Except for high-fuel-price years, Kansas custom rates generally increase 1-2% annually and are fairly consistent with inflation rates. Historical data, from 1990 to 2009, proves it, says Kevin Dhuyvetter, Extension ag economist with Kansas State University.
This year, however, looks to be one of those exceptions. In January, Dhuyvetter predicted a 5-10% jump in custom rates based largely on fuel-price increases.
“If I reforecast them this month or next month, I’m guessing I’d show a bigger increase because fuel prices have gone up since January,” he says.
Since the 1970s, Kansas Ag Statistics, operated by the state ag department and the National Ag Statistics Service’s Kansas office, conducted annual custom rates surveys. There was no budget to do so in 2010.
That’s why Dhuyvetter used regression models to estimate 2010 and 2011 Kansas custom rates based off historical custom rates survey data, inflation rates and fuel prices.
Here’s a synopsis of the ag economist’s mid-January estimates for 2011:
Rates for chopping, hauling and filling silo or chopping and hauling only are estimated to be up 5.5-7% compared to 2010 rates – 52¢ and 37¢/ton, respectively. Chopping-only rates could be up 9.3%, or 50¢/ton, and hauling-only charges, 3.4% or 9¢/ton compared to 2010 estimates.
Projected percentage increases for most haying operations were in the 4.5-7% range. Because of the varying units – bale size, harvesting per acre or per ton, etc. – dollar amounts also varied.
An estimated rate to bale one-ton square bales is $14.70, up 75¢/bale.
Baling round bales less than 1,500 lbs without net-wrap should average $10.63 or an increase of 48¢/bale; those with net-wrap, $11.29/bale or an increase of 54¢ each. Round bales 1,500+ lbs not net-wrapped should average 86¢ higher per bale for a total rate of $11.93/bale; net-wrapped bales in the same weight range could be baled for only 42¢/bale more, or $11.33 each.
The table below shows historical and projected rates. Remember that 2008 was a high-fuel year, reflected in some higher rates, Dhuyvetter says.
Rates between regions can vary greatly, so check percentage changes from last year as opposed to absolute values. The R-squared column shows variation in custom rates, explained by inflation and fuel price variables. Those with a high value (90%) show that estimated models work especially well. Those with lower values (60-70%) may be less successful in predicting relevant rates.
Check www.AgManager.info for updates reflecting fuel price changes.