Ohio Agricultural Lending Outlook: Fall 2018

Sources: Eric C. Davis, Robert Dinterman, and Ani L. Katchova
Farm Income Enhancement Program
Department of Agricultural, Environmental and Development Economics
The Ohio State University

Financial stress is a problem afflicting numerous Americans. The Financial Health Institute describes it as a “result of financial and/or economic events that create anxiety, worry, or a sense of scarcity”1. When trying to understand the level of financial stress that farmers are facing, the most tangible window through which to glimpse that condition is loan payments. By understanding whether or not farmers are able to make timely loan payments, one can know if farm income is sufficient to allow debts to be covered, and the most common way of doing this is by examining delinquency data, which is information that lending institutions report concerning the value of loans that are more than 90 days overdue. Read the full article by clicking on this link: Ag Lending Outlook FIE 2018-1mkmj88

Ohio State University Extension On-Farm Energy Demand Monitoring Project

Chris Zoller –Extension Educator, ANR & Eric Romich- Extension Field Specialist, Energy Education

Greater automation on farms has resulted in an increase in energy consumption on many farms. Due to increased electrical usage, many farms are now billed on a commercial rate structure. Unlike residential rates, which are based primarily on total energy usage measured in kilowatt hours (kWh), commercial accounts are also charged for the highest peak demand usage spike over a short time period measured in kilowatts (kW).

Ohio State University Extension secured grant funding to investigate how peak energy demand affects livestock facilities and, in turn, the manner by which farmers can implement energy management strategies, and make investments in equipment to minimize costs and promote long-term sustainability. We have equipment installed on six university and/or private swine and dairy farms across the state. Monitoring equipment installation was finalized earlier this year and we have begun collecting data from each cooperating farm. OSU Extension personnel involved in the project include Eric Romich, Tim Barnes, Rory Lewandowski, Eric Richer, Dale Ricker, and Chris Zoller.

While we are have not collected enough data to make any specific recommendations, we have a few months of data collected that has provided us the opportunity to make sure our monitoring equipment is functioning properly. As data is collected, it is shared with faculty and students in the Ohio State University College of Computer and Electrical Engineering. Students and faculty in the college analyze the data to develop a model that will help us interpret the findings.

Click Here to Access Full Report Which Shows Results

Observations

Many farmers are aware if they are on a demand rate. However, fewer farmers fully understand the details of how their demand charges are calculated including monthly measured demand formulas, power factor correction penalties, and if they are charged a minimum monthly demand based on seasonal spikes. These specific electric rate details greatly influence possible solution strategies.

Based on the preliminary data, there appears to be some motor loads that can be shifted (load shifting) to perform work during times when other critical motor loads are idle, thus reducing demand charges. Ultimately, energy management strategies to reduce demand cost will likely include a mixture of energy conservation, energy efficiency technologies, programmable logic controls and timers to preform load shifting, and possible on-site electric generation.

Summary

Obviously, farmers are interested in ways to reduce energy operational cost. However, before making investments in energy efficiency and renewable energy equipment, it is important to understand how you are charged for electricity. Some farms are still on residential electric rate tariffs and their bills are relatively easy to understand. However, because farms are using more electric, many farms are now on commercial electric rate tariffs that are more complex. Taking the time to investigate your rate tariff and analyze your consumption patterns will help you prioritize potential energy savings solutions, providing you the greatest return on your investment.

Ag Lender Seminars feature Federal Reserve Bank of Kansas City Economist

By Wm. Bruce Clevenger, Amanda Douridas & Rory Lewandowski, Extension Educators

The 2018 OSU Extension Agricultural Lender Seminars will feature keynote speaker, Courtney Cowley, Economist at the Federal Reserve Bank of Kansas City, Omaha, Nebraska.  Cowley will speak to each of the three regionally offered Ag Lender seminars scheduled in October 2018.  She will share her research and the role of the Federal Reserve Bank with her topic “Outlook for the U.S. Economy with Implications for the Ag Sector.”  Cortney Cowley is an economist in the Regional Affairs Department of the Federal Reserve Bank of Kansas City. Her current research focuses on agricultural finance, commodity markets, farm management, and natural resource economics and policy. Cowley’s responsibilities also include writing for the Tenth District Survey of Agricultural Credit Conditions and the Federal Reserve System’s Agricultural Finance Databook.    Cowley joined the Bank in 2015 after completing her Ph.D. in Agricultural Economics at Oklahoma State University. She also holds a B.S. degree in Biosystems Engineering from Oklahoma State and a M.S. degree in Civil Engineering from Colorado State University.

