FOCUS ON AG

March 28, 2022

FARM CUSTOM RATES LIKELY TO INCREASE FOR 2022

Due to the high cost of investment in farm machinery, an ever-increasing number of farm operators are hiring other farm operators to provide some or all of their machinery resources for their farm operation. This is especially true with new and younger farm operators, as well as with children that decide to start farming with their parents. In addition, some land investors are choosing to operate a farm themselves rather than cash renting the land another farm operator, thus hiring a farm operator under a custom farming agreement.

Custom farming agreements usually include tillage, planting, some weed control, harvesting, and delivering grain to a specified location. Some farm operators also hire custom work for specific farm operations with another farm operator, such as planting, combining, or hay baling. Many farm operators negotiate these types of custom rate and custom farming arrangements in the Spring of the year, while others wait until harvest is completed.

One of the best resources for average custom rates is the annual “Iowa Farm Custom Rate Survey” that is coordinated and analyzed by Iowa State University. Earlier this year, 559 custom operators and farm managers were sampled regarding expected 2022 custom farm rates to be for various farm operations. The survey summary lists the average custom rate, as well as a range, for various tillage, planting, fertilizer and chemical application, grain harvesting, and forage harvesting functions on the farm. The survey also includes many miscellaneous farming practices, average per hour farm labor rates, and includes a formula for calculating rental rates. The survey lists the average custom farming rates for corn, soybeans, and small grain. The average custom rates for farm operations in most other areas of the Upper Midwest tend to be very close to the average Iowa custom rates.

Average 2022 farm custom rates for some typical tillage, planting, and harvesting practices, as well as custom farming rates, are listed in the adjoining Table. The complete 2022 “Iowa Farm Custom Rate Survey” for all farming practices is available on-line at the following Iowa State University web site: https://www.extension.iastate.edu/agdm/crops/html/a3-10.html

Based on the Iowa State data, average custom rates for tillage, planting, and harvest operations in 2022 are expected to increase by about 7 percent, compared to the rates for similar operations in 2021, while 2022 custom rates for harvest operations are expected to increase by 3.4 percent. The custom farming rates for corn and soybean production are expected to increase by about 1.5 percent compared to a year earlier. The cost for new and used machinery increased rapidly in the past 12 months, which together with increasing fuel costs and higher labor charges, accounts for the increases in 2022 custom rates. It should be noted that many of these factors have continued to increase early in 2022, which may result in custom operators increasing their final custom rates even more by year-end to fully cover the increasing expenses for custom operations.

All listed custom rates in the Iowa Survey results include fuel, labor, repairs, depreciation, insurance, and interest, unless listed as rental rates or otherwise specified. The average price for diesel fuel was assumed to be $3.33 per gallon. A fuel price increase of $.50 per gallon would cause most custom rates to increase by approximately five percent. These average rates are only meant to be a guide for custom rates, as actual custom rates charged may vary depending on continued increase in fuel costs, availability of custom operators, timeliness, field size, etc. and could be adjusted later in the year due to changes in economic factors.

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Note — For additional information contact Kent Thiesse, Farm Management Analyst and Senior Vice President, MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960); E-mail — kent.thiesse@minnstarbank.com) Web Site — http://www.minnstarbank.com/

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SELECTED 2022 FARM CUSTOM RATES

Following are the median (adjusted average) custom rates for some common farming practices for 2022, based on the “Iowa Farm Custom Rate Survey” ……

Custom Farming Rates (includes tillage, planting and harvesting costs):

• Corn ———— $130 per acre (Range = $75 – $250)
• Soybeans ——- $120 per acre (Range = $70 – $250)
• Small Grain —- $95 per acre (Range = $90 – $100)

Tillage:

• Moldboard Plow ———- $18.35 per acre
• Chisel Plow —————- $18.00 per acre
• Disk/Chisel —————- $20.50 per acre
• V-Ripper (deep tillage) — $22.00 per acre
• Field Cultivator ———— $16.00 per acre
• Tandem Disk ————— $16.00 per acre
• Chopping Cornstalks —— $12.00 per acre

Planting and Spraying:

• Planter With Attachments ——- $24.00 per acre (extra charges for GPS, seed shutoffs, etc.)
• Planter Without Attachments — $22.00 per acre
• No-Till Planter ——————– $23.00 per acre
• Soybean Drill ——————— $20.00 per acre
• Grain Drill ————————- $18.25 per acre
• Crop Spraying (broadcast) ——- $ 8.00 per acre (self-propelled sprayer)

Harvesting Grain:

• Corn Combine ——————- $37.00 per acre ($41.00 with chopper head) ($55.00 per acre with grain cart & truck)
• Soybean Combine ————– $36.00 per acre ($39.25 with draper head) ($50.00 per acre with grain cart & truck)
• Small Grain Combine ————- $31.00 per acre
• Corn Grain Cart (in field) ——– $6.40 per acre
• Soybean Grain Cart (in field) —- $5.55 per acre
• Hauling Grain (5 mi. or less) —- $0.10 per bushel
• Hauling Grain (5-25 mi.) ——– $0.16 per bushel
• Grain Drying (continuous flow) — $0.04 per point per bushel (incl. fuel, electricity & labor)

Harvesting Forages:

• Windrowing Hay ———————- $15.00 per acre
• Hay Baling (small square bales) —- $0.75 per bale
• Hay Baling (large square bales) —- $12.75 per bale
• Hay Baling (large round bales) —– $14.00 per bale
• Corn Stalk Baling (large bales) —– $14.00 per bale
• Silage Chopping ———————- $ 7.00 per ton (or $70 per hour per head row)

Farm Labor Rates:

• General Farm Labor ——- $18.00 per hour ($20.00 per hour for harvesting and spraying)

*** Table prepared by Kent Thiesse, Farm Management Analyst ***