university of illinois custom farming rates 2021

NASS county yields are not the same yields that will be used to calculate Agriculture Risk Coverage at the county, Farmers will again have until March 15 to make commodity title program selections. Thus, it is imperative that farms compute their own machinery costs per acre when making comparisons with custom rate survey data. "Management Decisions Relative to High Nitrogen Fertilizer Prices." 0 Tillage operations are typically used to prepare a desirable seedbed, reduce weed growth, incorporate fertilizer, or improve soil conditions. Depreciation results from wear, obsolescence, and machine age. Summary of annual capital and noncapital family living expenditures and income and social security tax payments. Table 2 shows estimated costs in 2019 and 2021 for several different tractor sizes, combining corn and soybeans, a chisel plow, and a conventional planter. for the complete table of custom rates, which also lists tractors of various sizes. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Fortunately, the USDA began publishing the Grain Crushings and Co-Products Production, Fertilizer prices have been on a declining trend in recent months. In all cases, estimated costs went up and ranged from 2% to 19%. Suffice it to say, there is considerable downside risk in the market, and lower prices will result in much lower revenues and returns. Schnitkey, G. Revenue and Costs for Illinois Grain Crops, Actual for 2015 through 2020, Projected for 2021 and 2022. Illinois Farm Management Handbook. Farmers evaluating how costs may be cut in the upcoming year have several options, including reducing cash rents (see discussion in farmdoc daily, August 11, 2020). Informa Markets, a trading division of Informa PLC. Lattz, Dale and Gary Schnitkey. To fully obtain the benefits of reduced tillage passes, the pieces of equipment on a farm must be reduced. Many forecasters are using much lower prices for 2022. Custom Rates Financial and economic considerations such as limited capital, untimely cash flow, insufficient labor, small acreage, or other reasons require farmers to hire custom service for field operations. This report summarizes farm income and earnings for FBFM enrolled farms for 2012-2016. The updated budgets result in a comparative returns situation between corn and soybeans that does not indicate acreage would deviate from recent rotations. We are grateful to the 97 survey respondents who provided information for this publication. Purdue Educators distributed the questionnaires at meetings and events statewide during the last month of 2020 and the first three months of 2021. Though this information is very useful when establishing custom rates, it is prudent to compare your farm machinery costs per acre to custom rates. Disclaimer: We request all readers, electronic media and others follow our citation guidelines when re-posting articles from farmdoc daily. Disclaimer: We request all readers, electronic media and others follow our citation guidelines when re-posting articles from farmdoc daily. Fuel. HARVESTING September 2021 This publication shows estimated costs for combining, using grain carts, and hauling grain. Fuel costs are based on a $2.25 per gallon price for diesel fuel. endstream endobj 2432 0 obj <. "2022 Crop Budgets Contain Higher Costs." These estimates are useful for determining custom rates and for analyzing machinery costs on farms. Lattz, D. and G. Schnitkey. A "custom rate" is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider. Here, a look at cost estimates of field, forage and harvesting operations, plus per-hour tractor operating costs. What impact would a recession have on farming. Harvest. Historically, cost of, The Farm Service Agency (FSA) recently released all the information necessary to calculate 2021 commodity title payments. 0 The information in table 1 was used to help compute the total machinery costs for field cultivation on the case farm in table 2. Tables 3 and 4 present machinery costs for a self-propelled sprayer operation on the case farm. Our YouTube channel includes farmdoc webinars and publication related videos. At this early stage, The National Agriculture Statistics Service (NASS) recently released county yields. Fortunately, ag economists at the University of Illinois keep up on all those numbers, and have an entire listing of costs for various field operations located on their Farmdoc website. "Nitrogen Fertilizer Strategies for 2022." Improvement in outlook could come from higher prices, above trend yields without lower prices, additional government aid, cuts in costs, or some combination of those. "Machinery Cost Estimates: Field Operations." Trends in Table 1 for high-productivity farmland also occur across regions. Illinois Farm Management Handbook, Department of Agricultural and Consumer Economics, University of Illinois at Urbana . 