By Alejandro Plastina
Hiring others to do custom machine work is a common practice for farmers across Iowa. The 2016 Iowa Farm Custom Rate Survey canvassed 182 farmers, custom operators and farm managers from the state, putting together a guide for pricing custom machine work.
The publication, which can be found online at the Iowa State University Extension and Outreach Store (FM 1698) or on the Ag Decision Maker website as Information File A3-10, 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.
The survey found there was a 2 percent price decline across all surveyed categories. When the categories with the 5 percent highest and lowest change were removed, the average decline in rate became 2.6 percent.
“This change is tied to lower crop prices,” said Alejandro Plastina, assistant professor and extension economist with ISU Extension and Outreach. “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 median charge were. Another addition to the 2016 survey are responses for scouting crops with a drone.
For the survey, 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 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.
The Ag Decision Maker website offers a Decision Tool to help custom operators and other farmers estimate their own costs for specific machinery operations. Plastina and Ann Johanns, program specialist in economics with ISU Extension and Outreach, authored the publication.
Source:iastate.edu