Since 2016, custom machinery operations have increased in cost, according to results from the University of Nebraska-Lincoln's 2018 Custom Rates Survey. The survey of custom operators summarizes the current rates charged for specific machinery operations commonly used by agricultural producers.
That probably doesn't come as much of a surprise to anyone, considering the rising cost of labor and fuel. Survey participants reported a state average labor rate of $18.85 — 6% higher than 2016. With diesel costs on the rise, the cost for on-farm delivery of diesel fuel went from$1.68 per gallon in 2016 to $2.46 per gallon in 2018.
Similar to two years ago, 2018 survey participants reported slight, but noticeable, increases with some custom machine hire rates. For example, planting row crops with row cleaners went from $18.91 per acre in 2016 to $21.12 in 2018, while drilling soybeans with a no-till drill went up just slightly from $17.76 to $18.02 per acre.
Harvest rates for fall crops generally stayed in the same range compared to the prior survey two years ago, although combining irrigated corn using a flat rate per acre is at a state average of $38.22 in 2018 — $1 to $3 per acre higher than previously reported.
While average rates increased, rates in the "most common" category, or the most commonly used rates among respondents for several combining operations, went unchanged from the previous study. For combining small grains, the rate stayed the same at $30 per acre, compared to $35 per acre for combining irrigated corn and $35 for combining soybeans.
"As we look at some major operations that folks reported on, there are some slight increases in rates charged, but overall we didn’t find huge rate increases for operations included in the 2018 survey," says Glennis McClure, UNL farm and ranch management analyst and Extension educator.
Operators come in different sizes
McClure notes there are some factors to consider in how those custom rates were accounted for.
"Most of the operators who are combining irrigated corn, dryland corn and soybeans, over 70% of them said they include the tractor and grain cart in their rates," McClure says. "We asked custom operators to tell us how many acres they cover per year for custom work. That number was up. In 2016, we had 2,809 acres covered per year in custom work reported, and this year it was over 4,800. The hours they put into custom work per year were up about 100 hours reported over 2016 as well."
"With survey respondents telling us they cover significantly more acres on average than in the past, it appears that we had some larger custom operators participate in the survey," she adds. "Some farmers and ranchers may not be investing in new equipment and seek custom operators to cover their fieldwork, therefore driving up the acres and time that custom operators invest."
Jim Jansen, agricultural economist with Nebraska Extension, notes custom rates are a reflection of the cost of operating the equipment.
"This might include things like the technology of the machine itself, and the capital investment to acquire the equipment. These machines are large and take a big capital investment. That being said, when you divide those costs over a large number of acres, the custom rates would need to reflect that," he says.
And the number of acres the operator is covering makes a difference. "You might have an operator in the commercial grade with a very large planter, versus one that does some work on the side on a private basis for limited number of individuals," Jansen says.
The full 2018 Custom Rates Survey report is published as the Nebraska Extension Circular.
"Every one of these rates are a basis for negotiation. However, everyone needs to take into account the unique attributes of their time, availability of resources, location and their costs," Jansen says. "If people are having trouble starting negotiations and determining what the custom rates might be, this is a good resource to start with."
Those interested in learning more about custom rates can listen to a webinar hosted by McClure and Jansen at 12:30 p.m. July 24. The free webinar can be accessed at go.unl.edu/custom-rates.