Differences in corn and soybean returns will be influenced by corn, soybean, and nitrogen fertilizer prices. University of Illinois ag economists publish machinery costestimates intended to represent the actual costs associated with individual farm field operations, which can provide a baseline for setting a custom rate to ensure that costs are covered. Lets say you dont want to retire and rent out your farm, but you dont want to do it all yourself either. For a detailed statement, please see the University of Illinois Copyright Information and Policies here. This reduction generally will come from long-run decisions on replacement of equipment. Iowa State University Extension and Outreach, Ag Decision Maker, A3-29, May 2015. Authors: Bob Battel, Field Crops Educator . Still, overhead costs increased from $122.90 per acre to $126.10 per acre. Here, a look at cost estimates of field, forage and harvesting operations, plus per-hour tractor operating costs. Survey respondents include both providers and users of custom services, and data reflect the prices paid for typical farm and ranch custom operations. There will be great diversity in cash rent increases across farms. 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. ) The latest in the Illinois Farm Management Handbook. 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 Costs will be at all-time highs in 2022. 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. University of Illinois Extension, Farm Business Management, June 2017 (b). '/|@@q]H? l The total costs per hour for the tractor and implement were estimated to be $203.06 and $75.61 for a total combined cost per hour of $278.67. As indicated in the farmdoc machinery cost estimates publication, acreage decreases of 50% result in 80% increases in costs, on average. Lattz, D. and G. Schnitkey. Schnitkey, G. Revenue and Costs for Illinois Grain Crops, Actual for 2015 through 2020, Projected for 2021 and 2022. Illinois Farm Management Handbook. 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. Moreover, to fully obtain all cost saving from reduced tillage, the amount of equipment on a farm must be reduced. farmdoc daily (9):144, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 6, 2019. Examples pertaining to field cultivation and a self-propelled sprayer were used to illustrate the conceptual framework. Moreover, our return estimates do not suggest large changes in acres from 2021 to 2022. Schnitkey, G., K. Swanson, C. Zulauf, N. Paulson and J. Coppess. When the tillage equipment is used on fewer acres, the cost of operation would rise. Much uncertainty exists concerning fertilizer prices moving into spring. USDA is forecasting a $4.80 corn price and $10.50 soybean price in its preliminary long-run forecasts. It would be more cost effective to outsource the task than owning an implement of that size for 735 acres. These decisions are complex because a decrease in one type of expense may be offset by an increase in other costs, or a change in expected yield. Machinery cost estimates for 2021 have been released and are available on the farmdoc website (see Management section of farmdoc). Annually, Iowa State University surveys those who hire and/or perform custom farm services and compiles a report of results. Respondents were recipients of a mailing by the Oklahoma Field Office, USDA-NASS. A double-crop soybeans budget also is given for all regions except northern Illinois. The articles are written by Extension Specialists. Table gives results for corn, soybeans, wheat,. Fuel costs are based on a $2.25 per gallon price for diesel fuel. Central Illinois is further divided, Shows historical cost for the last 5 years and projections for next year. 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, Department of Agricultural and Consumer Economics. Understanding the . Conversely, the economic cost of owning and operating a mulch tiller and moldboard plow are both higher than average reported custom rates, indicating it would likely be less expensive to outsource these tasks than owning and operating the equipment to complete the task. These per acre return levels will result in above-average net incomes based on high corn and soybean prices. CUSTOM FARMING: Looking at arranging custom farming on your operation? Gentry, L. and G. Schnitkey. A chisel plow in that size range would be cost effective to own and operate on 735 acres. Fortunately, ag economists at the University of Illinois keep up on all . STARTING POINT: Rates for mowing and baling hay vary across Indiana. These . This publication shows estimated costs of performing agricultural field operations. 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. farmdoc daily (11):160, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, November 30, 2021. University of Illinois will publish 2021 machinery cost estimates at the end of September. 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. In addition to the costs outlined in table 3, the costs in table 4 include fuel, lubrication, and labor costs. Farm Progress is part of the Informa Markets Division of Informa PLC. Though this information is very useful when establishing custom rates, it is prudent to compare your farm machinery costs per acre to custom rates. 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. Fertilizer prices have skyrocketed in recent months (see farmdoc daily, October 26, 2021, November 2, 2021, and November 30, 2021). 