March 28, 2007 | By: Laura Skillman
LEXINGTON, KY.

Some farmers turn to others to help with specific farm work such as baling hay or combining grain, while other farmers do custom work to help add to their farm income. So where do farmers go to find out how much it will cost to hire a specific service? Or, if they want to make extra money themselves doing custom work, how do they know how much income to expect? 

Those are questions Greg Halich, farm management specialist with the University of Kentucky College of Agriculture, sought to answer recently by compiling custom machinery rate data. Halich found 10-year-old Kentucky figures that were more cost analyses, so to provide the state’s farmers with more current and applicable figures, he compiled survey information from Indiana, Illinois, Ohio, Iowa and Kansas. The rates he has calculated are averages for these combined states and are adjusted for differences in fuel price, machinery costs and wages at the time of the reported surveys. Adjusted data is available on 64 grain crop operation tasks, 44 hay operations, 34 miscellaneous operations and 72 unadjusted rates for miscellaneous operations.

“The stimuli for doing this came both from county extension agents and from farmers who where looking for custom rates for Kentucky,” he said. “So the need was there, but there was no time to do it (a state survey) before spring planting. There were a lot of other surveys that were applicable to Kentucky conditions, so why not utilize them in some fashion? So, I came up with the idea of averaging the other surveys and modifying them for differences.”

To account for differences in efficiency and market conditions, Halich’s report shows not only the average adjusted rate of the five states but also gives a rate 15 percent below that and 30 percent above it. These three rates are presented to provide a range of rates that are likely to occur in the state. 

The data is designed to provide a baseline for estimating reasonable custom machinery rates in Kentucky, he said. Actual custom rates are determined based on supply and demand within a localized market and can vary substantially. That is the main reason for the range of rates and these estimates should not be used to set rates for any area, he said.

One important note is that the majority of the original survey respondents in the five states are likely to be large operators in the grain belt, Halich said. “So, the average rate presented in the Kentucky report for grain-related activities are most suited to western Kentucky. Farmers in central and eastern Kentucky may want to adjust rates upward.

“Also, county agents have told me that in counties that are more urbanized and you have a lot more smaller farms, the activities are going to be higher than in other areas,” he said. “That’s why I wanted to go with the range in rates.”

The custom machinery rate data compiled by Halich is available on the Department of Agricultural Economics Web site at http://www.uky.edu/Ag/AgEcon/pubs/ext_aec/2007-01.pdf.

Contact: 

Greg Halich, 859-257-8841