Higher Fuel Prices Boost Custom Farming Costs

ISU's 2008 Custom Rate Survey data is based on prices for diesel fuel that have rapidly become out of date.

Rapid increases in the cost of fuel used by Iowa farmers are creating difficult problems this planting season, notes William Edwards, Extension farm management specialist at Iowa State University. Farmers and providers of farm custom services are facing challenges in adjusting their custom machinery rate charges, to reflect the big changes that are taking place in fuel prices.

ISU Extension's 2008 Iowa Farm Custom Rate Survey, which is directed by Edwards, was released in March. Earlier he sent the survey out to the people on his survey list to gather information on what they are charging for custom work and paying for custom work.

He suggested that the respondents who filled out the survey assume that diesel fuel would cost an average of $2.75 per gallon delivered to the farm--when figuring a fair price for custom farm work this year. However, fuel prices have increased considerably since then.

How to figure fuel price jump

If diesel fuel is assumed to cost $4.00 per gallon today instead of $2.75, the total cost of performing tillage operations will increase by 10% to 15%, depending on the depth at which soil is tilled, says Edwards. Costs for less power-intensive operations such as planting, spraying and harvesting will increase by 7% to 10%.

Another way to adjust custom rates is to use ISU Extension publication PM 709, "Fuel Required for Field Operations," which contains estimated fuel consumption values per acre for many common operations. Multiplying the fuel used per acre by the change in the price of fuel since the survey was conducted can provide an estimate of the most recent cost increases per acre.

This publication and the 2008 Iowa Farm Custom Rate Survey are available at ISU Extension county offices, from the ISU Extension Online Store www.extension.iastate.edu/store or call 515-294-5247 or e-mail [email protected]. You can also print it out as an information file on the Ag Decision Maker Web site www.extension.iastate.edu/agdm. Get the PDF version HERE

As alternatives to using the ISU survey data, Edwards says custom operators can keep a record of the actual fuel they use for specific operations, or the person hiring the work done can provide the necessary fuel.

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