Crops > Machinery > Custom Operations

Higher fuel prices boost custom farming costs

AgDM Newsletter
July 2008

Adjusting custom machinery rates for increasing fuel prices has been a difficult problem this year. In the 2008 Iowa Farm Custom Rate Survey, Iowa State University Extension economists suggested that respondents assume that diesel fuel would cost an average of $2.75 per gallon delivered to the farm. However, fuel prices have increased considerably since then. 

If diesel fuel is assumed to cost $4.00 per gallon today instead of $2.75, the total cost of performing tillage operations will increase by 10 to 15 percent, depending on the depth at which soil is tilled. Costs for less power intensive operations such as planting, spraying, and harvesting will increase by 7 to 10 percent.

Another way to adjust custom rates is to use Information File A3-27, Fuel Required for Field Operations, which contains estimated fuel consumption values per acre for many common operations. Multiplying the fuel used per acre by the change in the price of fuel since the survey was conducted can provide an estimate of the most recent cost increases per acre. 

Alternatively, custom operators can keep a record of the actual fuel they use for specific operations, or the person hiring the work done can provide the necessary fuel.

 

William Edwards, retired economist. Questions?