This publication presents crop budgets for three regions in Illinois: northern, central, and southern Illinois. This publication shows estimated costs of performing agricultural field operations. When comparing total machinery costs to custom hire charges, it is particularly important to include labor costs. Total non-land costs are projected at $755 per acre for corn, a $124 increase over the $631 per acres cost in 2021 (see Table 1). Both corn and soybean costs will be at record levels. For a detailed statement, please see the University of Illinois Copyright Information and Policies here. 2017 Indiana Farm Custom Rates." An active member of organizations such as 4-H, FFA and the National Junior Angus Association, she was able to show Angus cattle on the local, state and national levels while participating in contests and leadership opportunities that were presented through these programs. Though this information is very useful when establishing custom rates, it is prudent to compare your farm machinery costs per acre to custom rates. Fuel use on a 310 horsepower tractor is estimated at 13.6 gallons per hour. farmdoc daily (11):147, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 26, 2021. . Crop Insurance Summary of Business Tool (Sheet), Post Application Coverage Endorsement Tool (Sheet), Balance Sheet & Historical Financial Statements, Post Application Coverage Endorsement Tool, Biomass Crop Budget Tool Miscanthus and Switchgrass, Illinois Soil Productivity and Yield Utilities, Illinois Crop Budgets and Historic Returns, A Straight-Forward Structure for a Variable Cash Rent, The Agriculture Improvement Act of 2018: Initial Review, The Price Loss Coverage (PLC) Option in the 2018 Farm Bill, The Agricultural Risk Coverage County Level (ARC-CO) Option in the 2018 Farm Bill, The Case for Looking at the ARC-IC (ARC-Individual) Program Option, ARC-IC in 2019: Release of a 2019 ARC-IC Payment Calculator, Gardner Program Payment Calculator (ARC/PLC), Benchmarking Crop Machinery Cost and Investment, Comparing Machinery Values on Illinois Grain Farms, Revenue and Costs for Illinois Grain Crops, 2021 Cost to Produce Corn and Soybeans in Illinois, When Creating 2023 Crop Budgets, Keep in Mind Family Living Costs, Projected Wheat Double-Crop Soybean Profitability in 2023, April Update to 2022 Crop Budgets: Projected Profits Even with Record Costs, 2020 Cost to Produce Corn and Soybeans in Illinois, Index Numbers of Illinois Farmland Values, Experience, Knowledge, & Collaboration: Why Good Managers Make an Effort to Improve, A Deeper Dive into the February 2023 CBO Baseline: Title I Commodities Programs, Trends in the Operational Efficiency of the U.S. Ethanol Industry: 2022 Update, Fertilizer Prices and Company Profits Going into Spring 2023, RP vs. RP-HPE Insurance Decision: Premium, Cash Flow, and Forward Contracting, The Russia-Ukraine War and Changes in Ukraine Corn and Wheat Supply: Impacts on Global Agricultural Markets, Fixed Cash Rent Lease Form Short Form PDF, Soil Health and Conservation Addendum PDF, October 31 is Notice Deadline for Many Farm Leases, Financial Characteritics of Illinois Farms, Credit Reports and Consumer Credit Scoring, Summary of Illinois Farm Business Records, Farm and Family Living Income and Expenses, 2023 and 2024 Effective Reference Prices and the Next Farm Bill, Mulling over Margin, Part 5: An Inherent Problem with Margin Protection Programs, Mulling over Margin, Part 4: Lessons from Canadas Whole-farm Margin Protection Program, PLC and ARC Payment: 2021 Payments and Outlook for 2022 and 2023, Mulling Over Margin, Part 3: Chasing the Cost of Production Across Regions, Mulling Over Margin, Part 2: the Elusive Cost of Production, A 2022 Review of the Farm Bill: Economic Perspectives on Title I Commodities, Reviewing the Latest CBO Farm Bill Baseline, Mapping the Farm Bill: Reviewing the CRP; Law, Land & History, 2021 Corn and Soybean Yields: Implications for Crop Insurance and Commodity Title payments, Department of Agricultural and Consumer Economics. To fully obtain the benefits of reduced tillage passes, the pieces of equipment on a farm must be reduced. The "Ohio Farm Custom Rates 2022" publication reports custom rates based on a statewide survey of 223 farmers, custom operators, farm managers, and landowners conducted in 2022. Plastina, Alejandro and Ann Johanns. Here, a look at cost estimates of field, forage and harvesting operations, plus per-hour tractor operating costs. Substantial increases in list prices of machinery occurred between 2019 and 2021. The list price increase will also increase costs but is countered by a decline in interest rates from 5.5% in 2019 to 4.5% in 2021. At this point, those historical relationships suggest much lower prices than are being offered by CME futures contracts. University of Illinois ag economists publish machinery costestimates intended to represent the actual costs associated with individual farm field operations, which can provide a baseline for setting a custom rate to ensure that costs are covered. Fuel costs are based on a $2.25 per gallon price for diesel fuel. Represents the rate obtained from surveys of actual farm data surveys for 2014 & 2015 from Universities listed below to do this type of . Illinois Farm Management Handbook. Oklahoma Farm and Ranch Custom Rates, 20212022. Corn prices have been increased from $5.30 per bushel in August, In 2021, the total noncapital living expenses of 1,213 farm families enrolled in the Illinois Farm Business Farm Management Association (FBFM) averaged $85,828or about $7,200 a month for each family, In the August version of the 2023 Illinois Crop Budgets, wheat plus double-crop soybean is projected to be much more profitable than stand-alone corn and stand-alone soybeans in southern Illinois., Illinois crop budgets for 2022 have been revised from their December release (farmdoc daily, December 7, 2021). The alternative farmdoc forecast and USDA forecast are heavily based on historical supply/demand conditions. Farm Progress is part of the Informa Markets Division of Informa PLC. Labor cost reflect machine time, time required to lubricate and service machines, and travel time. farmdoc daily (9):144, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 6, 2019. Similarly, soybean non-land costs are projected at $476 per acre, a $101 per acre increase over the 2021 level.
