Custom operators are divided on 2007 rates, survey shows
If you're planning to raise your custom forage rates this year, you're in good company. If you decide not to, you won't be the only one.
Nearly 60% of 438 custom forage harvesters from 46 states said, through a Hay & Forage Grower online survey, that they plan to raise rates this year. Slightly more than a third of those who answered said they'll increase prices by 1-5%. Another 18.5% will raise rates 6-10%, while 5.5% expect to charge an additional 11% or more.
Almost 40% said they won't raise rates, and eight harvesters indicated that they will reduce prices slightly.
Large- and small-operation custom forage harvesters answered the 16-question survey. Some reported owning as many as 20 choppers and just as many balers, harvesting up to 25,000 acres of hay silage, 7,000 acres of corn silage and 17,250 acres of hay. Others reported custom harvesting few acres, so this survey will report median results — the middle value where half the values fall above the median and half fall below — rather than average figures.
Respondents reported harvesting a median number of 300 hay silage acres and 400 hay acres in 2006 — and those figures include total acreage from multiple cuttings. Those who offer corn silage services harvested a median of 400 acres. A typical respondent owns or leases one chopper and two balers. All of these numbers — and most of the following — are the middle value, or median.
Custom operators were asked what minimum job, acreage-wise, they would accept 50 miles from their home bases. Their answer: 100 acres.
They then were presented the following scenario: “A dairy operation is looking for someone to harvest alfalfa haylage and corn silage; it meets your acreage and distance specifications. Please enter your 2007 prices for the services that apply to you. (You will provide fuel; there is no mileage charge.)”
The survey asked operators to tell how they most often figure their prices. A majority of respondents (80.6%) are hay harvesters who charge per bale. A total of 37.7% of respondents charge by the acre, 17.1% per hour and 16.2% per ton.
Operators then listed their own alfalfa haylage and corn silage harvesting rates. In a few cases, they included rates for two or all three ways of charging for their services.
Total per-acre alfalfa haylage prices, including mowing-conditioning, merging into windrows, chopping, inoculating and bunker packing came to $58. Clients wanting haylage bagged will be charged $68/acre.
Corn silage harvest operations, including chopping and packing bunkers, totaled $50/acre in the survey, while chopping and bagging hit $62.50/acre.
On a per-hour basis, prices to mow and condition, merge, chop, inoculate and pack alfalfa haylage reached a median price of $402.50. Bagging instead of packing would add $60/hour for a total of $462.50.
The median per-hour price for chopping and packing corn silage was reported at $325; but chopping and bagging came in $15/hour lower. In this case, the average per-hour price made more sense than the median price. Bagging will cost $20/hour more, on average, than packing.
For a median price of $23.40/ton, survey respondents will mow and condition, merge, chop, inoculate and pack alfalfa haylage. Bagging instead of packing would increase the total to $28.40/ton.
Per-ton rates for chopping and packing corn silage were reported at $5.80. Chopping and bagging would increase the client's cost to $10.80/ton.
Prices to mow and condition, rake, bale and stack hay were reported at per-acre, per-hour and per-bale rates for large square, small square and round bales. Mid-point per-acre prices were $46 for large square bales, $41.50 for small squares and $36.50 for round bales.
Per-bale costs were identical for baling large-square and round bales, at $9, while small square bale prices were set at 75¢/bale.
For other individual operation costs reported per acre, per hour and per ton, see the table on page 7, which shows not only median, but also mean (average), prices.
Custom operators were asked if they offer discounts from their base charges. Only 37 of the 410 harvesters who answered the question said that they discount. Of those 37, most take a percentage off per acre or per ton; only three discount from per-hour charges.
Those who discount do so if customers:
provide fuel (and are discounted 15%/ton or 17½%/acre),
sign a multi-year contract with annually established rates (discounted 5%/ton or 10%/acre),
provide full payment by a specified date (saving 10%/ton or per acre),
agree to a monthly payment plan (discounted 3½%/ton or 10%/acre),
have significant acreage (saving more than 6%/ton or 10%/acre).
A few survey answers weren't revelations: Custom operators see little value in covering bunkers. Less than 5% provide that service.
Another dreaded task, that of cleaning mud off roads, is largely left to the client. At least that's what 68% of those surveyed reported. Nearly 20% said they take on that responsibility and decide either not to charge for it or include its cost in the overall price.