The mathematics (and economics) of soybean shrink

By Matt Reese

This wet soybean harvest has been challenging and has renewed concerns of farmers concerning the shrink charge that is fodder for regular coffee shop conversations.

“The quality has been very good this year with big, healthy beans. Guys have been taking beans off a little wetter, but most are in the 11% or 12% range,” Randy Broady, Director of Grain Operations for Trupointe Cooperative. “Shrink is charged at 13% and I would guess that less than 20% of the beans coming in have been over 13% moisture.”

The charge for shrink is intended to account for the amount of mass that will be lost as the soybeans are dried. While farmers do not want to face deductions in their checks from the elevator, they are actually often better off taking in wetter beans and being charged for the shrink, according to Broady.

“If I’m a farmer, I would rather deliver a wetter bean because they are actually bringing in more weight and, even after the discount, they are coming out ahead,” he said.

For example, 14% moisture beans are shrinking about 2%, so if a farmer brings in 1,000 bushels, he gets paid for 98% of them. If the beans are at 11% there is no charge for shrink, but out in the field that soybean has already shrunk 3 points and the farmer has lost 4.2 bushels in the field.

“We’re seeing average yields of 55 bushels this year. At 14% moisture, a farmer selling 55 bushels will sell 53.9 bushels,” Broady said. “In that same field, if he waited until the beans are at 11%, he will only bring in 52.8 bushels because he lost 4% in the field. So, he lost 2% when compared with the wet beans.”

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