As the trend toward custom harvesting continues, it gets harder for harvesters to find data current enough to help them figure what rates they should be charging.
The land-grant universities and National Ag Statistics Service (NASS) field offices that have historically conducted the surveys increasingly can’t afford to. Fewer custom rate surveys are funded annually, and most of those continuing are limited to every other or third year.
Last year was only the second year since the early 1970s that Kansas farmers, custom operators and others weren’t surveyed about charges for various field operations, says Kevin Dhuyvetter. In 1986, when funding faltered, the Kansas Ag Statistics Department and NASS didn’t publish a custom rate report. Budget cuts are again the reason that Kansas Ag Statistics didn’t generate 2010 results.
The good news, however, is that Dhuyvetter, Kansas State University Extension ag economist, has attempted to fill the breach by estimating 2010 and 2011 custom rates using historical data, an inflation index and fuel-price projections.
Since he posted the paper “Historical Custom Rates in Kansas and Projections for 2011” in mid-January, it’s been downloaded more than 1,750 times (visit tinyurl.com/4o6fjqe). That shows how hungry custom harvesters and their clients are for rate information.
“But just how valid are your estimates?” the ag economist was asked.
“If you look at a lot of the historical rates, especially where we have a lot of observations, the forecasts of average custom rates look very believable. That’s primarily because average rates pretty much trend up over time.”
The blip in that trend was 2008, when fuel prices jumped. Even so, he adds, “I feel relatively comfortable estimating an average rate. Do I feel comfortable doing this two years in a row? Yeah. Three years in a row? A little less so.”
Dhuyvetter says the state ag statistics entities are looking for funding to continue the rates survey every so many years. He, in the meantime, hopes to fill the years between with his models’ estimated values.
Wisconsin is another state that continues to survey the ag industry despite not having budget for it.
“We’re hanging on by our fingernails,” says Robert Battaglia, director of the state NASS office that produces the report every third year. “People need it, and it’s used a lot.”
The 2010 survey, completed in February of this year, was done in cooperation with University of Wisconsin Extension, which helped develop the survey questions. It was mailed once and received a whopping 50% response from farmers, custom operators and farm managers, Battaglia says.
Custom rate data from several states surrounding Kansas and Wisconsin are gathered by land-grant universities. Unlike NASS, which can utilize census data to generate its database, those universities have to develop their own lists of people to survey, point out Battaglia and Dhuyvetter.
“So we’ve been very, very fortunate here in Kansas for a lot of years to have Ag Statistics actually doing the survey,” Dhuyvetter adds.
University of Kentucky ag economist Greg Halich utilizes six other states’ custom survey numbers to provide rate estimates for Kentucky farmers and custom operators.
“I put all their rates for different practices on a big spreadsheet and have estimates for how much fuel was used in each one of those practices. Then I find out what each of those surveys used for an on-farm fuel price at the time of the survey.” Formulas within the spreadsheet update rates according to how much the fuel price increased or decreased.
Halich’s been providing custom rates with no budget for the past five years after county agents and farmers convinced him the numbers were needed. He also talks to a lot of farmers to check the range of rates he provides.
“I have found, for hay, it’s generally consistent, because someone in central Kentucky is going to be on pretty much the same efficiency with hay equipment as someone in western Kentucky.”
Custom operators in a number of Midwestern states this year, as well as in Pennsylvania, Kentucky, Oklahoma and Utah, have access to 2009, 2010 and 2011 custom rate guides or projections (see “Do Your Fees Compare?” page 26).
They, too, are fortunate to have university ag economists and state ag statisticians who will work – with little or no budget – to get that information.