Additional speakers at each location include: Farm Policy & Commodity Outlook – Ben Brown, OSU CFAES, Farm Mgmt. Program Mgr.; Ohio Farm Economy & Production Economics – Barry Ward, OSU Extension, CFAES, Production Business Management; Dairy Production Economics – Dianne Shoemaker, OSU Extension, CFAES, Field Specialist; Hops, Barley & Ohio’s Specialty Crops – Brad Bergefurd, OSU Extension, CFAES, Extension Educator & Horticulture Specialist.

The three Ag Lender Seminars will be as follows:

Tuesday, October 16

Champaign Co. Community Center Auditorium

1512 South US Highway 68

Urbana, OH  43078

 

Wednesday, October 17

Putnam Co. Educational Service Center

Assembly Hall

124 Putnam Parkway

Ottawa, OH 45875

 

Thursday, October 18

Buckeye Agricultural Museum

877 West Old Lincoln Way

Wooster, OH 4469

Seminar programs begin promptly at 9:15 a.m. and conclude by 3:15 pm.  Registration information is available at: https://u.osu.edu/aglenderseminars/  or by contacting Bruce Clevenger, OSU Extension Educator, Defiance County at 419-782-4771 or clevenger.10@osu.edu.

OSU Extension conducts the seminars from input from Ag Lenders, County Extension Educators and Extension Specialists.  The seminars are designed to provide information that Ag Lenders will use directly with their customers, indirectly within the lending industry, and as professional development for current issues and trends in production agriculture.  OSU Extension has been offering Ag Lenders seminars for nearly 30 years.

 

 

Annie’s Project Course- Empowering Women in Agriculture

by: Jacqueline Kowalski & Robin Christensen, Extension Educators

 

 

OSU Extension in Summit and Portage Counties are teaming up to offer Annie’s Project from October 9th– November 13th, 2018. Annie’s project is a six-week program designed to address risk management education for farm women. Its objective is to educate women entrepreneurs so that they are more prepared to make farm management decisions. While a large number of farm women own and operate farms, others play a major role in the decision-making process of farm operations for farm families. Annie’s Project provides in-depth sessions on topics that are important for decision-making of the family farm. The program topics covered include human resources, legal risks, financial risks, marketing risks, and production costs and risks. Sessions are designed to be very interactive between the presenters and the participants. Information presented is tailored to meet the needs of participants in their own geographical areas.

Annie was a woman who grew up in a small rural community with the life-long goal of being involved in production agriculture. She spent her lifetime learning how to be an involved business partner with her husband, and together they reached their goals and achieved success. Annie’s daughter, Ruth Hambleton, a former Extension Educator for the University of Illinois, founded Annie’s Project in 2000 in honor of her mother. Annie’s Project is designed to take Annie’s life experiences and share them with other women in agriculture who are living and working in this complex, dynamic business environment. Additional details on Annie’s life can be found https://www.anniesproject.org/

The 6-week training will begin on Tuesday October 9th at 6:00pm, with dinner starting at 5:30pm. Registration is due October 5th, 2018. Classes will rotate between the Summit and Portage County Extension offices in Stow and Ravenna. The course fee is $100.

Please contact Robin Christensen with questions or for an application at 330-296-6432 or e-mail at Christensen.227@osu.edu

 

Consider Pros, Cons of Alternative Grain Storage Methods

by: Source: Chris Bruynis, OSU Extension Ross County

Farmers are faced with making some tough decisions this fall going into harvest. I am hearing there are large quantities of 2017’s crop still in storage in the local elevators which could lead to limited hours and inadequate storage for the 2018 large crop that is being harvested. Also there are pricing and basis concerns which clearly favor keeping the grain on the farm. These issues are making farmers scramble to find storage options and find them quick.

Ken Hellevang, North Dakota State University Extension agricultural engineer offers some advice that we need to think about when making this decision.  The important point is that all storage options should keep the grain dry and provide adequate aeration to control grain temperature. Grain must be dry and cool (near the average outdoor temperature) when placed in alternative storage facilities because providing adequate, uniform airflow to dry grain or cool grain coming from a dryer is not feasible.

Also farmers need to think about the structural issues of the building. Grain pushing against walls can damage buildings not built for grain storage. The wall must be anchored securely, and its structural members must be strong enough to transfer the force to the building poles or support structure without breaking or excessive bending. He suggests hiring an engineer to complete a structural analysis and follow the recommendations to reinforce the structure. The last thing farmers need is structural failure where we lose the grain and the structure.

