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farawayguy
Veteran Contributor

Re: Good idea!

I've gone through this with my tax person about materially participating and we came to the conclusion that we could slip below that threshold for self-employment tax purposes. What you're saying about the subsidy works against that though. Sounds like I might be trapped into paying that tax after all, to qualify for the gov't subsidy.

 

 

 

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idalivered
Advisor

Re: About custom farming

BA, when it comes to custom farming, on of my landlords says that it is a situation where both parties lose money. The custom operator never charges enough for his cost and loss of timeliness on his own acres and the person hiring tha work done, always pays more than they feel they should. You're right about the brown-nosing thing,too. I've been trying that with one guy i do custom work for for 20 years. he's still farming and I'm still doing it too cheap!

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BA Deere
Honored Advisor

Re: About custom farming

Hey Ida, repairs are so high, new machinery is crazy, if a guy puts a pencil to it to charge what you`d have to would price you out of the market on custom work.  Just in my piddley case, I`ve got a baler just for my own but acreage guys want me to bale "a couple acres", well you drive 5 miles to roll up 3 bales, if I wanted to charge them what that really costs they would think I was robbing them, so I just do it for free, to get paid $45 for 3 bales after driving 5 miles is insulting to me, on the other hand.

 

But the area there a famous/infamous BTO (depending on your prespective, let the record show I like him, I might have to rent to him one day)  he started in the 70`s as a young tiger doing custom work.  That was at a time when duffers were getting to the age where their old lady wanted them to quit and their quarter was no longer big enough.  This BTO would come in with his brand new 7700 combine and do the beans in one day and the corn in 2 days and that impressed the heck out of the old duffers.  Until finally one day, they`d just say "You`re doing everything for me now, why don`t I just rent it to you for $65?" ....that was a pretty good gimick.

 

But yeah, those ladowners that have had their ground custom farmed might put a pencil to that if we really are moving into a period of $3-$4 corn.  In short it`s easier to write out a $150/acre custom check when you`re grossing $1300/acre than if you`re grossing $600/acre.   🙂

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4wd
Senior Contributor

Re: About custom farming

I have done a lot of custom work thru the years, and let me be clear. I own the equipment, and I accept or reject a custom job at my own discretion. If it is a small job, it goes to the end of the list. If I am busy, I am not available.  And, My own work always comes first. So, you might end up waiting a week for me so show up. My charges are at the top of Iowa State's custom range.

But, if you are so fortunate to get me on your farm, I will do the particular job as if it were my own farm, and you will be satisfied.

 

In Kraft-t's case, he is keeping his custom work within his family, so it is a lot different. I suspect he also keeps the management timing of when each custom job is performed up to the discretion of his kin, and he could care less intervening on the timeliness of when each job gets done, as he has full confidence in his kin's time management skills. If he had to deal with outsiders to get his custom farming done, things would be a lot different unless he had a farm manager do the management for him. Then That would take 6% $$$ off the top.

 

Custom farming for the uninformed investor isn't all it appears to be on paper!

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Jim Meade / Iowa City
Senior Advisor

Re: About custom farming

I think we've seen a fair portrayal of the good, the bad and the ugly of custom farming from both sides of the fence. 

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4wd
Senior Contributor

Re: About custom farming

I just want clear "custom farming" land is not as easy and cost effective as some posters on here have made it out to be for the landlords and for the custom farmers.  There is good, bad, and ugly...for both.

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kraft-t
Senior Advisor

Re: About custom farming

are you interested in a few more acres a little south of you. You can brown nose me for 20 years and do my custom work way too cheap.

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idalivered
Advisor

Re: About custom farming

thanks, but i'll probably pass.

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farawayguy
Veteran Contributor

Re: About custom farming

I like the idea of getting equipment and hiring someone capable, but I don't know enough to do that now. That's a big appeal of custom farming - it's a way in for me to understand costs and learm more about the business. One of my ideas is after custom farming a couple of years, is to get a tractor, some kind of tilling equipment and a planter, and do that part myself. I could use a coop for applying fertilzer and spraying, and then a custom farmer to take in the crop. I do have people there I can turn to for help and I wouldn't mind spending more there. Anyone have a guess as to how much the equipment would cost for that - figuring on farming 700 acres?

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BA Deere
Honored Advisor

Re: About custom farming

Hey Farawayguy, if you "don`t know what you`re doing"  that would be a real/expensive learning experience.  It`s hard to find good help these days and if you do feel lucky only spending $20/hr.  And if you hire someone "cheap" he might be blopping along to Katey Perry`s latest hit and not notice the non-existant oil pressure and a $12,000 overall later, he was pretty expensive help. 

 

But go to "Tractorhouse.com" and add up the probably 12 row machinery for 700 acres.  I would guess at least $80K for a tillage tractor $100K for a combine $35K for a planter, field cult, chisel plow, wagons/trucks/semi? I bet if you add it all up it`d be over $300,000 maybe $500,000.  You probably wouldn`t want things that need fixing, if this is new to you.  

 

A good custom farmer would let you ride along and you`d get a better feel on what you need, how long tasks take and the costs.  Then you`ll know what you`re up against.  Good Luck. 

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