147 0 obj <>/Filter/FlateDecode/ID[<269ADE589DBEE54094DDE17E08AF1239><530EECDB0D779343B2147141D420F3BF>]/Index[122 43]/Info 121 0 R/Length 119/Prev 235468/Root 123 0 R/Size 165/Type/XRef/W[1 3 1]>>stream The farmdoc daily website falls under University of Illinois copyright and intellectual property rights. These . Here, we are talking about economic depreciation rather than tax depreciation. Interest should be included in ownership costs regardless of whether debt is incurred when purchasing a machine. Fertilizer prices have skyrocketed in recent months (see farmdoc daily, October 26, 2021, November 2, 2021, and November 30, 2021). Corn is projected $15 per acre higher than soybeans in northern Illinois, corn is projected $14 per acre higher than soybean on low productivity farmland in central Illinois, and soybeans are projected to be $1 more profitable than corn in southern Illinois. If this level of detail is not available, it is common to use annual hours of use and machine age to estimate repair and maintenance costs. for a look at their summary, including commentary by farm management experts Dale Lattz and Gary Schnitkey. ) Substantial increases in list prices of machinery occurred between 2019 and 2021. Illinois Farm Management Handbook. At this point, our return estimates are not suggesting large changes in acreage. Michael. Machinery costs are updated every two years, with the last update occurring in 2019. This program calculates Agricultural Risk Coverage for County Coverage (ARC-CO), Price Loss Coverage (PLC) payments, and ARC at the Individual Level (ARC-IC). The following two comparisons drawn from Table 2 further highlight the importance of implements sized for acreage use when managing costs on the farm. Strategies then for lowering costs are to use equipment on the maximal acres. The farmdoc daily website falls under University of Illinois copyright and intellectual property rights. Ohio Farm Custom Rates. Iowa State University Extension and Outreach, Ag Decision Maker, A3-10, March 2017. Projected costs have been raised for 2022, and corn and soybean costs are. This report is based on data obtained from farm business records on Illinois farms. The reference price escalator was introduced in the 2018 Farm Bill and uses effective reference prices to calculate Price Loss Coverage (PLC) payments. Check out the baseline prices on custom rates from 2019. This information is intended to give farmers looking to hire a custom operator or custom operators a starting point in negotiating a price for various services. farmdoc daily (11):160, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, November 30, 2021. Results are included for all regions in Illinois. These price changes will influence the relative profitability of the two crops. Depending on your situation, you may want to consider the following spraying and ammonia application total costs from 2019: Self-propelled at $4.40 per acre. Labor costs per hour increased from $20.90 per hour in 2019 to $22.00 per hour in 2021 (see Table 1). For a detailed statement, please see the University of Illinois Copyright Information and Policies here. Shawn and Kristy Freeland with some of their cattle, Corn with fuel pump handle representing ethanol fuel. Schnitkey, G., N. Paulson, K. Swanson, C. Zulauf and J. Baltz. Lattz, D. and G. Schnitkey. Custom work charges are determined by demand and supply and are negotiated between farmers and custom operators. Custom farming rates from around the U.S. March 23, 2021 08:00 AM. Several data sources were used to create the two examples below. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine . Post Application Coverage Endorsement Tool (Sheet), Balance Sheet & Historical Financial Statements, Briomass Crop Budget Tool Miscanthus & Switchgrass, Illinois Soil Productivity & Yield Utilities, Farmland LEasing Facts Sheets & Pricing Information, Swanson, K., G. Schnitkey, N. Paulson, C. Zulauf and J. Coppess. Spraying. Iowa Farm Custom Rate Survey was mailed to 327 people by the US Postal Service and 232 people via email in early February 2022. Understanding the difference in the intent of the two reports, and acknowledging some differences in general assumptions (for example, fuel rate of $2.50 versus $2.63 per gallon), explains the potential