Extension News

Higher Fuel Prices Boost Custom Farming Costs

5/29/2008

AMES, Iowa – Rapid increases in the cost of fuel used by Iowa farmers are creating difficult problems during this planting season, according to William Edwards, professor of economics and extension farm management specialist at Iowa State University.

 

Farm operators and providers of farm services are facing challenges in adjusting custom machinery rates for to reflect changes in fuel prices.

 

ISU Extension’s 2008 Iowa Farm Custom Rate Survey, which is directed by Edwards, suggested that respondents assume that diesel fuel would cost an average of $2.75 per gallon delivered to the farm when figuring a fair price for custom farm work this year.  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, Edwards said. 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 ISU Extension publication PM 709, “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. 

 

This publication and the 2008 Iowa Farm Custom Rate Survey are available at  ISU Extension county offices, from the ISU Extension Online Store (https://www.extension.iastate.edu/store/,  (515) 294-5247, e-mail pubdist@iastate.edu) or as an information file on the Ag Decision Maker Web site (www.extension.iastate.edu/agdm/).

 

As alternatives to using survey data, Edwards said 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.

 

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Contacts :

William Edwards, Economics, (515) 294-6161, wedwards@iastate.edu

Del Marks, Communications and External Relations, (515) 294-9807, delmarks@iastate.edu