Declines in natural gas and corn prices likely have led to nitrogen fertilizer price declines. The information in table 1 was used to help compute the total machinery costs for field cultivation on the case farm in table 2. Plastina, A., A. Johanns and O. Massman. These estimates are useful for determining custom rates and for analyzing machinery costs on farms. Custom hay mowing and baling are common in parts of Indiana where people have small patches of hay but don't want to own the equipment needed to mow, rake and bale hay themselves. The cost with the largest increase is fertilizer. Acres farmed, annual hours, useful life, and interest rate represent those of the case farm. A chisel plow in that size range would be cost effective to own and operate on 735 acres. Consider outsourcing certain field tillage passes. The reference price escalator was introduced in the 2018 Farm Bill and uses effective reference prices to calculate Price Loss Coverage (PLC) payments. Similar results for northern Illinois, central Illinois low-productivity farmland, and southern Illinois are available in the Revenue and Costs for Illinois Grain Crops publication. Due to the fuel price increases, fuel costs for the 310 horsepower tractor increased from $37.30 per hour in 2019 to $41.10 per hour in 2021 (see Table 1). Machinery Cost Estimates: Forage Field Operations. Illinois Farm Management Handbook, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, updated October 11, 2021. Disclaimer: We request all readers, electronic media and others follow our citation guidelines when re-posting articles from farmdoc daily. CUSTOM FARMING: Looking at arranging custom farming on your operation? These estimates are useful for determining custom rates and for analyzing machinery costs on farms. Trends in Table 1 for high-productivity farmland also occur across regions. Much uncertainty exists concerning fertilizer prices moving into spring. '/|@@q]H? l
University of Illinois Extension, Farm Business Management, June 2017 (a). farmdoc daily (10):147, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 11, 2020. Depending on your situation, you may want to consider the following spraying and ammonia application total costs from 2019: Liquid fertilizer applicator at $23.50 per acre. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. These returns are at record levels and will result in very high incomes in 2021. Disclaimer: We request all readers, electronic media and others follow our citation guidelines when re-posting articles from farmdoc daily. Follow these social media channels for updates onfarmdoc dailyarticles,farmdocevents, and ag information from Ryan Hanrahan thefarmdocsocial media director. Much uncertainty exists about all three prices levels, and it is likely that there will be changes in prices moving into the spring planting season. Farm Progress Show annually hosts more than 600 exhibitors displaying new farm equipment, tractors, combines and farm implements; seed and crop protection products; and many additional farm supplies and services. The salvage value for the self-propelled sprayer is assumed to be 30 percent of the purchase price. As part of a forthcoming Farm Bill, Congress may consider changes to farm programs to incorporate margins, expected to be defined as the difference between a, Note: This article is based on testimony given before the House Agricultural Committee Subcommittee on General Farm Commodities and Risk Management on June 9, 2022. Some cash rents will not increase, while others will have much larger increases than $25 per acre. "Estimating Farm Machinery Costs." Between 2019 and 2021, the list price on a 310 HP tractor increased by 9.1% from $410,256 in 2019 to $447,479 in 2021. Effective reference prices can exceed statutory reference, High farm input costs, especially for fertilizer and fuel, have reinvigorated arguments for farm support programs where payments are triggered when the cost of production rises. These costs are heavily dependent on annual hours of use and useful life. Fuel costs will vary with each operations fuel use. Machinery Costs; Finance; Illinois Crop Budgets and Historic Returns; . It contains averages of several different university survey results on rates paid for farm custom machinery work. Improvement in outlook could come from higher prices, above trend yields without lower prices, additional government aid, cuts in costs, or some combination of those. Projected costs have been raised for 2022, and corn and soybean costs are. The duo strives to raise functional cattle that are show ring quality and a solid foundation for building anyones herd. Machinery ownership and labor can be costly. 