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%. Based on the above comparisons, the following suggestions result: Further note that that these decisions are longer run in nature as well. Langemeier, Michael. Pull-type at $3.90 per acre. Machinery cost estimates for 2019 are available in the management section of farmdoc in five publications. Salvage values for the tractor and implement were assumed to 30 percent of the purchase prices. The salvage value for the self-propelled sprayer is assumed to be 30 percent of the purchase price. "Management Decisions Relative to High Nitrogen Fertilizer Prices." Machinery Cost Estimates: Forage Field Operations. Illinois Farm Management Handbook, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, updated October 11, 2021. It contains averages of several different university survey results on rates paid for farm custom machinery work. The site also contains a completed example of a farm return. Farmer returns in 2021 are projected to be $378 per acre for corn and $305 per acre for soybeans. Estimating Farm Machinery Costs, available by searching Iowa State University agriculture decision maker and machinery management. "Machinery Cost Estimates: Tractors." Significant changes from the initial release are increased corn prices, soybean prices, and non-land costs. What impact would a recession have on farming? @ &7 For a detailed statement, please see the University of Illinois Copyright Information and Policies here. endstream endobj 2432 0 obj <. Several options exist for reducing non-land costs, with this article focusing on tillage related costs. If you are having trouble registering please view the faq or watch the video below. 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. If it occurs, the $25 per acre increase will be the second-highest, only exceeded by a $33 per acre increase in cash rents between 2010 and 1011. Numerous farms that are either hiring a custom operator or providing custom rate services to other farms use published custom rate surveys. We did not raise fertilizer costs to reflect the highest prices because: Soybean fertilizer costs are at $102 per acre (see Table 1), up considerably from the $45 costs for 2021. Farm Progress is part of the Informa Markets Division of Informa PLC. 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 . According to Lattz and Schnitkey (2017b), the field cultivator represented in tables 1 and 2 can cover 29.1 acres per hour. This article outlined the conceptual framework needed to estimate machinery costs per acre. Several cost items should be included when computing total machinery costs per hour and per acre. Illinois crop budgets for 2022 have been revised from their initial release in July (farmdoc daily, July 27, 2021). The purpose of this publication is to provide information on custom work . The list price increase will also increase costs but is countered by a decline in interest rates from 5.5% in 2019 to 4.5% in 2021. Disclaimer: We request all readers, electronic media and others follow our citation guidelines when re-posting articles from farmdoc daily. 0 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. HARVESTING September 2021 This publication shows estimated costs for combining, using grain carts, and hauling grain. By Mike Rankin. Gary Schnitkey, ag economist at U of I, says theyll publish 2021 machinery cost estimates by the end of September. The computations of interest, insurance and housing, and repair costs assumed that the self-propelled sprayer had one-half of its useful life left. "2017 Iowa Farm Custom Rate Survey." This program calculates premiums, evaluates insurance payments, and provides historical data useful when making crop insurance decisions for multiple crops. Farmers likely will be reducing fertilizer rates. If the same chisel plow were used on only 735 acres (50% less acres), the cost would increase about 80% to $22.86 per acre (see Table 2). 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. 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, Machinery Cost Estimates: Field Operations, Machinery Cost Estimates: Forage Field Operations, 2022 Planting Decisions, Nitrogen Fertilizer Prices, and Corn and Soybean Prices, Department of Agricultural and Consumer Economics. These estimates are useful for determining custom rates and for analyzing machinery costs on farms. Each year, eHay Weekly offers readers a one-stop shop for accessing custom field work rate information from those states that have done . Lattz, D. and G. Schnitkey. CBO recently, The operational efficiency of any industry is key to long-term profitability, no less so for the U.S. ethanol industry. ceres imagaging lindsay irrigation partner. U of I ag economists expect 2021 machinery cost estimates to be 8% to 10% higher than 2019s. Projected financial statements and, Illinois crop budgets for 2023 have been revised from their initial release in August (farmdoc daily, August 2, 2022). This report is based on data obtained from farm business records on Illinois farms. This report is based on data obtained from farm business records on Illinois farms. Subscribe to receive top agriculture news, Be informed daily with these free e-newsletters. Includes tractor overhead, implement overhead, fuel and lube, and labor: Split-row planter for soybeans at $12.50 per acre. Total costs will be at all-time highs in 2022. Lattz, D. and G. Schnitkey. ", 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. The computations of interest, insurance and housing, and repair costs assumed that the tractor and implement had one-half of their useful life left. 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. FIRM Team Fact Sheet Page 1. . Given the current high prices, commodity title payments are not expected from any program option for the, Net farm income in the U.S. reached nearly $95 billion in 2020 and is projected at nearly $117 billion for 2021 after averaging just under $76 billion from 2015 to. Oklahoma Farm and Ranch Custom Rates, 20212022. These decisions may also be dependent on requirements of a landlord or business owner for certain practices to be done and concern over the ability to outsource in a timely manner when the task needs completed. 