FOCUS ON AG
March 27, 2023
FARM CUSTOM RATES HIGHER FOR 2023
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, 553 custom operators and farm managers were sampled regarding expected 2023 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 2023 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 2023 “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, most average custom rates for tillage, planting, and harvest operations in 2023 are expected to increase by about 10 to 15 percent, compared to the rates for similar operations in 2022. The 2023 custom farming rates for corn and soybean production are also expected to increase by about 10 to 12 percent compared to a year earlier, with an increase of nearly 20 percent in the past five years.The cost for new and used machinery continued to increase in the past 12 months, which together with increasing fuel costs, higher repair costs, and higher labor charges, accounts for the increases in 2023 custom rates. It should be noted that many of these factors could change by the end of 2023, which may result in custom operators adjusting their final custom rates even more by year-end to more fully reflect any changes in the 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 $3.39 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/
SELECTED 2023 FARM CUSTOM RATES
Following are the average custom rates for some common farming practices for 2023, as well as the (range) of custom rates listed, based on the “Iowa Farm Custom Rate Survey” ……
Custom Farming Rates (includes tillage, planting and harvesting costs):
- Corn ———— $152.60 per acre (Range = $75 – $275 per acre)
- Soybeans ——- $139.65 per acre (Range = $70 – $275 per acre)
Tillage:
- Moldboard Plow ———- $19.80 per acre ($15 – $25 per acre)
- Chisel Plow —————- $19.75 per acre ($10 – $25 per acre)
- Disk/Chisel —————- $22.95 per acre ($12.75 – $31 per acre)
- V-Ripper (deep tillage) — $25.25 per acre ($16 – $35 per acre)
- Field Cultivator ———— $17.75 per acre ($7.50 – $30 per acre)
- Tandem Disk ————— $17.55 per acre ($10 – $25.80 per acre)
- Chopping Cornstalks —— $14.80 per acre ($10 – $20 per acre)
Planting and Spraying:
- Planter With Attachments ——- $27.10 per acre ($15 – $35 per acre)
- Planter Without Attachments — $24.70 per acre ($13 – $36 per acre)
- No-Till Planter ——————– $27.10 per acre ($12.75 – $42.50 per acre)
- Soybean Drill ——————— $20.20 per acre ($13 – $27.50 per acre)
- Grain Drill ————————- $17.70 per acre ($10 – $20 per acre)
- Crop Spraying (broadcast) ——- $10.35 per acre ($6.75 – $16 per acre) (self-propelled sprayer)
Harvesting Grain:
- Corn Combine ——————- $41.30 per acre ($30 – $64 per acre)
$44.10 per acre (with chopper head) ($65.75/A. with grain cart & truck)
- Soybean Combine —————- $39.90 per acre ($25 – $66 per acre)
$42.80 per acre with draper head) ($60.10/A. with grain cart & truck)
- Small Grain Combine ———— $31.75 per acre ($30 – $33.50 per acre)
- Corn Grain Cart (in field) ——- $7.35 per acre ($.50 – $18 per acre)
- Soybean Grain Cart (in field) — $6.25 per acre ($.50 – $15 per acre)
- Hauling Grain (5 or less) — $0.135 per bushel ($.06 – $.18 per bushel)
- Hauling Grain (5-25 ) ——– $0.21 per bushel ($.09 – $.40 per bushel)
- Grain Drying (continuous flow) — $0.045 per point per bushel (incl. fuel, electricity & labor)
Harvesting Forages:
- Windrowing Hay ———————- $17.80 per acre ($16 – $20 per acre)
- Hay Baling (small square bales) —- $0.89 per bale ($.60 – $1.00 per bale)
- Hay Baling (large bales) ————- $13.55 per bale ($12 – $15 per bale)
- Corn Stalk Baling (large bales) —– $16.00 per bale ($13 – $17 per bale)
- Silage Chopping ———————- $ 80 per ton (or $108.70 per hour per head row)
Farm Labor Rates:
- General Farm Labor —————- $21.75 per hour ($13.50 – $40.00 per hour)
- Spraying & Harvesting Labor —– $23.85 per hour (16.00 – $40.00 per hour)
*** Table prepared by Kent Thiesse, Farm Management Analyst ***