While profit margins are expected to be tight this year, money spent on getting the crop planted timely and efficiently is money well spent.
The wet weather and saturated soils have delayed normal spring planting preparations such as field work and or burn down applications for many parts of the Southeast. This could start to compress the crop planting into a smaller window than we would like. Discussions with producers in Tennessee indicate an increased interest in having some aspect of the cropping operation custom farmed.
How much to pay or how much to charge is the question that I generally get on custom planting. I like to look at our budgeted cost for the operation as well as what custom rate guides indicate the going rate is.
For the budgeted cost, The UT Extension budgets use $12.68 per acre of total cost for a 16-row planter suitable for corn or soybeans. We also have $16.28 for a 12-row cotton planter. A word of caution, our budgets and most university budgets generate fixed cost calculations based on hours of use and the useful life of the machinery. So the more hours on a machine the less the fixed cost is while lower hours generate a higher fixed cost.
I tend to give more weight to custom rate guides in determining a fair cost for planting. Custom rates are somewhat like cash cropland rent, the market generally determines the going rate. In this case the market is what producers are paying or receiving for custom planting in a particular area. Since these costs are not easily discoverable, I use the most current custom rate guides available.
The University of Kentucky Custom Machinery Rate for 2015 is a very useful publication as it compiles custom rates from 6 states (more observations) and adjusts them to an average on-farm diesel fuel price which for 2015 is $2.50 a gallon. This guide by Dr. Greg Halich uses a range of rates to account for efficiency and market conditions in an area.
This guide on the average for conventional corn and soybean planting has a rate of $16 per acre with a rate of $18.50 per acre for planting with fertilizer/chemicals. No-till planting rates are $16.50 acre for 15 inch row soybeans, $17.50 acre for 30 inch row soybeans and corn and $19.00 acre for corn planting with fertilizer attachments.
Another useful guide is one from Iowa State. While this guide’s fuel adjusted rates are included in the Kentucky guide, the Iowa State guide does offer some additional specifics that I think should be noted. These include an additional rate for the use of a seed tender at $3.75 acre; seed shut-offs at $2.70 acre; and variable rate seeding at $3.15 acre.
Cost depends on crop and attachments
Planting is of course a critical component of a farm’s operation. Getting the crop off to a good to excellent start is necessary for maximum economic yields. Weather conditions and other factors will certainly also influence production, but if the crop doesn’t get a good start then producers will have to try to catch up. That is usually difficult to do.
Having a portion of the crop custom planting may allow producers to get a crop planted timely, planted efficiently, and planted using the latest equipment and technology. Custom planting is only as good as the one doing the planting, but most producers either know or can find out how well a job a custom operator is capable of doing.
From the custom rate guides, the cost of custom planting depending on the crop and attachments ranges from $16 - $19 per acre. Additionally, use of seed tenders, automatic shut offs, and variable rate seeding will increase rates $3-$4 per acre. Allowances should be made for distance to the field and for the number of acres planted. A travel fee might be considered if that is a factor and rates can be adjusted up or down depending on the acreage.
Custom planting may also allow producers who have time and the available equipment the opportunity to generate some additional income and spread out the cost of equipment and labor. Since the custom rate guides list rates higher than our budgets, I would look closer at the custom rate guide numbers. Producers helping out a family member or neighbor might just want to recover their cost so in that case the budgeted cost would be of interest.