1 Min Read. Estimated machinery costs often are used in setting custom rates where one individual performs a field operation for another individual. Depreciation results from wear, obsolescence, and machine age. Suffice it to say, there is considerable downside risk in the market, and lower prices will result in much lower revenues and returns. Fuel costs are based on a $2.25 per gallon price for diesel fuel. Depreciation for tax purposes is often accelerated compared to economic depreciation. This report summarizes farm income and earnings for FBFM enrolled farms for 2012-2016. From time to time, Prairie Farmer gets requests for the custom rate estimates on various field operations. Numerous farms that are either hiring a custom operator or providing custom rate services to other farms use published custom rate surveys. Click here (http://www.farmdoc.uiuc.edu/manage/newsletters/fefo06_16/fefo06_16.html) for a look at their summary, including commentary by farm management experts Dale Lattz and Gary Schnitkey. The updated budgets result in a comparative returns situation between corn and soybeans that does not indicate acreage would deviate from recent rotations. All regions have about equal corn and soybean returns (see the corn-minus-soybean returns in Table 2). Several data sources were used to create the two examples below. Report with summary of cost to produce beef in Illinois. Ownership costs include depreciation, interest, and insurance and housing. All rights reserved. Tables 1 and 2 present machinery costs for a field cultivation operation on the case farm. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Purdue University, Center for Commercial Agriculture, May 2017. If acres are not maximized, options include 1) outsource the operation or 2) reduce the size of the equipment. Still, overhead costs increased from $122.90 per acre to $126.10 per acre. All rights reserved. This indicates that some level of tillage is resulting in yields that offset costs, while repeated tillage operations add costs beyond attained value. Tillage operations are typically used to prepare a desirable seedbed, reduce weed growth, incorporate fertilizer, or improve soil conditions. Custom rate guides are popular documents in those states that continue to do the survey legwork; unfortunately, many do not. Spraying. Machinery costs estimates are available in the Management section of farmdoc in five publications: Costs are estimated using an economic engineering approach that relies on formulas developed by the American Society of Agricultural Engineers (ASAE). %PDF-1.5
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Gary Schnitkey, ag economist at U of I, says theyll publish 2021 machinery cost estimates by the end of September. The latest on Farm Management along with the Farm Management Handbook. Lattz, D. and G. Schnitkey. "2020 Iowa Farm Custom Rate Survey." If corn and soybeans prices fall, 2022 net farm incomes could be very low. Guidelines are available here. "Machinery Cost Estimates for 2019." Post Application Coverage Endorsement Tool (Sheet), Balance Sheet & Historical Financial Statements, Briomass Crop Budget Tool Miscanthus & Switchgrass, Illinois Soil Productivity & Yield Utilities, Farmland LEasing Facts Sheets & Pricing Information, Swanson, K., G. Schnitkey, N. Paulson, C. Zulauf and J. Coppess. Still, we are projecting positive returns for 2022, given relatively high corn and soybean prices. It is common to divide farm machinery costs into two categories: annual ownership costs and annual operating costs. And how do you set a rate? A comparison of the two sets of rates provides a baseline that can be used to evaluate costs of owning equipment and performing field operations versus outsourcing. Farmers will again have until March 15 to make commodity title program selections. Unlike the farmdoc machinery cost estimates which represent actual economic cost of performing the field operation, the custom rate survey reports actual rates expected to be charged or paid in 2020. The total machinery cost per acre ($3.90) for the case farm is under these custom rates, indicating that it is economical for the case farm to own a self-propelled sprayer. Credit reports and scores are being used for many decisions such as credit determination and pricing; insurance pricing; government licenses; and employment. Or in your area, the person who owned the hay may still have expected half the hay plus up to $1 per bale for your half. Lattz, D. and G. Schnitkey. Many farms trade machines before they are completely worn out. Schnitkey, G., K. Swanson, C. Zulauf and N. Paulson. Table 1 shows corn and soybean performance for 2020, 2021, and 2022 on high-productivity farmland in central Illinois. Langemeier, Michael. The total costs per hour for the tractor and implement were estimated to be $203.06 and $75.61 for a total combined cost per hour of $278.67. Similarly, if a farm is providing custom rate services and has a higher cost than the published survey rates, it either needs to charge more or try to figure out how to lower costs per acre.