Other option beside existing buildings could include poly bags, but it does not prevent mold growth in damp grain or insect infestations. Place grain in the bag at recommended storage moisture contents based on grain and outdoor temperatures during the potential storage period. Heating will occur if the grain exceeds a safe storage moisture content and it cannot be aerated to control heating. The average temperature of dry grain will follow the average outdoor temperature. If considering this option, select an elevated, well-drained site for the storage bags. Run the bags north and south so solar heating is similar on both sides. Sunshine on just one side heats that side, which can lead to moisture accumulation in the grain and spoilage on the cool side.

Grain covers over a pile could be an option as well, but site preparation might be costly. A combination of restraining straps and suction from the aeration system, when designed correctly, holds grain covers in place. This system can also provide adequate airflow through the grain to control grain temperature. Place perforated ducts on the grain under the cover to provide a controlled air intake for the aeration system and airflow near the cover to minimize condensation problems under the cover. Place properly sized and spaced ducts under the pile on the ground to pull air through the grain. Some storage options use a perforated wall for the air inlet.

For additional information and building specifications on alternative storage option go to https://www.ag.ndsu.edu/pubs/ageng/grainsto/ae84.pdf.

Net Farm Income Expected to Decline Again in 2018 After a Small Rebound Last Year

by: Ana Claudia Sant’Anna[1], Ani Katchova[2] and Ben Brown[3]

Department of Agricultural, Environmental, and Development Economics, The Ohio State University

Click here for full article with graphs

The United State Department of Agriculture (USDA), on August 30, forecasted U.S. net farm income for 2018 to decline 13% from last year, from $75.5 billion in 2017 to $65.7 billion in 2018 (USDA 2018). If realized, U.S. net farm income would decrease to levels witnessed in 2016 (Figure 1). This decline is even larger when we consider inflation-adjusted values, showing a 14.8% decrease in real U.S. net farm income. The USDA also made a similar downward forecast for U.S. net cash income. Net cash income is projected to drop 12% in 2018, from $104 billion in 2017 to $91.5 billion in 2018. These declines in farm income reverse the small rebound in income in 2017 to what would be the second lowest values in inflation-adjusted terms since 2002.

The latest USDA forecast did not consider or include payments made under the Market Facilitation Program (MFP) to producers in response to decreased prices, as a result of ongoing trade negotiations with several U.S. trading partners. A question which may arise is how MFP could change the forecast for U.S. net farm income. The MFP program is expected to make direct payments to farmers close to $4.7 billion with purchases of excess commodities of $1.2 billion and $200 million reserved for identifying new international markets through the Foreign Agricultural Service for an initial total of $6 billion on agricultural commodities (USDA, Sept. 2018). If trade negotiations continue to weigh on commodity prices, another payment of $4.7 billion could be released to U.S. producers later this fall. Considering that in the 2018 forecast, net government payments represented 7.8% of net farm income and that net government payments (i.e. government payments subtracted from federal taxes paid by producers) were negative (- $5.2 billion), an increase in government benefits could mean a smaller decline in net farm income than expected. Nevertheless the downturn in the farming sector, witnessed since 2013, would still be present.

The USDA also released the estimates for Ohio net farm income for 2017. Similar to the U.S. estimates from 2017, Ohio net farm income showed an increase after large declines since 2013 (Figure 1). In fact, net farm income in Ohio in 2017 was about 3 times larger than that of 2016 (from $0.4 billion to $1.3 billion). The concern, though, is that the 2018 Ohio farm income would experience a downturn similar to the forecast for the 2018 U.S. net farm income. Figure 1 illustrates how Ohio and U.S. net farm income have trended in the past. They seem to follow similar trends which may mean that Ohio net farm income would probably see a decrease in 2018 with respect to 2017.