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. Remember, fuel Purdue Educators distributed the questionnaires at meetings and events statewide during the last month of 2020 and the first three months of 2021. Details: New to University Housing for 2020- 2021 For 2020, Illinois ' average cash rent is $222 per acre, down $2 from 2019, according to USDA data. Depreciation results from wear, obsolescence, and machine age. "Cash Rents in 2020 and 2021." "Planting and Acreage Decisions in 2022." 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 latest on Farm Management along with the Farm Management Handbook. It is important for you to check your reports to identify errors and detect fraud. Labor. Ruraltax.org contains many articles on taxes aimed at farm and land owners. %PDF-1.5 % This Microsoft Excel spreadsheet will estimate Price Loss Coverage (PLC) and Agricultural Risk Coverage at the county level ARC-IC (Agriculture Risk Coverage Individual) has received less attention than ARC-CO (ARC County) and PLC (Price Loss Coverage). It is important to note that machinery costs per acre vary widely among farms. Respondents were asked to report custom rates they had either paid or received during the past year. Analyzes the cost of completing fieldwork and generates machinery costs. We provide machinery cost estimates which may be helpful in setting custom rates. Disclaimer: We request all readers, electronic media and others follow our citation guidelines when re-posting articles from farmdoc daily. 7 ag stories you cant miss March 3, 2023, Jill Reiter, Virginia State FFA Vice President, Soymeal rally sends soybeans higher on the week. Many farms trade machines before they are completely worn out. Includes tractor overhead, implement overhead, fuel and lube, and labor: Depending on your situation, you may want to consider the following spraying and ammonia application total costs from 2019: Fuel costs are based on $2.50 per gallon for diesel fuel. Between 2019 and 2021, the list price on a 310 HP tractor increased by 9.1% from $410,256 in 2019 to $447,479 in 2021. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. A Purdue survey can provide a starting point for setting custom rates. %%EOF The dynamics of fertilizer prices in conjunction with movements in corn and soybean prices will influence relative profitability of corn and soybeans and acreage decisions. Total costs will be at all-time highs in 2022. Substantial increases in list prices of machinery occurred between 2019 and 2021. These estimates are useful for determining custom rates and for analyzing machinery costs on farms. Number 8860726. Twitter at farmdocdaily. Estimated machinery costs often are used in setting custom rates where one individual performs a field operation for another individual. The second publication Revenue and Costs for Illinois Grain Crop shows yearly returns and costs of producing corn, soybeans, wheat, and double-crop soybeans by region of Illinois. Shows estimated costs for different sized tractors. Langemeier (2017) and Plastina and Johanns (2017) indicate that the custom rate for field cultivating is approximately $12.75 to $15.25 per acre. At this point, those historical relationships suggest much lower prices than are being offered by CME futures contracts. Estimated machinery costs often are used in setting custom rates where one individual performs a field operation for another individual. Illinois Farm Management Handbook, Department of Agricultural and Consumer Economics, University of Illinois at Urbana . 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). Fuel use on a 310 horsepower tractor is estimated at 13.6 gallons per hour. Anhydrous ammonia at $16.50 per acre. Twenty percent of the respondents perform custom work, 16% Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. This publication shows estimated costs of performing agricultural field operations. Could custom farming work? The alternative farmdoc forecast and USDA forecast are heavily based on historical supply/demand conditions. Includes tractor overhead, platform overhead, fuel and lube, and labor: Combining only for corn at $37.60 per acre, Combining only soybeans at $32.60 per acre, Grain cart for soybeans at $7.80 per acre. The 2019 Custom Machine and Work Rate Estimates fact sheet from Michigan State University Extension is now available. The latest in the Marketing & Outlook Section. About the report. Second, purchase prices, insurance and housing, and repair costs were adapted using information contained in Edwards (2015) and Lattz and Schnitkey (2017a; 2017b). Declines in natural gas and corn prices likely have led to nitrogen fertilizer price declines. 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. farmdoc daily (11):147, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 26, 2021. Tillage, Nitrogen Use, and Cover Crop Impacts of Corn and Soybean Returns. farmdoc webinar, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, June 22, 2020. 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. 2017 Indiana Farm Custom Rates." Several factors may explain this divergence: Whether prices will come down to those indicated by typical supply/demand relationships is an open question that will play out over the next year. Check Out Custom Rates. Guidelines are available here. Factors impacting costs are illustrated for a 310 PTO horsepower tractor in Table 1, which shows per hour costs of operations from 2017, 2019, and 2021. Here, a look at cost estimates of field, forage and harvesting operations, plus per-hour tractor operating costs. Spraying. hb```]O@(9j0;sLUG\S%mN3/,w```6 q(f`4``fg4bx#C]e^T&2@f`{ 6Vy,(! The 2018 Farm Bill What-If Tool has been released (clickhere to download). 