SAF'S 2006 Farm Machinery and Custom Rental Guide is Now Available

Source: Saskatchewan Agriculture and Food

The 2006 edition of the Farm Machinery Custom and Rental Rate Guide, published by Saskatchewan Agriculture and Food (SAF), is now available.

The publication is designed to help producers calculate how much their equipment costs to operate and how much they might charge for doing custom work, be it seeding, spraying or harvesting.

The publication is a calculation of the equipment and labour expenses to complete the listed custom operations. The expenses include fuel, opportunity cost, depreciation and repairs, along with a profit margin (15 per cent), explains Joe Novak, Provincial Specialist, Crop Economics, who compiled the guide. Many producers will do some spraying, seeding or harvesting for other producers, and the guide helps them to know how much to charge.

“This guide gives them a bit of a guideline on how much to charge," he says. "It is not a survey of the market, but it is a guide to help. I always recommend that producers phone around and talk to people who do this as a business in order to decide what a fair rate might be.”

For people wishing to do custom work as an ongoing business, the amounts you can charge and still generate a profit might be different, explains Novak.

“This is because our calculations are based on hours of use that a typical farmer might require. Custom operators would be able to spread their fixed costs over more acres, meaning a lower cost. But at the same time, our expenses do not include liability insurance, advertising, shop equipment and transportation costs, which would increase your costs. As such, custom operators need to do more thorough calculations to determine their costs."

It is strongly recommended to determine and agree upon a rate before doing any custom work. Negotiating the price after the work is done can cause disagreements.

“The biggest changes from the 2004 version are the increases in fuel and equipment prices. The price of diesel fuel has gone up 42 per cent since 2004. The price of steel has skyrocketed, but, due to the rising Canadian dollar, the price of equipment manufactured in the U.S. has increased by zero to a modest 10 per cent. Canadian manufactured equipment has increased more in the range of five to 15 per cent since 2004.”

Novak says the Farm Machinery Custom and Rental Rate Guide is one of SAF's most popular publications. It is revised every two years, and has been published by the department for the past 30 years.

The Farm Machinery Custom and Rental Rate Guide is available on the department's website, www.agr.gov.sk.ca under the heading Business Arrangements, or can be obtained by calling the Agriculture Knowledge Centre at 1-866-457-2377.

For more information, contact:

Joe Novak
Provincial Specialist, Crop Economics
Saskatchewan Agriculture and Food