differences in rates reported from each source. Subscribe to receive top agriculture news, Be informed daily with these free e-newsletters. Air-seeder at $16.80 per acre. Gentry, L. and G. Schnitkey. Although tillage can provide value, there is a cost associated with each tillage operation. It is also important to check your report to become an informed consumer of information being used to make decisions about you. Fuel costs will vary with each operations fuel use. Both corn and soybean costs will be at record levels. Many Iowa farmers hire some custom machine work in their farm business or perform custom work for others. By Mike Rankin. From time to time, Prairie Farmer gets requests for the custom rate estimates on various field operations. For seven of the nine tillage operations compared, the economic cost of owning the machinery and performing the task is less than the average custom rate cost per acre, with all but one considerably lower than the average custom rate cost. hb```]O@(9j0;sLUG\S%mN3/,w```6 q(f`4``fg4bx#C]e^T&2@f`{ 6Vy,(! Central Illinois is further divided, Shows historical cost for the last 5 years and projections for next year. Unlike the farmdoc machinery cost estimates which represent actual economic cost of performing the harvest operation, the custom rate survey reports actual rates expected to be charged or paid in 2020. Tables 1 and 2 present machinery costs for a field cultivation operation on the case farm. %PDF-1.5 % Farmers will again have until March 15 to make commodity title program selections. http://www.farmdoc.uiuc.edu/manage/newsletters/fefo06_16/fefo06_16.html, http://www.farmdoc.uiuc.edu/manage/machinery/machinery_summary.html. Second, purchase prices, insurance and housing, and repair costs were adapted using information contained in Edwards (2015) and Lattz and Schnitkey (2017a; 2017b). Iowa State University Extension and Outreach, Ag Decision Maker, A3-29, May 2015. Machinery cost estimates for 2021 have been released and are available on the farmdoc website (see Management section of farmdoc). Learn more. The "Ohio Farm Custom Rates 2022" publication reports custom rates based on a statewide survey of 223 farmers, custom operators, farm managers, and landowners conducted in 2022. Machinery Costs: Field Operations. farmdoc Business Management, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, July 2019. Based on data collected through the Purdue University Center for Commercial Agriculture 2021 Custom Rates Survey, the person baling the hay on shares today gets 52% of the crop, on average. Several options exist for reducing non-land costs, with this article focusing on tillage related costs. These estimates are useful for determining custom rates and for analyzing machinery costs on farms. A survey of agricultural custom operators is conducted in Nebraska every two years. United States Department of Agriculture Local Extension Councils Cooperating University of Illinois Extension provides equal opportunities in programs and employment. The total machinery cost per acre ($9.58 per acre) for the case farm is under these custom rates, indicating that it is economical for the case farm to own a field cultivator. Lattz, D. and G. Schnitkey. For several common tillage operations, the average farmdoc machinery use rate is shown in Table 1 next to the corresponding average, median, minimum and maximum custom rates from the Iowa survey responses. Tillage passes that may fall in this category are those associated with heavier, deep tillage that are not performed on all acres in every year. If corn and soybeans prices fall, 2022 net farm incomes could be very low. hbbd``b`$V @]H0 Vq .$ b=\@g Estimated machinery costs can be useful when performing a field operation for another individual. As shown in Table 2, a 15-foot chisel plow used on 630 acres has an economic cost of $14.50 per acre and a 21-foot chisel plow used on 882 acres has an economic cost of $16.00 per acre. 2H8so:e`!g[ a "Planting and Acreage Decisions in 2022." Interest, insurance and housing, and repair cost rates were assumed to be 5 percent, 1 percent, and 1.5 percent, respectively. Study examines impact of beer sales in Colorado, Quick Takes: Cover crop program, Iowa Pork leaders, scholarships and more, 2023 meat production expected to decline 1%. A 21-foot chisel plow used on 882 acres has a cost of $16.00 per acre, while a 27-foot chisel plow used on 1,134 acres has nearly the same cost at $15.90 per acre. As Day got older, she began to understand the importance of transitioning from a member to a mentor for other youth in the