Custom Rate Survey Shows Shifting Machinery, Fuel Costs

Custom Rate Survey Shows Shifting Machinery, Fuel Costs July 15, 2016

Recent findings from the University of Nebraska-Lincoln's 2016 Custom Rates Survey show changing rates for machinery operations and related services. The survey summarizes the current rates charged for specific machinery operations commonly used by agricultural producers.

Many Nebraska producers hire custom operators to perform machinery services for their farms and ranches across the state. Prices for these services become more critical as profit margins tighten with lower crop and livestock prices.

Findings from the survey, conducted every two years, divide the custom operations performed in Nebraska into two major sections. Part I includes spring and summer operations such as tillage, planting, and harvesting of small grains. Part II includes information about fall and miscellaneous operations. Custom rate summaries in these sections include regional rates for the eight Nebraska Agricultural Districts and the overall state. A total of 163 custom rates were reported as part of the 2016 survey.

The statewide average for disk harrowing (heavy) increased by 14.1% from $12.94 per acre in 2014 to $14.77 per acre in 2016. Planting row crops with row cleaners reported a much smaller statewide change from $18.31 per acre in 2014 to $18.91 per acre in 2016, accounting for a 3.2% increase over the prior two years. The statewide rate for ombining dryland corn, including tractor and grain cart, averaged 9.1% higher from 2014 to 2016, equating to a $3.05 per acre increase to $36.45.

"Differences in necessary expenses for performing custom rates across the state, such as fuel and labor, have a strong influence on the custom rates charged by operators, according to survey participants," said Jim Jansen, assistant extension educator and one of the survey's authors.

The statewide expected farm-delivered fuel cost per gallon declined nearly 50% from the 2014 high of $3.39 per gallon to the 2016 average $1.68 per gallon in 2016. The statewide average labor rate assumed or included in custom rates increased by 12.5% from $15.58 per hour in 2014 to $17.53 in 2016. Necessary expenses vary across the state as local market forces and availability of labor may affect costs.

Custom rates reported include charges for the use of necessary equipment, fuel, labor and supplies, such as baling wire or twine provided by the custom operator. Seed, fertilizer and chemical costs are not included.

Full report summaries from the 2016 UNL Custom Rates Survey are published as Nebraska Extension Circular (EC) 823 for Part I and EC 826 for Part II.

FurtherThe publications are available at http://farm.unl.edu/customrates.