What is the right custom rate for field operations? What does a typical crop budget look like? Purdue Extension has resources that can help producers find answers to these and other important farm management questions at the Purdue Center for Commercial Agriculture website, https://ag.purdue.edu/commercialag/.
I get the question from farmers on custom rates several times each year. Farmers generally ask what the “going rate” is to perform custom field operations. Typically, I find that the farmer simply wants to charge a fair rate, and they need a place to start, or at least some data to get them in the ballpark for good-faith negotiations.
Dr. Michael Langemeier, Associate Director of the Purdue Center for Commercial Agriculture, periodically conducts state-wide surveys to determine average Indiana farm custom rates, reported at the Purdue Center for Commercial Agriculture website under the “Publications” tab. The direct link for 2023 rates is https://ag.purdue.edu/commercialag/home/resource/2023/03/indiana-farm-custom-rates/.
“Unless otherwise stated, the rates reported include payments made for fuel, operator labor, and machinery ownership costs,” said Langemeier.
Langemeier said farm custom rates may differ significantly from one area in the state to another based on the availability of custom operators and demand for their services. Therefore, the statewide averages reported might be quite different from the going rate in any given area. “Custom rates in a given area may vary significantly according to timeliness, operator skill, field size and shape, crop conditions, the performance characteristics of the machine being used, the relationship between the custom operator and the person needing custom work done, competitive pressures, and economic circumstances of the custom operator,” he said. “The variation of reported rates was large for many of the operations and thus should only be used as a starting point for establishing a rate in any given situation.”
Another question I get from time to time revolves around what a “typical” or “average” budget for a particular crop might look like. As you might imagine, “typical” may not exist in reality. Much variability exists from field to field, farmer to farmer, and from among various management systems. But, again, we think about “getting in the ballpark.”
Find the 2024 Crop Cost and Return Guide on the website. The guide is cooperatively authored by Langemeier and other Purdue specialists in multiple departments. If significant pricing structures change, the guide may be updated. The current version was based on December 2023 estimates.
The guide offers farmers crop budgets for three levels of soil productivity: low, average, and high productivity soil. Additionally, the guide offers average budgets for continuous corn, rotation corn, rotation beans, wheat, and double-crop beans.
Find the guide under the “Publications” tab at the website, or via direct link at: https://ag.purdue.edu/commercialag/home/resource/keyword/crop-cost-return-guide-archive/. Multiple years are available on the page for multi-year comparisons.