Net farm income for Ohio dating back to 1949 shows that the Ohio farm sector is not doing as well as it was 5 years ago (Figure 2). Although the drop in net farm income witnessed in 2016 was not as low as that during the 80s farm crisis, it is still the lowest since the 1980s in real terms. In fact, since 2014 Ohio net farm income has been below the 69 year average of $2 billion in 2018 dollars (Figure 2). The length of time which Ohio net farm income remains below its long-term average is concerning. In the twenty first century, Ohio net farm income remained below the 69 year average a couple of periods, but the longest duration was for four years (2005 to 2008). Current statistics, though, point to 2018 possibly being the fifth consecutive year that Ohio net farm income is below the long-term average. Greater emphasis should be placed on the length of the downturn rather than the fact that net farm income in Ohio is not as low as it was during the farm crisis. These observations made for Ohio echoes those of Gloy and Widmar for the U.S. net farm income (Gloy and Widmar 2018)

 

References

Gloy, B. and Widmar, D. (2018, September 4). “After 2017 Rebound, Net Farm Income to fall in 2018”. Agricultural Economic Insights. Retrieved September 10, 2018, from: https://ageconomists.com/2018/09/04/after-rebounding-in-2017-net-farm-income-to-slump-in-2018/

United State Department of Agriculture (USDA), Economic Research Service (ERS). (2018). 2018 Farm Sector Income Forecast. Retrieved September 10, 2018, from https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/farm-sector-income-forecast/

United State Department of Agriculture (USDA). (2018, September 4). USDA Launches Trade Mitigation Programs [Press release]. Retrieved September 10, 2018, from https://www.usda.gov/media/press-releases/2018/09/04/usda-launches-trade-mitigation-programs

[1] Post-Doctoral researcher in the Farm Income Enhancement Program

[2] Associate Professor and Farm Income Enhancement Chair

[3] Program Manager for the Farm Management Program

World Supply and Demand Estimates for September 12, 2018

by Ben Brown, Program Manager- Farm Management Program College of Food, Agricultural, & Environmental Sciences  Department of Agricultural, Environmental, and Development Economics 2120 Fyffe Road, Columbus, OH 43210

614-688-8686 Office

brown.6888@osu.edu

USDA released their monthly supply and demand estimates today and similar to years past the September WASDE was an important one given its proximity to the end of harvest in the United States. This year’s September WASDE could have more influence on final yields compared to years past taking into consideration how quickly the crops are progressing. The crop progress report that came out earlier this week reported that corn completion is 2% further along than our five-year average- an adjustment from 3% to 5%. However, considering the majority of the corn production is located in the Midwest and Upper Plains, the percent of corn entering dent stage is important. USDA reports that 86% of the U.S. corn crop is in the dent stage compared to the 5-year average of 75%. For soybeans the percent of the U.S. crop dropping leaves is at 31% compared to the five-year average of 19%. Historically the October report has been the best indicator of final crop yields, but since 1964 when a crop is this far along there is significant correlation with the September yield forecasts.

As far as commodity prices received to producers, this was another WASDE to burn. However, producers will have to shake it off because while complaining about prices might make one feel better, it historically hasn’t changed the result. The yield forecast confirmed early reports by the Pro-Farmer Tour and Ohio Ag Net that this had the potential to be a record crop. The Pro-Farmer Tour had results of 177bu./acre for corn and 53bu./acre for soybeans for a national average. Ohio yields were 184 bu./ acre for corn and 60 bu./acre for soybeans. Both would be new yield records for Ohio beating previous records of 177 bu./acre for corn in 2017 and 54.5 bu./acre for soybeans in 2016. The Crop Production Report released today had an Ohio corn yield of 188 bu./acre and a Ohio soybean yield of 58 bu./acre. Multiplied by expected harvested acreage, this would be Ohio’s second largest corn crop and largest soybean crop in terms of production. Total U.S. yields were 181.3 bu./acre for corn and 52.8 bu./acre for soybeans.

Preventive plant numbers and failed acreage reports filed through USDA have to this point been lower than the 5-year average. It is likely that the harvested acreage estimates won’t move much through the remainder of the growing season, which leaves yield as the determining factor for total production. Total corn production is estimated at 14,827 billion bushels. Total soybean production is estimated at 4,693 billion bushels. That’s a lot of grain to store and sell. Some farmers or cooperatives will have a blank space and they will probably use it to pile corn, given the large size of both crops and significant carry over from 2017.

Moving to the demand side, export numbers for soybeans would suggest the there is some bad blood in the water between the United States and China and develops the question “will the U.S. and China ever get back together”. Trade theory would suggest that the U.S. price will either be bid lower on excess supply and weakened demand or the rest of the world price (mainly large exporters like Brazil) will be bid higher on stronger demand for their product until the U.S. price plus the tariff is equal to the Brazilian price. With an additional 25% Chinese tariff on U.S. soybeans, that would mean that the U.S. soybean price will would need to be 80% of the rest of the world price (i.e. Brazil) for the two prices to be substitutable to Chinese buyers. That wedge as of today sits at 83%, meaning that the Brazil price is still not high enough or the U.S. price has not hit it’s floor yet. Sorry for the bad news.

