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rswfarms
Senior Contributor

Re: Should I Custom Farm?$150/acre is low????

Buckfarmer- the going rate for Custom Farming in Iowa is $90 to $140/acre. My $150/acre that I pay my Custom Operators is not too low, it is $10/acre higher than the range in Iowa. I pay my guys a darn good salary of over $275,000 a year. However, I would be interested is knowing what I am leaving out. My posts were very short and only covered some of the main detail, but again, if you can add more to these details, I would like to know what they are. Maybe I can learn something too from these posts on Custom Farming. As mentioned, I have been doing it for over 20 years, but you can always learn something new. So please post what these details are. Thank you!!!

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rswfarms
Senior Contributor

Re: Should I Custom Farm?/Yes/Iowa State University Website

Farawayguy- I forgot to mention that Iowa State University has an Agricultural Website for the very high-rated Agricultural College they have. It is probably the best Agricultural College in the nation. In fact, my youngest boy will be going to Iowa State University to attend this very well rated AG Program they have when he finishes High School in a year, He will probably be taking over my Farm Operation when he gets his College Degree in Agriculture in 5 years. Anyway, the website can be found by just searching Iowa State University Extension Service. On this website they have a huge amount of information on Custom Farming, along with analysis of the long-term Return on Investment Ratios for all the different types of farmland leases. Custom Farming has the highest ROI Ratio according to there studies, and both a 50/50 Crop Share and Cash Rent is the lowest. These are long-term returns over a 10-15 year time period, but on a year to year basis they can change alot. As mentioned. they have alot of information listed on the website that you should read before you decide if Custom Farming is for you. In fact, I was just on there website yesterday reading there new report/analysis of the which has been the best return for your money: The Stock Market vs Returns on Farmland. Since 1986 to 2013, Farmland has beat out returns to the SP500 Stocks by a very large margin. It is nice to know that we did the right thing by investing in farmland back in 1986 compared to putting that money into a SP500 Index Fund. Alot of these very well written papers use Iowa farmland as the base unit in the analysis studies, but I believe they would be very similiar for all the corn belt states.

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Shaggy98
Senior Advisor

Re: Should I Custom Farm?/Yes/Iowa State University Website

Faraway, heed everyone's warning on listening to ole Fairy Tale (RSW). Check his archived posts, you'll see for yourself. He's already been banned from one website for being a fraud. His farm empire he talks about is nonexistent and he merely speaks of his in-laws operation as being his own.
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farawayguy
Veteran Contributor

Re: Should I Custom Farm?/Yes/Iowa State University Website

Yes, I have been using the Iowa State website. That's where the source of most of my costs come from. As a graduate of U of Illinois, I'll take exception to your comment that Iowa State is the best. We we're always taught that U of IL had the best Ag program by far. I'll give you that the online resources for Iowa State are superior, but I'll assume U of IL exceeds in all other areas 🙂

 

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farawayguy
Veteran Contributor

Re: Should I Custom Farm?

Iowa State's really helpful Web Site has details for the average custom rates (in Iowa) for corn at $126 and beans at $112. (Dated March 2013). Tillage, planting, pest control, harvesting, hauling to farm included. No drying. That's where my info came from. So I think RSW is solid with his numbers. 

 

I would assume hauling to farm is the equivalent of hauling to elevator. Although pest control is included, I don't know if that includes crop dusting. Also, no mention of fertilzer application. 

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farawayguy
Veteran Contributor

Re: Should I Custom Farm?

I'll keep your contact. I need to have a conversation with the current tenant before I move forward (including offering him the option to custom farm). Which is why I'm using an anonymous place like this right now. We're talking about a farm a bit north of Springfield.

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buckfarmer
Senior Contributor

Re: Should I Custom Farm?

RSW: I've been following your posts pretty close since you started posting on here. Your comments get me thinking about some of the economic decisions that we all need to make. I feel like I have a more scientific mindset and sometimes i lack in those econoamic decisions. However the only operational detail I remember seing, was one time someone asked if you $150 per acre included nitrogen application. My question (and this may be why some on here are suspicious of you) is what does 150 cover. Like I said in my post earlier, the difference between notill and heavy tillage could be over $50 per acre. Then there are all kinds of possibilities for fertilizer and chemical application. PM me if you want to talk about it privately. Or if answering these type of questions will help someone like faraway just post it up here.
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Shaggy98
Senior Advisor

Re: Should I Custom Farm?/Yes/Iowa State University Website

Doesn't DuPont own Iowa State University?
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rswfarms
Senior Contributor

Re: Should I Custom Farm?/Yes/Shaggy

Say Shaggy, remember when I posted all my farmland by the USDA Farm Numbers? But hey, I can tell from your posts such as on this issue that you are not even a farmer or even a farmland owner. If you were either you would be able to post alot of information on Custom Farming vs Cash Renting. By you posts that provide absolutely nothing to add to this discussion, you have very much given yourself away. But be honest with the guys on this website, do you even own any farmland? If you did, you should know all the Custom Farming numbers such as costs and Return on Investment Ratios like the back of your hand, but as usual with all your posts you have nothing intelligent to add to this discussion. But hey, I will give you a chance to say something intelligent. Is hauling grain included on all Custom Farming fees, or if it isn't, what is the cost per bushel for hauling? Also, is sidedressing nitrogen included on Custom Farm Leases or is that a charge that is added on to the Custom Farming Fee at harvest for the 50% Payment due at harvest to the Custom Operator? These questions that I ask you are so very much just basic farming knowledge you should have no trouble. So, go ahead and post your answers.

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farawayguy
Veteran Contributor

Re: Should I Custom Farm?

Wow, this is a whole 'nother topic. You're probably not serious, but I'd actually consider that, save for several reasons. 

 

1. The farms are spread around pretty far, but in two distinct areas. I don't think one person could do them all. About 700 acres (1/2 of total) could be farmed by one person. Another 700+ acres are smaller chunks near each other, but 150 miles miles closer to Chicago.

 

2. While I maybe could get the expertise to run a custom operation, when it comes to actually farming? That sounds really hard. I grew up running tractors in the 1970's. It all seems to have changed. How many pieces of equipment would I have to learn to use? Planters, for instance, are unrecognizable to me now. Maybe doable, but probably very hard. 

 

3. Probably the biggest in my mind - maintenance/repair. No way do I have this knowledge. I've never been great at fixing mechanical things. Not terrible, but nothing like my father, who could find some creative way to rig something up for any situation. I have been told that things are so complex now, it's almost not a factor anymore since everything is too hard to fix, you just call in the experts, but I'm not so sure about that. Tractor doesn't start? I'd probably have to embarrass myself with a call to the John Deere service tech everytime.

 

4. Equipment costs. Even if I could get past the previous issues (maybe hire someone with better mechanical skills) and farm the 700+ acres nearer to Chicago, I'm pretty sure machinery costs no longer allow for acreage that small. Made worse by the fact that I wouldn't want lesser equipment that breaks down more (see above).

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