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Custom Rates, Machinery Cost and Bin Checks

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An increased number of farm operators are now providing some type of custom work to other farmers during the growing season. Many times, the farmers involved in custom work arrangements wonder what a fair custom rate is for the various faming practices that were performed. Iowa State University releases the annual Iowa Farm Custom Rate Survey each year in February, which is based on a survey of custom operators, farm managers and ag lenders on what they expect custom farm rates to be for various farm operations to be for the coming year. This is probably the most widely used and updated custom rate information that is available in the Upper Midwest.

The 2012 Iowa Custom Rate Survey includes farm custom rates for typical tillage, planting and harvesting practices, as well as custom farming rates. All listed custom rates in the Iowa Survey results include fuel and labor, unless listed as rental rates or otherwise specified. These average rates are only meant to be a guide for custom rates, as actual custom rates charged may vary depending on increases in fuel costs, availability of custom operators, timeliness, field size, etc. The 2012 Iowa Farm Custom Rate Survey is available as a pdf download.   

The University of Minnesota releases “Machinery Cost Estimates” each year, which was last updated in May. This summary looks at use-related (operating) cost of farm machinery, as well as overhead (ownership) costs. The use-related expenses include fuel, repairs and maintenance, labor, and depreciation. Overhead costs include interest, insurance, and housing, which are calculated based on pre-set formulas. Download a pdf of the Machinery Cost Estimates publication. 

An analysis of some of the more common custom rates in the 2012 Iowa Custom Rate Survey showed that the listed average custom rates for some farming practices may be a bit low, given the higher ownership costs of larger farm machinery, higher fuel expenses that have existed in 2012, and the difficult field conditions this fall in some areas. The analysis also found that some of the harvesting costs for combining, as well as for the use of a grain cart and grain hauling, were somewhat undervalued in the Iowa survey. Based on this cost analysis, most of the 2012 farm custom rates for harvesting, fall tillage and custom farming should probably be in the upper one-third of the range in custom rates listed in the Iowa survey to reflect the true costs of operation.

 

Check Grain Bins

Many corn and soybean producers across the Midwest completed harvest by mid-October, and now need to pay close attention to grain that is stored in on-farm grain bins for potential storage problems. Much of the corn and soybeans in 2012 were harvested and placed into bins at very warm temperatures; however, we have had a wide range of temperatures in the past several weeks, from fairly warm to quite cold.

These extreme changes in outside temperature can cause wide temperature variations in grain bins to occur, resulting in moisture migration in the bin, and potential for grain spoilage. Farm operators should run aeration fans periodically to equalize the grain bin temperatures in order to help prevent this situation from occurring. It is very important to check grain bins on a regular basis for any potential storage issues, and to address those issues promptly. Otherwise, there can be considerable damage to grain in storage, resulting in a significant financial loss to the farm operator.  

 

 

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.

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on Feb 23, 2014

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