Custom Farm Work Rates on North Dakota Farms, 2004, by North Dakota Farming Regions

EC-499 (Revised), January 2005
Dwight Aakre, Farm Management Economist

Click here for an Adobe Acrobat PDF file suitable for printing. (97KB)

The U.S. Department of Agriculture's North Dakota Agricultural Statistics Service, Fargo, in cooperation with the North Dakota State University Extension Service and the Agricultural Experiment Station, conducted a survey of custom operators in North Dakota in 2004. Survey data for 2004 is summarized for the state as a whole and by four farming regions. This publication shows the number of reports, the range in rates, the most frequently reported rate and the average rate for each operation. For some operations, data are not broken down by regions.

Custom rates include charges for the equipment, tractor or power unit used, fuel, repairs and the operator. Rates vary because of supply and demand and differences in soil type, topography, size and shape of field, and costs of custom operators. Exchange work between farms is not considered custom work. However, some of the low rates may represent charges by a farmer who did custom work for a neighbor. Custom operators who perform these operations as a main source of income likely would trend toward the higher rates of the range to cover operating costs and a return on investment, labor and management.

These rates are published as a guide in establishing rates for custom work, comparing ownership or leasing costs with custom work, and for settling accounts when two or more people swap work.

Assistance in helping determine a fair custom rate may be obtained from county Extension agents or Extension Service specialists at North Dakota State University.

New for 2004

Custom operations for which data was collected for the first time include land rolling, no-till drilling, row-crop planting with an air seeder, shredding corn stalks and building multistrand wire fence. Rental rates for grain storage and machinery storage have been added to this survey as well.

Custom Rates Compared to Ownership and Operating Costs

Custom rates should not be confused with the cost of owning and operating farm machinery. Presumably, custom rates are set with knowledge of the true cost of owning and operating machinery. In practice, this is not always the case. For example, the average custom rate reported for field cultivation is $5.15, while an economic engineering approach suggests a cost of $3.38 per acre. Likewise, the average custom rate for combining soybeans is $18.22, while the cost estimate is $22.94.

Custom rates represent a market-derived price. They reflect the supply of and demand for the services rendered, which include the use of the machine, power, fuel, repairs and the operator. Custom rates are to machinery services as market prices are to commodities. Custom rates may deviate from the cost of machinery ownership and operation, just as the market price for commodities deviates from the cost of producing the commodity.

Ownership and operation costs represent an accounting of all the resources used. These costs include depreciation, interest, repairs, fuel, taxes, insurance, housing and labor. Supply and demand will impact the price paid for machinery, which then will affect the ownership costs. However, once a machine has been purchased, the ownership cost becomes fixed relative to the life of that machine.

Survey Summary

The custom rate survey is conducted every third year. The 2004 survey, conducted in two parts, summarized more than 4,700 reports from farmers and ranchers, aerial sprayers, elevators, custom harvesters and other custom operators. The average rates reported in the previous survey (2001) are included for comparison. Most rates have increased since the last survey; however, the increase is quite variable.

Click here for a pdf file with the survey tables. (97KB)

For more information on this and other topics, see: www.ag.ndsu.edu