Farming is a complex business and many Ohio farmers utilize outside assistance for specific farm-related work. This option is appealing for tasks requiring specialized equipment or technical expertise.
Often, having someone else with specialized tools perform tasks is more cost effective and saves time. Farm work completed by others is often referred to as “custom farm work” or more simply, “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.
This publication reports custom rates based on a statewide survey of 223 farmers, custom operators, farm managers, and landowners conducted in 2022. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine, etc., and labor for the operation.
Some custom rates published in this study vary widely, possibly influenced by:
- type or size of equipment used (e.g. 20-shank chisel plow versus a 9-shank),
- size and shape of fields,
- condition of the crop (for harvesting operations),
- skill level of labor,
- amount of labor needed in relation to the equipment capabilities,
- cost margin differences for full-time custom operators compared to farmers.
Supplementing current income
Some custom rates reflect discounted rates as the parties involved have family or community relationships, Discounted rates may also occur when the custom work provider is attempting to strengthen a relationship to help secure the custom farmed land in a future purchase, cash rental or other rental agreement. Some providers charge differently because they are simply attempting to spread their fixed costs over more acreage to decrease fixed costs per acre and are willing to forgo complete cost recovery.
Charges may be added if the custom provider considers a job abnormal such as distance from the operator’s base location, difficulty of terrain, amount of product or labor involved with the operation, or other special requirements of the custom work customer.
The measures shown in the following tables are the summary of the survey respondents. The measures are the maximum, minimum, responses, average (mean), median, standard deviation and range. The maximum and minimum reported in the table are the maximum and minimum amounts reported from the survey data for a given custom operation. Responses indicates the number of survey responses for each given operation. Average reported in this publication is a simple average of all the survey responses for each operation. The median represents the middle value of the survey responses. Standard deviation is a measure of variability. Range identified in the tables consists of two numbers. The first is the average plus the standard deviation. The second number of the range is the average minus the standard deviation. In cases where there were too few responses to statistically analyze, statistics are not presented due to the low response rate.
The data from this survey are intended to show a representative farming industry cost for specified machines and operations in Ohio. As a custom provider, the average rates reported in this publication may not cover your total costs for performing the custom service. As a customer, you may not be able to hire a custom service for the average rate published in this factsheet.
It is recommended that you calculate your own costs carefully before determining the rate to charge or pay. It may be helpful to compare the custom rates reported in this fact sheet with machinery costs calculated by economic engineering models available by searching University of Minnesota farm machinery cost estimates. The following resources are available to help you calculate and consider the total costs of performing a given machinery operation. You may also consider using the data contained in multiple publications as a base for future custom rates. Suggested publications are:
Farm machinery cost estimates, available by searching University of Minnesota.
Illinois Farm Management Handbook, available by searching University of Illinois farmdoc.
Estimating Farm Machinery Costs, available by searching Iowa State University agriculture decision maker and machinery management.
Before entering into an agreement, discuss all of the details of the specific job with the other party.
Estimating Machinery Rental Rate from Custom Rates
Source: crescent-news.com
Categories: Ohio, Equipment & Machinery