2431 0 obj <> endobj Guidelines are available here. Schnitkey, G. Crop Budgets, Illinois, 2022. Illinois Farm Management Handbook. This Current Report summarizes data collected from Oklahoma farmers, ranchers and custom operators during the fall of 2021. Acres farmed, annual hours, useful life, and interest rate represent those of the case farm. Year Applies: 2021. 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. 164 0 obj <>stream These cost rates are dependent on annual hours of use and useful life. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. endstream endobj startxref Another consideration is owning tillage implements that are sized appropriately for acres of expected use rather than total farm acres. farmdoc daily (10):143, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 4, 2020. Plastina, A., A. Johanns and O. Massman. Lattz, Dale and Gary Schnitkey. As part of a forthcoming Farm Bill, Congress may consider changes to farm programs to incorporate margins, expected to be defined as the difference between a, Note: This article is based on testimony given before the House Agricultural Committee Subcommittee on General Farm Commodities and Risk Management on June 9, 2022. If your machinery cost per acre is relatively high, then a farm should consider using a custom operator rather than replacing their own machine. 1 Min Read. 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. Interest should be included in ownership costs regardless of whether debt is incurred when purchasing a machine. Costs include overhead (depreciation, interest, insurance . Based on the ISU data, average custom rates for tillage, planting and harvest operations in 2021 are expected to decrease by about 3%, compared to the rates for similar operations in 2020. 2020 Survey Responses Below are tables summarizing the results of the 2020 Ohio Farm Custom Rate Survey. 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 purchase price is assumed to equal 85% of the list price of the tractor. Machinery Cost Estimates: Harvesting. Illinois Farm Management Handbook, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, updated October 11, 2021. Tables 1 and 2 present machinery costs for a field cultivation operation on the case farm. For vertical tillage and chisel plow, the economic cost is lower than the lowest custom rate reported. The diesel fuel price was increased from $2.50 per gallon in 2019 to $2.75 per gallon in 2021. Report with summary of cost to produce beef in Illinois. Michigan State University Extension June 2019. Michael. Labor cost reflect machine time, time required to lubricate and service machines, and travel time. Black piggy bank with downward trend line representing recession. Often, tillage operations are an option for a farmer to consider, carefully weighing costs and potential benefits. Our YouTube channel includes farmdoc webinars and publication related videos. Check out the entire list of cost estimates at Farmdoc: A 10th-generation agriculturist, Sierra Day grew up alongside the Angus cattle, corn and soybeans on her familys operation in Cerro Gordo, Ill. Labor costs per hour increased from $20.90 per hour in 2019 to $22.00 per hour in 2021 (see Table 1). A farmer evaluating costs and returns may consider whether to own specialized equipment for a tillage operation versus outsourcing the task. FIRM Team Fact Sheet Number . Labor time is assumed to be 1.1 times the tractor hour resulting in a 10% higher cost per tractor hour. If corn and soybeans prices fall, 2022 net farm incomes could be very low. Includes tractor overhead, implement overhead, fuel and lube and labor: Includes tractor overhead, platform overhead, fuel and lube, and labor: . A survey of agricultural custom operators is conducted in Nebraska every two years. Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, updated December 7, 2021. This program calculates Agricultural Risk Coverage for County Coverage (ARC-CO), Price Loss Coverage (PLC) payments, and ARC at the Individual Level (ARC-IC). Lattz, D. and G. Schnitkey. 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. If annual hours of use or the useful life were lower, the cost rates for interest, insurance and housing, and repairs would be higher. A December 2020 graduate of Kansas State University in Animal Sciences & Industry and Agricultural Communications & Journalism, Day was active in Block & Bridle and Agriculture Communicators of Tomorrow, while also serving as a communications student worker in the animal science department. Recently released crop budgets (farmdoc daily, August 4, 2020) project losses for corn and soybeans on Illinois farms, given current assumptions for 2021. 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. If you are figuring what it costs you to make hay on your farm, add mowing, raking, and baling at 20.20 per bale ( Machinery Cost Estimates, University of Illinois Extension, June 2015 ). Fuel costs will vary with each operations fuel use. Purdue University, Center for Commercial Agriculture, May 2017. The . Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, updated December 7, 2021. 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. Updated 2021 and 2022 projections are contained in two publications in the Management section of farmdoc. "Machinery Cost Estimates: Field Operations." Users can select the state, county, and crop combination that they wish to consider. More detail on the approaches used to estimate overhead costs are given in the Machinery Cost Estimates: Tractors publication. 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, Schnitkey, G., C. Zulauf, K. Swanson and N. Paulson.