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Fuel prices lead custom rates higher

Jeff Caldwell 03/23/2011 @ 7:47am Multimedia Editor for Agriculture.com and Successful Farming magazine.

Surging fuel prices are the driving factor behind custom farming rates that, according to one Iowa survey, will be another 5% higher this year than 2010.

This last winter, when Iowa State University (ISU) Extension economists conducted the annual Iowa Farm Custom Rate Survey, ISU economist William Edwards says the diesel price assumed was around $2.75 per gallon. Since then, diesel's continued to stack on gains, to where this week, the U.S. Energy Information Administration (EIA) pegged the average diesel price for the Midwest at $3.85 per gallon (for highway diesel).

That rise, Edwards says, has average custom farming rates surging, too; for example, custom corn combining is pegged to exceed $30/acre for the first time for the 2011 crop. "Fuel prices have soared this winter, causing many custom operators to increase their rates from last year," Edwards says.


This year's survey, Edwards says, takes into account more new technology, tools and operations in the field, including seed shut-offs on planters, silage bagging and generator rental. While the numbers should represent the average prices paid for custom work this year, Edwards says local conditions should be taken into account when reaching a custom rate agreement.

"There are many reasons why the rate charged in a particular situation should be above or below the average. These include the timeliness with which operations are performed, quality and special features of the machine, operator skill, size and shape of fields, number of acres contracted, and the condition of the crop for harvesting," Edwards says. "The availability of custom operators in a given area will also affect rates."

   

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