Focus on Ag

8 Considerations with Custom Farming Agreements

RSS

Table of Contents:

An alternative to leasing farmland is a custom farming agreement. In a typical custom farming agreement, the custom operator agrees to perform all the machine operations on the owner’s land in exchange for a set fee or rate. The landowner pays for all seed, fertilizer, chemicals, crop insurance and other input costs; receives the all grain produced and all eligible farm program payments on the land; and is responsible to store and market the grain.

Following are the average custom farming rates for 2013, based on the Iowa Farm Custom Rate Survey (includes tillage, planting and harvesting costs):

  • Corn: $126.65/acre (range = $85-175)
  • Soybeans: $112.40/acre (range = $68-165)
  • Small grain: $83.25/acre (range = $50-100)

One obvious advantage to the custom operator is that a custom farming agreement provides some extra farm income, with little or no additional operating capital or farm machinery investment. Fuel, lubrication and repairs are usually the only added costs. In addition, custom farming offers a fixed return per acre to the custom operator, and although there is some possibility of higher repair bills, this is minor compared with the price and yield risks typically faced by a farm operator in a normal cash rental contract. Of course, in a good year, profits from a custom farming agreement will be lower than most cash rental leases; however, in this era of much higher land rental rates there is much more risk to the farm operator with a cash lease as compared to a custom agreement with a landowner.

Landowners also find several advantages to a custom farming agreement. Landowners with small acreages can make most of the crop production and grain marketing decisions without the investment into a full-line of farm machinery. The landowner does not have to negotiate land rental rates or worry about collecting lease payments, since the owner receives all of the crop proceeds. The landowner does have to pay the farm operator an agreed upon per-acre fee for the custom farming services by specified dates. The landowner is considered to be the material participant for income tax purposes, and the landowner is typically entitled to all government farm program payments.

Discuss this Blog Entry 69

on Aug 26, 2014

Step Up height increaser helps to increase height naturally. Step up Height Increaser is a Herbal & Ayurvedic Product.

on Aug 29, 2014

Amazing article this is! I really cherish this article from you and I would really love if I could cherish more great articles like this one. Keep this work going! South Sudan web hosting and design

on Aug 29, 2014

Excellent post this is. I love your posts! Your posts are always the best. This one is your best one yet and I hope to get more good posts like this from you. Keep doing work like this! Thumbs up, mate!

on Aug 29, 2014

Excellently written blog this is! I really expected that you would write a excellent blog today and you have not disappointed me a tall. You can become a world class article in the future. cold stone franchise

on Aug 8, 2014

Very nice article. The information from this has led me to complete my project on this topic. My teacher was quite happy to see my project and I have to only thank you for giving me the information. I sincerely hope that you keep on giving such amazing articles. Cheers! stagewestonline

on Aug 9, 2014

Wonderful article...this is really the most wonderful article that I've seen. I am really happy with this and I hope that I keep getting these amazing articles in the coming weeks as well BattleNet Login

on Aug 10, 2014

This is a really good article. Everything I had heard till know about you seems to be coming true. I was told that you are one of the most brilliant writer and you've proven your brilliant skills here. I would strongly recommend this article to everyone! strong hash brownies

on Aug 11, 2014

This article is spectacular! I don't think that I've ever witnessed an article of such high dignifying quality. I must say that I am very very impressed by this and I hope that you will soon provide some more amazing articles. Cheers! adult website business

on Aug 14, 2014

Wow, this is quite extra ordinary. To be honest, I would have never expected you to deliver an article of such high proportions. But, you've proved me wrong and published a world class article. For that, I am thankful to you and I expect you to deliver on more consistent bases from now on. pokolbin accommodation

on Aug 30, 2014

This is very nice work! I have never seen such brilliant accuracy in any of the articles that I have read. One of the most professional work I've ever seen in my whole life. Please, keep this going!..
Gabinete Grafológico

on Apr 3, 2014

You have done a great job. I will definitely dig it and personally recommend to my friends. I am confident they will be benefited from this site.
http://chooseanadjustablebed.skyrock.com/

on Apr 10, 2014

I came onto your blog while focusing just slightly submits. Nice strategy for next, I will be bookmarking at once seize your complete rises
http://bestmattress-forbackpain.yolasite.com/

on Jul 1, 2014

The landowner is considered to be the material participant for income tax purposes, and the landowner is typically entitled to all government farm program payments..
restore my vision today dr. sen system review

on Jul 15, 2014

I am always searching online for articles that can help me. There is obviously a lot to know about this. I think you made some good points in Features also. Keep working, great job!
http://fiverrrrr.blogspot.com/

on Jul 17, 2014

searching online for articles that can help me. There is obviously a lot to know about this. I think you made some good points in Features also. Keep working, great job! Palette opinie

on Jul 17, 2014

this era of much higher land rental rates there is much more risk to the farm operator with a cash lease as compared to a custom agreement with a landowner.rob judge unlock her legs download reviews

on Jul 28, 2014

The landowner is considered to be the material participant for income tax purposes, and the landowner is typically entitled to all government farm program payments.Unimebel - meble drewniane

on Jul 29, 2014

this is minor compared with the price and yield risks typically faced by a farm operator in a normal cash rental contract. Of course, in a good year, profits from a custom farming agreement how do i get him to see me as more than friends

on Sep 12, 2014

Whenever a person carry care connected with The item issue The item "8 Considerations with Custom Farming Agreements" e-mailed to me, It takes your own monkey off MY OWN back AND ALSO reduces MY PERSONAL stress. Thanks regarding doing that.
harga baja wf

Post new comment
or to use your Corn and Soybean Digest ID
What's Focus on Ag?

Timely information on crop and livestock production, farm management and marketing, ag policy, renewable energy and other ag topics.

Blog Archive

Sponsored Introduction Continue on to (or wait seconds) ×