industry. Plastina, A., A. Johanns and O. Massman. A comparison of the two sets of rates provides a baseline that can be used to evaluate costs of owning equipment and performing field operations versus outsourcing. The purpose of this publication is to provide information on custom work . Numerous farms that are either hiring a custom operator or providing custom rate services to other farms use published custom rate surveys. In addition to the costs outlined in table 3, the costs in table 4 include fuel, lubrication, and labor costs. Current fall bids for 2022 cash delivery were also considered and are close to projected prices. Report ID: . Although the actual costs will vary from farm to farm, and are dependent on the number of acres and the size or capacity of the equipment used, the averages presented here can be used as a guide. The machinery cost estimates include four categories of costs associated with operating the machinery: tractor overhead, implement overhead, fuel charges, and labor. Guidelines are available here. Click here (http://www.farmdoc.uiuc.edu/manage/newsletters/fefo06_16/fefo06_16.html) for a look at their summary, including commentary by farm management experts Dale Lattz and Gary Schnitkey. All rights reserved. University of Illinois Extension provides equal opportunities in . Users can select the state, county, and crop combination that they wish to consider. Check Out Custom Rates. Liquid fertilizer applicator at $23.50 per acre. The purchase price is assumed to equal 85% of the list price of the tractor. Therefore, as use increases, costs generally go down. Moreover, our return estimates do not suggest large changes in acres from 2021 to 2022. This publication presents crop budgets for three regions in Illinois: northern, central, and southern Illinois. For example, a generational family farm may have different levels of ownership, own separate pieces of machinery, or have acreage shares that dont align with ownership, and these costs can be used as a resource for settling with other farm members. in 2021, while 2022 custom rates for . A "custom rate" is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider. October 11, 2021. Number 8860726. The 2019 Custom Machine and Work Rate Estimates fact sheet from Michigan State University Extension is now available. The "Ohio Farm Custom Rates 2022" publication reports custom rates based on a statewide survey of 223 farmers, custom operators, farm managers, and landowners conducted in 2022. According to Lattz and Schnitkey (2017b), the field cultivator represented in tables 1 and 2 can cover 29.1 acres per hour. FIRM Team Fact Sheet Number . There will be great diversity in cash rent increases across farms. Labor. FIRM Team Fact Sheet Page 1. . According to Lattz and Schnitkey (2017b), a self-propelled sprayer can cover 80.6 acres per hour. University of Illinois will publish 2021 machinery cost estimates at the end of September. Crop Insurance Summary of Business Tool (Sheet), Post Application Coverage Endorsement Tool (Sheet), Balance Sheet & Historical Financial Statements, Post Application Coverage Endorsement Tool, Biomass Crop Budget Tool Miscanthus and Switchgrass, Illinois Soil Productivity and Yield Utilities, Illinois Crop Budgets and Historic Returns. One of the best resources for average custom rates is the annual Iowa Farm Custom Rate Survey that is coordinated and analyzed by Iowa State University. Schnitkey, G., N. Paulson, K. Swanson and C. Zulauf. And how do you set a rate? Per hour costs are divided into overhead, fuel, and labor categories. Repair and maintenance costs for a particular machine can vary substantially among farms. The computations of interest, insurance and housing, and repair costs assumed that the self-propelled sprayer had one-half of its useful life left. This indicates that some level of tillage is resulting in yields that offset costs, while repeated tillage operations add costs beyond attained value. It is common to divide farm machinery costs into two categories: annual ownership costs and annual operating costs. The cost with the largest increase is fertilizer. These higher fertilizer costs reflect higher prices for diammonium phosphate and potash. Unlike fuel and labor costs which vary with use, depreciation and interest costs vary little with use. The 2018 Farm Bill What-If Tool has been released (clickhere to download). Learn, Introduction Knowledge, experience, and collaboration work hand in hand with one another to improve farm output per unit of input (i.e., productivity). For a detailed statement, please see the University of Illinois Copyright Information and Policies here. Uncertainty exists about whether fertilizer prices will continue at high levels. This Current Report summarizes data collected from Oklahoma farmers, ranchers and custom operators during the fall of 2021. