are, how can you reduce them? Mr Cunnington has identified six easy hits – relatively straightforward steps that could shave thousands off your storage bill: “Focus first on running costs. In a typical store, this will be your highest expenditure, and electricity will form the bulk of it. There are also simple changes you can make to store layout and design, and ways to reduce store losses that can make incremental but significant savings,” he advises.
“If you want to take cost-saving further, such as fitting inverters to control fan speed, then some significant capital investment and specialist advice will be needed, but payback can be achieved in as little as 3 years”.
Six simple steps to save on storage:
- Tariff management. The energy market is highly competitive and good deals are available. Look around for an alternative supplier, and look at manipulating terms to suit your needs – significant savings can be made with off-peak contracts and timing plant to run accordingly.
- Air-mixing. A good solution is to make best use of ambient air availability. Mixing in cooler, night-time air can reduce refrigeration requirement. Automatic control systems are available that will mix air cost-efficiently.
- Defrost on demand. A lot of energy can be wasted through refrigeration units that run through their defrost cycle on a time basis, rather than when needed. Changing to defrost on demand can save electricity.
- Store design. Making improvements to insulation and ensuring doors and louvres are airtight can save on energy losses.
- Store layout. Stores should be loaded to maximise airflow. This reduces fan running time, as well as helping to maintain quality of the stored crop. Taking steps to segregate stocks and partitioning areas in store can also result in energy savings.
- Storage losses. Don’t store a crop that is not up to the job – this adds costs that you may not recoup. Make sure the crop meets market spec as it comes in and monitor the crop during the storage period to identify potential problems early on. Try and ensure your contract, and your store, give you the flexibility to out-load early if necessary.
- Growers' Advice - Electricity cost management.
- If you would like to use the benchmarking software to analyse your on-farm storage costs, it can be downloaded from our Business Improvement Toolbox. In case of difficulty, please e-mail email@example.com or call the Storage Advice Line free on 0800 02 82 111