Due to the higher world price, Chinese, Brazilian and European producers are getting the signal to produce more product. Similarly, Chinese consumers are getting the signal to consume less. This creates a decrease in the amount of soybean imports for China, holding everything else constant.

Looking at the May WASDE, which in this case represents the before tariff estimates and the September WADE, which represents post tariff estimates we can draw conclusions about use. Chinese soybean production in the September WASDE is increased from the May WASDE by 6%, and their imports of soybeans are decreased by 9 million metric tons or 8.7%. This follows the logic in the paragraph above.

Time for some good news. As expected, a lower commodity price will spur domestic use. Corn ethanol production is up 50 million metric tons compared to a year ago and finally we are seeing increases in the feed and residual use value- up 125 million bushels from 2017. This value was also increased 50 million bushels from the August report. Exports for the 2018 crop are still down from 2017, but raised from the August report on strong growth in sales to Egypt, Columbia, and Mexico.

Soybean use, shows a 15 million bushel increase in crush- driven by profit margin of soybean oil. Bio-diesel is increased 800 million pounds on the resulting increase in soybean oil. It’s like a peanut butter sandwich- to get a sandwich, one need equal parts of peanut butter and jelly. For soybeans, increased crushing to get more soybean oil also produces more soybean meal. The increase in soybean meal pushes down meal prices and a decrease of $20/ short ton is represented in the WASDE report. Soybean export continue to be stronger than normal right now to countries not named China. This increase in exports is not expected to continue through the remainder of the marketing year. Soybean export estimates have been reduced 70 million bushels compared to a year ago, even with the record crop.

Total soybean use is reduced to 24,200 million bushels and ending stocks are increased to 845 million bushels. For corn, total use is increased to 15,105 million bushels, but not enough to counter the large production, as ending stocks are also increased to 1,774 million bushels.

The markets were expecting corn production around 14.5 billion bushels. The larger than expected corn crop pushed futures prices lower today. December corn futures reached their lowest levels of their existence settling at $3.52/bu. November soybean futures traded sideways as the increase in production was close to expectation. The season marketing average for corn is now projected at $3.50/bu. and for soybeans at $8.60/bu. As a reminder the season marketing period for both corn and soybeans is September 1, 2018- August 31, 2019.

Grain marketing this winter and early spring will be tough for producers, because the low prices are expected to continue. Any talk of a resolution to the trade situation has been a positive sign to markets and one could expect that if resolved could send corn and soybean prices significantly above current futures prices. However, a large South American crop this winter followed by another above trend U.S. crop would possibly send U.S. prices to their lowest levels since the early 2000s. It’s completely their choice, but personally- I’d rather be safe than sorry.

 

Ohio Farm Custom Rates 2018

by: Barry Ward, Leader, Production Business Management OSU Extension, Agriculture and Natural Resources and John Barker, Extension Educator Agriculture/Amos Program Ohio State University Extension Knox County

Farming is a complex business and many Ohio farmers utilize outside assistance for specific farm-related work. This option is appealing for tasks requiring specialized equipment or technical expertise. Often, having someone else with specialized tools perform a tasks is more cost effective and saves time. Farm work completed by others is often referred to as “custom farm work” or more simply, “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.

Ohio Farm Custom Rates

This survey summary reports custom rates based on a statewide survey of 352 farmers, custom operators, farm managers, and landowners conducted in 2018. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine, etc., and the labor for the operation.

Some custom rates published in this study vary widely, possibly influenced by:

  • Type or size of equipment used (e.g. 20-shank chisel plow versus a 9-shank)
  • Size and shape of fields,
  • Condition of the crop (for harvesting operations)
  • Skill level of labor
  • Amount of labor needed in relation to the equipment capabilities
  • Cost margin differences for full-time custom operators compared to farmers supplementing current income

Some custom rates reflect discounted rates as the parties involved have family relationships or are strengthening a relationship to help secure the custom farmed land in a cash or other rental agreement. Some providers charge differently because they are simply attempting to spread their fixed costs over more acreage to decrease fixed costs per acre and are willing to forgo complete cost recovery.

The measures shown in the summary tables of the survey respondents. The measures are the average (or mean), standard deviation (a statistical measure of variability of the responses), range, median, minimum, and maximum. Average custom rates reported in this publication are a simple average of all the survey responses. Range identified in the tables consists of two numbers. The first is the average plus the standard deviation, which is the variability of the data from the average measure. The second number of the range is the average minus the standard deviation. The median represents the middle value in the survey responses. The minimum and maximum reported in the table are the minimum and maximum amounts reported from the survey data for a given custom operation.

