Custom Rates Change with Fuel Cost

Custom Rates Change with Fuel Cost

Spreadsheet helps fine-tune pricing for buyers and sellers in the custom farm market.

With the high cost of machinery and the capacity of new machines, custom farming is seeing increasing popularity in many areas. The process allows farms to access new technology without making the investment in new equipment while the machinery owner can spread fixed costs over more acres and generate cash flow.

THE PRICE IS RIGHT: Spreadsheet helps fine-tune custom rate pricing.

Knowing what to charge for custom operations in in this world of volatile fuel prices is critical to profitable custom farming. Published custom rates from university sources have historically been based on survey data from the previous year. Kevin Dhuyvetter at Kansas State University has developed a tool for projecting rates for the season using relationships between fuel prices and custom rates. Historical values are used to develop a model that predicts the rate to charge based on expected fuel prices. Fuel cost remains a major variable in the determination of cost for custom operators and can be the difference between profit and loss when providing operations for hire. This spreadsheet is designed to help farmers develop accurate price levels prior to pricing the service.

We're featuring the spreadsheet as our Farm Futures Spreadsheet of the Month. The 3.5-megabyte spreadsheet should work with Excel 2000, 2002, 2010 or Excel XP. You can download it by clicking on the link below.

Do you have a spreadsheet that's made a difference on your operation that you'd be willing to share with other readers? Drop us a line at [email protected] with a description of the spreadsheet. We'll pay $75 if we feature your farmer-written noncommercial program as our Spreadsheet of the Month.

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