Experts predict farm custom rates likely to remain steady for 2021

Due to the high cost of investment in farm machinery, an ever-increasing number of farm operators are hiring other farm operators to provide some or all of their machinery resources for their farm operation. This is especially true with new and younger farm operators, as well as with children that decide to start farming with their parents. In addition, some land investors are choosing to operate a farm themselves rather than cash renting the land to another farm operator, thus hiring a farm operator under a custom farming agreement.
Custom farming agreements usually include tillage, planting, some weed control, harvesting, and delivering grain to a specified location. Some farm operators also hire custom work for specific farm operations with another farm operator, such as planting, combining, or hay baling. Many farm operators negotiate these types of custom rate and custom farming arrangements in the spring of the year, while others wait until harvest is completed.
One of the best resources for average custom rates is the annual “Iowa Farm Custom Rate Survey” that is coordinated and analyzed by Iowa State University. Earlier this year, 559 custom operators and farm managers were sampled regarding expected 2021 custom farm rates for various farm operations. The survey summary lists the average custom rate, as well as a range, for various tillage, planting, fertilizer and chemical application, grain harvesting, and forage harvesting functions on the farm. The survey also includes many miscellaneous farming practices, average per hour farm labor rates, and includes a formula for calculating rental rates.
The survey lists the average custom farming rates for corn, soybeans, and small grain. The average custom rates for farm operations in most other areas of the Upper Midwest tend to be very close to the average Iowa custom rates.
Average 2021 farm custom rates for some typical tillage, planting, and harvesting practices, as well as custom farming rates, are listed in the adjoining table. The complete 2021 “Iowa Farm Custom Rate Survey” for all farming practices is available online at the following Iowa State University website:   
https://www.extension.iastate.edu/agdm/crops/html/a3-10.html
Based on the Iowa State data, average custom rates for tillage, planting, and harvest operations in 2021 are expected to decrease by about 3 percent, compared to the rates for similar operations in 2020. The custom farming rates for corn and soybean production are expected to decrease by about 1 percent compared to a year earlier.
The cost for new and used machinery has increased rapidly in the early months of 2021, which together with increasing fuel costs and higher labor charges, may impact final 2021 custom rates. These factors may result in custom operators trying to more fully cover their increasing expenses for custom operations later in 2021, resulting in steady to slightly higher final average custom rates by year-end.
All listed custom rates in the Iowa Survey results include fuel, labor, repairs, depreciation, insurance and interest, unless listed as rental rates or otherwise specified. The average price for diesel fuel was assumed to be $2.71 per gallon. A fuel price increase of $.50 per gallon would cause most custom rates to increase by approximately five percent.
These average rates are only meant to be a guide for custom rates, as actual custom rates charged may vary depending on continued increase in fuel costs, availability of custom operators, timeliness, field size, etc. and could be adjusted later in the year due to changes in economic factors.
For additional information contact Kent Thiesse, Farm Management Analyst and Sr. Vice President, MinnStar Bank, Lake Crystal, MN.  Phone: 507- 381-7960. Email: kent.thiesse@minnstarbank.com)  Website: http://www.minnstarbank.com/