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Custom rate survey available

Each year Iowa State University Extension surveys farmers, custom operators and farm managers to find out what the typical custom rate charges are for different machinery operations in Iowa. Results of the 2010 survey were recently compiled.

The results are available as an ISU Extension publication, “2010 Iowa Farm Custom Rate Survey,” FM 1698 revised. To view the publication or print a copy, go to www.extension.iastate.
edu/agdm
,
which is ISU’s Ag Decision Maker Web site. Look under “Crops and machinery,” and click on “Iowa Farm Custom Rate Survey, A3-10.”

This year 187 people responded to the survey. Of those, 31% did custom work for other people, 18% hired custom work and 52% indicated doing both — hiring custom work and performing custom work for others.

Key Points

• Annual survey of custom operators and farmers reports charges for custom work.

• Many farmers hire custom machinery work or do custom work for others.

• Custom rate survey results can also be used to set rental rates for machinery.


Rates include all machinery costs, such as ownership costs, including depreciation and interest and repair costs; fuel costs; and labor. Some people charge a custom rate that does not include fuel. In that case, the rates in the survey need to be adjusted downward to reflect the fact that the person hiring the operation provides their own fuel.

“In addition to custom rates, we also report rental rates for various types of farm machinery,” says William Edwards, ISU Extension economist who conducts the survey with the help of ISU Extension specialist Ann Johanns. “A rental rate would cover only the ownership costs and repairs for a particular machine.”

For each operation reported in the survey, the ISU publication shows an average rate, as well as a range from the lowest to the highest rates.

Average rate for each operation

For example, soybean combining averages $28.70 per acre, but the range is from $20 to $39.05. There are a number of reasons why a custom operator might charge a rate that is either higher or lower than the average rate.

The reasons for the range include special features of the machines being used, special skills of the operator, timeliness (whether someone is getting their work done early or late in the season), and size and shape of fields. Smaller fields and more irregularly shaped fields will probably require a higher rate because they cost the custom operator more to do the work. Condition of the crop can also be a factor in setting the rate, particularly for harvesting.

Several new operations have been added to the survey the past few years. They include complete harvesting of corn and soybeans. That is, the custom operator provides not only the combine, but also a grain cart and trucking, as well and operators for each of those.

“So, with this ‘complete harvesting’ category, we now have a single, per-acre charge for the entire harvesting operation,” notes Edwards.

Another new field operation is combining with a stalk-chopper corn head. This special head chops up cornstalks as they go through the header. A third addition to the survey is baling cornstalks or straw in large square bales. ISU also added banded spraying to the spraying operations list.

Finally, under miscellaneous services, ISU added two items: machinery welding and managing stored grain — that is, checking grain bins throughout the winter to make sure grain is being held properly in condition.

Edwards says the rates listed in the survey for 2010 are the rates expected to be charged or paid for custom work, including fuel and labor. The average price for diesel fuel is expected to be $2.25 per gallon for 2010.

“These custom rates we’ve listed are intended only to be used as a guide,” he points out. “Actual custom rates charged or paid in your area may vary from what is reported in this survey.

“Remember, custom rates do vary according to availability of machinery in the area, timeliness, operator skill, field size and shape, crop conditions, and performance characteristics of the machine being used.”

Source: ISU Extension

Owning vs. hiring

Custom operators harvest about 30% of the crop acres in Iowa. They play a crucial part in making harvesting more timely and efficient. The decision to own a combine or custom hire the harvesting can involve thousands of dollars. Similar considerations apply to other self-propelled machines such as forage harvesters, windrowers and sprayers.

Iowa State University Extension has a newly updated publication “Combine Ownership or Custom Hire” PM-786. It’s available at the ISU Ag Decision Maker site, www.extension.iastate.edu/agdm, as File A3-33. Explaining the pros and cons of ownership compared to custom hiring, it has a worksheet that can be printed and used to help with the decision. An electronic spreadsheet version is also available on the site.

This article published in the April, 2010 edition of WALLACES FARMER.

All rights reserved. Copyright Farm Progress Cos. 2010.