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Higher Custom Rates

Growers who purchase custom farm jobs may see a sharp increase in price in 2007, according to a University of Illinois Extension survey. And growers who custom farm should consider raising their rates next year.

The university survey estimated the per-hour cost of operating various tractors and the total cost of field, forage and harvest work on Illinois farms. These figures are meant to be estimates only and will vary based on factors such as the number of hours that equipment is used.

The survey shows that overall machinery costs jumped 11 to 44% in 2006 compared to 2005. A corn harvest that cost $31.10/acre last year rose to $34.50/acre this year for an 11% increase. Tandem disking increased from $8.20/acre to $9.80/acre, a 20% increase.

The rise in fieldwork and tractor operating costs is credited to higher fuel prices, higher equipment prices and increased interest rates. Fuel costs for 2006 rose 67% over 2005 with an estimated $2.50/gal. price this year compared to $1.50/gal. last year.

List prices for new equipment ran higher. The researchers noted that the 2006 list prices were 9% higher for planters, 11% higher for combines and 15% higher for tandem disks than 2005 prices.

Higher interest rates added to higher costs. A rate of 7.5% was used for calculating costs compared to 7% in 2005.

For more information, read the report “Machinery Cost Estimates for 2006” on the University of Illinois' farmdoc Web site at www.farmdoc.uiuc.edu/manage/machinery/machinery_harvest.html.

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