Agricultural Custom Work – What to Charge?
There are various resources or guides available to assist custom machine hire and service providers in figuring rates in Nebraska. The Nebraska Custom Rates Report is a popular biennial publication, now updated for 2022. Information provided in the report is from survey data gathered on 136 different custom operations and services from 193 survey respondents providing those services in Nebraska. The report provides market rates and is an informational source for those providing custom work and their potential customers. The report provides common charges, or a range of rates charged in their area and for Nebraska. Another important source of information is to calculate cost of owning and operating machinery and equipment with a program like the Agricultural Budget Calculator (ABC). Considering market information combined with covering costs plus a profit margin is a common formula for setting a price for services.
Agricultural custom rate charges can vary across the state; therefore, the Nebraska Custom Rates Report provides rate details from survey responses grouped by Nebraska Agricultural Statistics Districts. Several factors contribute to rate differences reported by survey participants, including field and job sizes, soil conditions, and the number of responses for the various operations. Some operators may charge lower than market rate prices to neighbors or relatives. Rates may change from year-to-year due to expense differences and local market forces. Determining appropriate charges for custom machine hire and agricultural services may include consideration of various elements including current market rates as reported in the custom rates survey report, market demand in the area for specific types of custom work, and availability of services.
In this article, Farm and Ranch Management Analyst Glennis McClure discusses how custom operators can input data from the 2022 Nebraska Custom Rates Report into the Agricultural Budget Calculator to figure charges that will be competitive in the marketplace.