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Projected financial statements and, Illinois crop budgets for 2023 have been revised from their initial release in August (farmdoc daily, August 2, 2022). Report with summary of cost to produce milk in Illinois. Pull-type at $3.90 per acre. The site also contains a completed example of a farm return. The University of Illinois farmdoc machinery costs estimates are intended to represent costs associated with buying new machinery and owning the machinery for ten years (links provided in farmdoc daily, August 6, 2019). Custom Rates -- Iowa; Kansas State Resources . Corn prices have been increased from $5.30 per bushel in August, In 2021, the total noncapital living expenses of 1,213 farm families enrolled in the Illinois Farm Business Farm Management Association (FBFM) averaged $85,828or about $7,200 a month for each family, In the August version of the 2023 Illinois Crop Budgets, wheat plus double-crop soybean is projected to be much more profitable than stand-alone corn and stand-alone soybeans in southern Illinois., Illinois crop budgets for 2022 have been revised from their December release (farmdoc daily, December 7, 2021). Crop Insurance Summary of Business Tool (Sheet), Post Application Coverage Endorsement Tool (Sheet), Balance Sheet & Historical Financial Statements, Post Application Coverage Endorsement Tool, Biomass Crop Budget Tool Miscanthus and Switchgrass, Illinois Soil Productivity and Yield Utilities, Illinois Crop Budgets and Historic Returns, Department of Agricultural and Consumer Economics. Langemeier (2017) and Plastina and Johanns (2017) indicate that the custom rate for field cultivating is approximately $12.75 to $15.25 per acre. Annually, Iowa State University surveys those who hire and/or perform custom farm services and compiles a report of results. Lattz, D. and G. Schnitkey. Depreciation for tax purposes is often accelerated compared to economic depreciation. That cost is higher than the maximum custom rate reported. Although she spent an equal amount in farm machinery as she did in the cattle barn as a child, Day developed a bigger passion for the cattle side of the things. Custom Farming. May 25, 2019. "2017 Iowa Farm Custom Rate Survey." Includes tractor overhead, implement overhead, fuel and lube and labor: Vertical tillage, rolling basket at $11.70 per acre, V-ripper (shanks only) at $22.50 per acre. 2021 Custom Machine Work Rates By Ned M. Birkey, MSU Extension Educator Emeritus, Spartan Ag; July 21, 2021 News release With the 2021 spring planting season wrapping up with wheat harvest and . The 2022 Iowa Farm Custom Rate Survey is intended as a guide in determining custom rates. If your machinery cost per acre is relatively high, then a farm should consider using a custom operator rather than replacing their own machine. Labor time is assumed to be 1.1 times the tractor hour resulting in a 10% higher cost per tractor hour. It is an annual summary of such records obtained from farmers cooperating with University of Illinois Extension, the Department of Agricultural and Consumer Economics, and the Illinois Farm Business Farm Management (FBFM) Association. Declines in natural gas and corn prices likely have led to nitrogen fertilizer price declines. Edwards, William. 2019 Custom Machine and Work Rate Estimates. Costs rise dramatically with lower use because much of the tillage related cost is associated with depreciation and interest on owning the equipment. "Cash Rents in 2020 and 2021." These estimates are useful for determining custom rates and for analyzing machinery costs on farms. Economic useful life is not necessarily the same as service life. Some farms may have other factors to consider, such as requirements of land or business owners, and the ability to outsource, and timeliness of completing the task. The total of all economic costs per acre for growing corn and soybeans in Illinois. Twitter at farmdocdaily. Estimating Farm Machinery Costs, available by searching Iowa State University agriculture decision maker and machinery management. Could custom farming work? A way for reducing these costs is outsourcing the equipment, thereby allowing the individual performing the operation to perform the operation over more acres, and thereby lower total costs. Machinery ownership and labor can be costly. Click