2016 Iowa Farm Custom Rate Survey results available

2016 Iowa Farm Custom Rate Survey results available

Charges for custom machinery work declined, but not as much as drop in crop prices.

Hiring someone to do custom machinery work, fieldwork or other jobs around the farm is a common practice for farmers across Iowa. The 2016 Iowa Farm Custom Rate Survey canvassed 182 farmers, custom operators and farm managers in Iowa, to put together a guide for pricing custom work.

CUSTOM RATES: Farmers who perform custom work, hire work done or do some of both have the 2016 Iowa Farm Custom Rate Survey results as a guide in determining custom rates. Information is based on annual survey of farmers, custom operators and farm managers. For each operation the average rate, median and range are provided.

The 2016 survey results were compiled by Iowa State University economists and released March 4. The publication (FM 1698) can be found online at the ISU Extension Store or on ISU’s Ag Decision Maker website as Information File A3-10. It provides rates for custom work in the following categories: tillage, planting, drilling and seeding, fertilizer application, harvesting, drying and hauling grain, harvesting forages, complete custom farming, labor and both bin and machine rental.

Decline in custom rate charges is tied to lower crop prices
The survey shows a 2% price decline across all surveyed categories. When the categories with the 5% highest and lowest change were removed, the average decline in rate became 2.6%.

“This change is tied to lower crop prices,” says Alejandro Plastina, assistant professor and ISU Extension economist. “The bad news is the decline in price for those who hire custom work is dwarfed by the overall decline in crop prices.”

The average rate and range for each machine work function were compiled into the survey as usual, but this year the median charge and number of responses for each category were added to provide additional context to the findings. The additions were included to make the publication more useful and user-friendly, providing clarity on how far apart the average and the median charge were. Another addition to the 2016 survey are responses for scouting crops with a drone.

Values listed in the survey are to be used only as a guide
The average is calculated as the simple average of all responses. The median is the response that splits all the ordered responses (from smallest to largest) in half. The range consists of the second-lowest value and the second-highest value in the sample.

The values presented in the survey are intended only as a guide. There are many reasons why the rate charged in a particular situation should be above or below the average. These reasons include 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.

Estimate your own costs for specific machinery operations
The ISU Ag Decision Maker website offers a Decision Tool to help custom operators and other farmers estimate their own costs for specific machinery operations.

The values in publication FM 1698 are rates expected to be charged or paid for custom work, including fuel and labor. The average price for diesel fuel was assumed to be $2.00 per gallon. All rates include fuel, repairs, depreciation, interest, labor and all other machinery costs for the tractor and implement.

In addition to rates charged for custom work, rental rates for some types of machinery are also listed in the publication, along with a worksheet for estimating rental rates for other items. Plastina, along with Ann Johanns, a program specialist in economics with ISU Extension, authored the 2016 custom rate survey publication.

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