Oat Storage Economic Feasibility Study

Why Oats

Oats are more than just another crop.  Adding oats and other small grains to the dominant corn-soybean rotation can:

• Improve soil health and soil structure
• Reduce nitrate runoff and groundwater contamination
• Lower fertilizer needs through companion crops such as clover
• Create a yield bump in subsequent corn and soy crops
• Diversify farm income and workload
• Increase resilience to weather and market disruptions

Research and farmer experience show that oat-inclusive rotations can reduce nitrate losses in runoff by 30% to 50% while lowering input costs and improving long-term productivity.

For regions such as the Driftless Area and broader Upper Midwest, oats represent an important opportunity to improve both agricultural and environmental outcomes.

The Challenge: Rebuilding an Industry

The Midwest was once a leading oat-producing region. As production shifted to Canada and federal policies increasingly favored corn and soybeans, oat acreage declined and much of the supporting infrastructure disappeared. Today, nearly 90% of oats consumed in the United States are imported from Canada.

Although farmer interest and consumer demand for oat-based products are growing, several barriers continue to limit expansion, including:

• Limited storage infrastructure
• Few small grain aggregation points
• Limited processing capacity
• Inadequate crop insurance structures
• Difficulty accessing premium food-grade markets
• Supply chain coordination challenges

Without storage, farmers are often forced to sell oats at harvest when prices are lowest and buyer options are limited.

Storage Is Critical

Storage is more than a place to hold grain. It is the critical link that turns a beneficial crop rotation into a viable business opportunity.

Storage allows farmers to:

Maximize pricing flexibility by:

·       Marketing grain when prices improve instead of at harvest

·       Holding oats until buyer demand emerges

·       Capturing food-grade premiums

·       Avoiding being forced into harvest-time sales

Access markets by:

·       Participating in forward contracts

·       Meeting scheduled delivery windows

·       Becoming reliable suppliers rather than spot-market sellers

This capability is increasingly important as regional milling capacity expands.

Manage grain quality by:

·       Maintaining grain quality

·       Monitoring moisture and temperature

·       Aggregating grain from multiple farms

·       Blending oats to meet food-grade specifications from multiple farms

Who This Study Is For

The feasibility study was designed to serve multiple audiences interested in strengthening the regional oat economy.

Farmers

Farmers already connected to emerging oat markets and those exploring oats as a new crop can use the study to evaluate storage options, ownership structures, and investment pathways.

Farmer Organizations and Cooperatives

The study examines ownership and governance models, including cooperatives and multi-member LLCs, to help producer groups understand potential pathways for shared investment. The learnings can also help advance other crop diversification efforts with similar storage bottlenecks.

Grain Buyers and Food Companies

Food manufacturers and millers depend on reliable, consistent oat supplies. The study identifies infrastructure investments that could improve supply reliability, streamline transportation logistics and ensure quality management.

Investors and Lenders

The study provides detailed cost estimates, financial projections, break-even analyses, and governance considerations to support financing decisions.

Policymakers and Public Agencies

The findings demonstrate how strategic infrastructure investments can support economic development, improve water quality, strengthen domestic supply chains, and advance regenerative agriculture goals.

Conservation and Environmental Organizations

By enabling greater adoption of oats in crop rotations, storage infrastructure can help generate measurable soil health, water quality, and conservation benefits at scale.

Across all scenarios, financial sustainability depends on maintaining storage occupancy above 50%. However, purchasing and retrofitting an existing grain facility emerged as the most capital-efficient option, providing 520,000 bushels of storage.

For projects with more modest needs and limited capital, consolidated on-farm storage (100,000 bushels) is the most accessible entry point. Newly constructed facilities at larger scales (284,000 bushels) are technically viable but require significantly higher upfront investment and carry greater financial risk during the ramp-up period.

The study also highlighted the value of blending capability. Because blending requires grain from multiple producers, it cannot be achieved at the individual farm level and should be considered a core design feature of any shared storage facility.

Regardless of facility design, successful storage projects share several characteristics that matter as much as the facility itself:

·       Committed market access tied to storage design

·       Right-sizing capacity to committed production

·       Adequate beginning capital and cash reserves

·       Governance trust and democratic accountability Identity preservation and capability

·       Blending capability as a quality management tool

Across all scenarios, financial sustainability depends on maintaining storage occupancy above 50%. However, purchasing and retrofitting an existing grain facility emerged as the most capital-efficient option, providing 520,000 bushels of storage.

For projects with more modest needs and limited capital, consolidated on-farm storage (100,000 bushels) is the most accessible entry point. Newly constructed facilities at larger scales (284,000 bushels) are technically viable but require significantly higher upfront investment and carry greater financial risk during the ramp-up period.

The study also highlighted the value of blending capability. Because blending requires grain from multiple producers, it cannot be achieved at the individual farm level and should be considered a core design feature of any shared storage facility.

Regardless of facility design, successful storage projects share several characteristics that matter as much as the facility itself:

·       Committed market access tied to storage design

·       Right-sizing capacity to committed production

·       Adequate beginning capital and cash reserves

·       Governance trust and democratic accountability Identity preservation and capability

·       Blending capability as a quality management tool