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Estimate farm machinery costs using survey data, individual factors

Ag News Wire
By Dan Martens, University of Minnesota Extension

ST. PAUL, Minn. (4/4/2011) —Many factors play into custom rate decisions in individual situations. Factors might include field size, field conditions, hazards like rocks, availability, travel distance, trading work, ownership and operating costs, and other personal and business goals.

Iowa State Extension recently posted their Custom Rate Survey information for 2011 (available at http://bit.ly/9Fw967). A custom rate survey, like a lot of other information, should be viewed as a "starting point" for considerations about custom rates.

The average values on a survey may not cover total ownership and operating costs. University of Minnesota Extension economist Bill Lazarus outlines a process for estimating ownership and operating costs in a publication called "Machinery Cost Estimates," which is available at Lazarus' Department of Applied Economics webpage at http://z.umn.edu/30w.

Lazarus' Farm Machinery Economic Cost Estimation spreadsheet (machdata.xls), also on the webpage, is a tool for figuring out your own costs. Remember that surveys are starting points, and not meant to be solely relied upon. The spreadsheet is intended to help individuals with doing their own calculations.

The 2011 Iowa State Survey includes responses from 179 entities including 22 percent doing custom work, 14 percent hiring work done, and 64 percent indicating both. The Iowa State survey also reports numbers for renting some items.

Here are some examples from the 2011 Iowa State Survey. The numbers are listed as the low response, average response, and the high response.

Chisel Plowing
$9.00 $13.70 $18.00

Field Cultivating
$7.00 $11.45 $16.00

Land Rolling
$3.00 $6.55 $11.00

Planting with fertilizer/insecticide attachments
$10.00 $15.70 $25.00

Drilling Soybeans
$11.00 $14.85 $20.00

The average price for diesel fuel was assumed to be $2.75 per gallon compared to $2.25 in 2010. A fuel increase of $0.50 per gallon will cause the total machinery cost to increase about 5 percent.



Any use of this article must include the byline or following credit line:
Dan Martens is a crops educator with University of Minnesota Extension.

Media Contact: Catherine Dehdashti, U of M Extension, (612) 625-0237, ced@umn.edu

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