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NE MO & W IL | Just depends on the rate you charge. I make a very large margin on custom farming, but I charge at the very high end of most custom rate surveys. I custom farm for one customer from start to finish, perform all management just like I would if I cash rented it, and oversee and care for it like I owned it (this was by choice I might add, i could rent it). I get a $30/acre management fee for doing this on top of profitable custom farming rates for tillage, planting, harvest, hauling etc. I could make a little more by cash renting with 50 bu, $10 beans, but I have limited risk and make very good money. Banker thinks its a no brainer. If you try to custom farm based on average custom rates from a university, all you are doing is wearing out your equipment, like several other posters said. Iowa States new rates are decent, much better than the outdated ones from other universities, like MU, but the averages are still too low to make good margin. My rates are at the high end on that survey. Make a spreadsheet and figure out your profit margin under different rate scenarios. Then, you will know what to charge and still make the margin you desire. If a landlord is grossing $500/acre for beans and $700 for corn....the custom operator is getting hosed by charging university rates (Iowa's being an exception I guess) and he (the landlord) is making big money for taking some crop risk and not owning equipment. my 2 cents | |
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how much profit margin in custom farming?
