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Both producers and consumers benefit from stable prices, which reduce the uncertainties associated with planning farm investment and household expenditure. However storage involves costs, and the only way in which these costs can be recuperated is through a price spread. If storage is to be profitable, people who store grain must receive a price on sale which at least covers the costs of storing the grain since harvest. These include:
In practice, the costs of storage depend on the commodity stored, on the type of storage system, and on unpredictable and variable factors such as pest incidence and climatic conditions. Storage costs also depend on the circumstances of the person, the business or the institution who is storing. The most variable component of storage costs is the cost of capital. For a small farmer or trader, capital may be scarce and costly, and their only access to loans may be from money lenders charging rates of 10% or more per month. On the other hand a Government Marketing Board may have preferential access to loans at low interest, at rates of as low as 10% per annum. There is, therefore, no single cost of storage.