Charges may be added if the custom provider considers a job abnormal such as distance from the operator’s base location, difficulty of terrain, amount of product or labor involved with the operation, or other special requirements of the custom work customer.

As a custom provider, the average rates reported in this publication may not cover total costs for performing the custom service. As a customer, you may not be able to hire a custom service for the average rate published. Calculate your own costs carefully before determining the rate to charge or pay.

The complete summary of Ohio Farm Custom Rates is available online at the Farmoffice website:

https://farmoffice.osu.edu/farm-management-tools/custom-rates-and-machinery-costs

Grants and Low-Interest Loans for Ohio Small Farms

by: Eric Barrett, Assistant Professor

Are you looking for funding for a new venture on the farm? Are you interested in doing a research project to try something new on your farm?

OSU Extension has a new factsheet on Ohioline.osu.edu to help you find funding sources that match the ideas you have for your farm. The most difficult part of preparing to apply for these programs is developing a business plan. The factsheet includes information on where to get help with a business plan and where to find enterprise budgets to help develop the plan. The OSU South Centers has a website with templates and other information, a Small Business Toolbox to help you get your plan down on paper. The toolbox is located at: http://go.osu.edu/plans.

Grants to support current farming operations are difficult to find, but more available when it comes to trying a new idea. Most grant programs offer funding for research ideas, new ventures on the farm and ways to add value to products grown or produced on the farm. Many Ohio farmers have found the USDA Sustainable Agriculture Grant Program to be a fruitful funding opportunity for project ideas.

Low interest loan programs support all types of family farming operations. The factsheet explains types of loans and gives examples of where to start the search. One example is the AgriLink Deposit Program through the Ohio Treasurer’s Office that helps Ohio farmers get a lower interest rate by partnering with local banks.

The factsheet includes the names and information to use in internet searches to find the right program fits the needs of your farming operation and your ideas.

For complete details, you can read the factsheet at:

http://go.osu.edu/grantsloans

Ohio Farm Custom Rates 2018

Part 1: Soil Preparation, Fertilizer Application, Spraying Pesticides, Mechanical Weed Control, Aerial Applications, Planting Operations, Harvest Operations, Grain Drying and Storage, Hay Harvest

by: Barry Ward, Leader, Production Business Management, Department of Agricultural, Environmental and Development Economics & John Barker, Extension Educator Agriculture/Amos Program, County Director, Ohio State University Extension Knox County

Farming is a complex business and many Ohio farmers utilize outside assistance for specific farm-related work. This option is appealing for tasks requiring specialized equipment or technical expertise. Often, having someone else with specialized tools perform a tasks is more cost effective and saves time. Farm work completed by others is often referred to as “custom farm work” or more simply, “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.

Ohio Farm Custom Rates

This survey summary reports custom rates based on a statewide survey of 352 farmers, custom operators, farm managers, and landowners conducted in 2018. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine, etc., and the labor for the operation.

Some custom rates published in this study vary widely, possibly influenced by:

  • Type or size of equipment used (e.g. 20-shank chisel plow versus a 6-shank)
  • Size and shape of fields,
  • Condition of the crop (for harvesting operations)
  • Skill level of labor
  • Amount of labor needed in relation to the equipment capabilities
  • Cost margin differences for full-time custom operators compared to farmers supplementing current income

Some custom rates reflect discounted rates as the parties involved have family relationships or are strengthening a relationship to help secure the custom farmed land in a cash or other rental agreement. Some providers charge differently because they are simply attempting to spread their fixed costs over more acreage to decrease fixed costs per acre and are willing to forgo complete cost recovery.

The measures shown in the summary tables are the summaries of the survey respondents. The measures are the average (or mean), range, median, minimum, and maximum. Average custom rates reported in this publication are a simple average of all the survey responses. Range identified in the tables consists of two numbers. The first is the average plus the standard deviation, which is the variability of the data from the average measure. The second number of the range is the average minus the standard deviation. The median represents the middle value in the survey responses. The minimum and maximum reported in the table are the minimum and maximum amounts reported from the survey data for a given custom operation.

The complete summary of part 1 is available online at the Farmoffice website:

https://farmoffice.osu.edu/farm-management-tools/custom-rates-and-machinery-costs