MSU offers new Custom Rate Calculator Tool
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Many farm operations reach out to other farms to help fulfill production activities. These custom operators can fill a gap that would otherwise make it difficult to meet farm goals. Michigan State University Extension offers a custom work rates report that offers Michigan-based costs for a variety of common farm operations. However, some operators may find that their production activity is not available in this report. The MSU Custom Rates Calculator Tool spreadsheet can be used to calculate individual values. These values can be used as a base to determine a fair exchange value for both provider and recipient of custom work. The MSU Custom Rates Worksheet is a pdf version of this spreadsheet with which the value can be calculated by hand.
The MSU Custom Rate Calculator Tool calculates the total economic costs of providing a custom service. These values reflect the cost of ownership of the tractor and implement, as well as the operating costs for the custom operation. The total economic cost of owning and operating the machinery for custom hire services can be a starting point for custom work rates. Ownership costs include depreciation, interest, repairs, taxes and insurance. Operating costs include fuel and labor.
The result of the MSU Custom Rate Calculator Tool can then be utilized as a starting point for custom rate values. It can be adjusted for local economic conditions, such as the availability of machinery services and demand for machinery services in your local area or usual rates set in the community. Other factors can include field size and shape, ease of access, amount of non-farm traffic to get to the field, machine size and road or bridge widths, trash in the field, weed history, trees or brush hindering work, depth and amount of field drainage tile, and payment arrangements.