here (http://www.farmdoc.uiuc.edu/manage/machinery/machinery_summary.html) for the complete table of custom rates, which also lists tractors of various sizes. Depending on your situation, you may want to consider the following spraying and ammonia application total costs from 2019: Liquid fertilizer applicator at $23.50 per acre. If acres are not maximized, options include 1) outsource the operation or 2) reduce the size of the equipment. '/|@@q]H? l %PDF-1.6 % Schnitkey, G. Crop Budgets, Illinois, 2022. Illinois Farm Management Handbook. Understanding the . Follow these social media channels for updates on farmdoc daily articles, farmdoc events, and ag information from Ryan Hanrahan - the farmdoc social media director. 2474 0 obj <>stream Guidelines are available here. Unlike the farmdoc machinery cost estimates which represent actual economic cost of performing the field operation, the custom rate survey reports actual rates expected to be charged or paid in 2020. FAST (Farm Analysis Solution Tools) are a suite of Microsoft Excel spreadsheets designed to assist those in agriculture make better decisions via user-friendly computer programs. Using this information, the total machinery cost per acre was $9.58. It would be more cost effective to outsource the task than owning an implement of that size for 735 acres. Authors: Dale Lattz and Gary Schnitkey. Fertilizer prices may decrease in the spring when many fertilizer purchases are made. Eliminating a tillage pass in a single year will reduce fuel, labor, and repair costs for the given year, but the ownership costs will remain. Many of them are involved in the Extension Income Tax Advisory Committee. Illinois Farm Management Handbook, available by searching University of Illinois farmdoc. Machinery Cost Estimates: Tractors. Illinois Farm Management Handbook, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, updated October 11, 2021. It is important to note that other factors such as timeliness, liquidity, solvency, and tax management may affect a farms decision to own machines or custom hire certain field operations. Annually, Iowa State University surveys those who hire and/or perform custom farm services and compiles a report of results. This information is based on 122 responses and 3,389 custom rates provided by Iowa farmers, custom operators, and farm managers. Total costs will be at all-time highs in 2022. ", Tillage, Nitrogen Use, and Cover Crop Impacts of Corn and Soybean Returns, Revenue Loss Coverage and Other Farm Safety Net Proposals in an Era of High Ad Hoc Payments, Department of Agricultural and Consumer Economics, Department of Agricultural, Environmental and Development Economics. ceres imagaging lindsay irrigation partner. Data collected through the Precision Conservation Management from 2015 to 2019 indicates that light to moderate tillage is associated with higher returns than heavier tillage (farmdoc daily webinar, June 22, 2020). Lattz, Dale and Gary Schnitkey. The average farmdoc machinery use economic costs are calculated for use on approximately 1,400 acres. It is important to note that machinery costs per acre vary widely among farms. These returns are at record levels and will result in very high incomes in 2021. However, profitability is expected if corn and soybean prices remain high. Langemeier (2017) and Plastina and Johanns (2017) indicate that the custom rate for using a self-propelled sprayer is approximately $6.70 to $7.65 per acre. This program calculates premiums, evaluates insurance payments, and provides historical data useful when making crop insurance decisions for multiple crops. Again, other factors such as timeliness, liquidity, solvency, and tax management affect a farms decision to own the sprayer or use a custom operator to spray the farms crops. Similar results for northern Illinois, central Illinois low-productivity farmland, and southern Illinois are available in the Revenue and Costs for Illinois Grain Crops publication. Lets say you dont want to retire and rent out your farm, but you dont want to do it all yourself either. hb``` eaVCz @ .m&n\`h``) J20ii TEjA@JGCbs>1Um_iF L:C#u` (^ Analyzes the cost of completing fieldwork and generates machinery costs. The diesel fuel price was increased from $2.50 per gallon in 2019 to $2.75 per gallon in 2021. A Purdue survey can provide a starting point for setting custom rates. Consider reducing tillage operations. Moreover, to fully obtain all cost saving from reduced tillage, the amount of equipment on a farm must be reduced. . These cost rates are dependent on annual hours of use and useful life.