Custom rate update available

Many Iowa farmers hire some custom work done in their farming business, or farmers sometimes perform custom work for other people. Other farmers rent machinery or perform other services. How much should you charge if you are doing the work? What’s a fair rate to pay if you are hiring the work done?

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 and other custom work in Iowa.

Results of the 2012 survey were recently compiled. The “2012 Iowa Farm Custom Rate Survey” publication is presented in a pdf file you can access by going online to ISU’s Ag Decision Maker website, www.extension.iastate.

Key Points

Iowa Farm Custom Rate Survey for 2012 available; it’s based on statewide survey.

Results list charges for number of different farming and fieldwork operations.

The rates should be used only as a guide; actual rates can vary area to area.

In the table of contents, look under “Crops” and click on “Machinery,” and then click on “Iowa Farm Custom Rate Survey, File A3-10.” It’s also available as publication FM-1698 from the ISU Extension Online Store or at county Extension offices.

“The 2012 survey showed consistent increases in rates this year,” says ISU Extension economist William Edwards. “Most operations had increases of 5% to 15% over the average rates in the 2011 survey. The average rate for combining soybeans, for example, exceeded $30 per acre for the first time.”

Fuel prices are predicted to increase drastically over the coming months, which could affect the rates custom operators charge. In the survey, the average price for diesel fuel in 2012 was assumed to be $3.25 per gallon. As a rule of thumb, a 50-cent-per-gallon increase in the price of fuel will cause total costs for machinery operations to increase about 5%.

Use the values as a guide

The values reported in the survey are simply the average of all the responses received for each category. The range of the highest and lowest responses received is also reported. These values are intended to be used only as a guide, says Edwards.

There are many reasons why the rate charged in a particular situation could be above or below the average. These include the timeliness with which operations are performed, quality and special features of the machine, operator skill, size and shape of fields, number of acres contracted, and the condition of the crop for harvesting. The availability of custom operators in a given area will also affect rates.

New operations and services included in the 2012 survey are sidedressing liquid fertilizer, aerating liquid manure and vacuuming grain.

In addition to the publication that has the survey results, the Ag Decision Maker website offers a “decision tool” to help custom operators and other farmers estimate their own costs for specific machinery operations. The Machinery Cost Calculator (File A3-29) can be found under “Crops,” then “Machinery,” in the Ag Decision Maker table of contents.

The survey information this year is based on responses from 276 Iowa farmers, custom operators and farm managers. In the 2012 survey, 28% of the respondents said they perform custom work, 11% hire custom work done and 61% indicated they do both.

The values reported in the survey publication are the rates expected to be charged or paid this year for the work that is done, and these values include tractor, implement, fuel and labor.

Source: ISU Extension

Average farm custom rates reported for Iowa

Operation 1978 1988 1998 2011 2012

Chisel plowing, per acre $6.00 $8.40 $9.65 $13.70 $14.90

Planting, per acre 4.40 6.80 8.85 14.80 15.60

Spraying, per acre 2.40 3.50 4.00 6.05 6.35

Combining corn, per acre 16.20 22.00 23.40 30.90 31.85

Combining soybeans, per acre 14.00 20.60 22.55 29.65 31.10

Baling square bales, per bale 0.21 0.29 0.36 0.50 0.55

Custom farming, corn, per acre 58.00 71.00 75.80 108.95 119.80

Custom farming, soybeans, per acre 50.00 65.00 70.65 96.40 105.70

Machinery operating wage, per hour 3.50 5.10 7.20 12.00 13.40

Source: ISU, Iowa Farm Custom Rate Surveys, FM-1698

This article published in the April, 2012 edition of WALLACES FARMER.

All rights reserved. Copyright Farm Progress Cos. 2012.