Prices for performing custom work are expected to jump in 2019, according to data gathered by Iowa State University Extension and Outreach economists. The 2019 Iowa Farm Custom Rate Survey showed a 7 percent price increase across all surveyed categories.
The 2018 Custom Rate Survey, which is available in the March issue of Ag Decision Maker or through the ISU Extension Store, was conducted by Alejandro Plastina, assistant professor and extension economist at Iowa State.
“Even with stable fuel prices and thin profit margins in crop production on the horizon, the majority of operations reported a rate increase,” said Plastina.
Changes from 2018 to 2019 varied across categories, with complete harvesting and hauling for corn and soybeans increasing by 6 percent and hired labor going up by 7 percent.
“I believe this is more indicative of part-time custom workers paying more attention to covering all costs and actually profiting from this activity than of a substantially higher demand for their services,” Plastina said.
The survey received input from 121 farmers, custom operators and farm managers to determine estimated pricing for custom work. Custom rates are provided for tillage, planting, drilling, seeding, fertilizer application, harvesting, drying and hauling grain, harvesting forages, complete custom farming, labor and both bin and machine rental.
The reported rates are expected to be charged or paid in 2019, including fuel and labor. The average prices for diesel fuel was assumed to be $2.94 per gallon. 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 include the timeliness in 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. Any custom rate should cover the cost of operating the farm machinery (fuel, repairs, depreciation, interest) as well as the operator’s labor.
The Ag Decision Maker website offers a Decision Tool, a downloadable Excel file (here), to help custom operators and other farmers estimate their own costs for specific machinery operations.