For more information on custom agricultural contracts, the 2013 Farm Custom Rates and other farm machinery information is available on the Iowa State University Ag Decision Maker website. Landowners also benefit from several advantages of a tariff agricultural contract. Small-scale landowners can make most of the decision on plant production and grain marketing without investing in a range of agricultural machinery. The landowner is not required to negotiate land rental prices or to worry about rent recovery, as the owner receives all of the proceeds from the crop. The landowner must pay the operator an agreed fee per hectare for the management of the farm on specific dates. The landowner is considered an essential participant in income tax and the landowner is generally entitled to all payments from the state`s agricultural program. An alternative to renting arable land is an agricultural agreement subject to tariffs. In a typically customized farming contract, the custom operator undertakes to carry out all machine operations on the owner`s land for a fixed fee or a specified rate. The landowner bears all costs of seeds, fertilizers, chemicals, harvesting and other inputs; receives all cereals produced and all eligible payments for rural agricultural programs; and is responsible for the storage and marketing of cereals. An obvious advantage for the custom operator is that a favourable customs agricultural agreement provides additional agricultural income with little or no additional working capital or investments in agricultural machinery. Fuel, laying and repairs are usually the only additional cost. In addition, custom farming offers a fixed yield per hectare to the custom operator and, although there is some possibility of higher repair bills, it is low compared to the price and yield risks to which an operator is generally exposed in a normal cash lease.
Of course, in a good year, the benefits of a customs contract will be less than most leases; However, in this period of much higher land rents, the risk to the operator of a barleasing is much higher than in a customs agreement with a landowner. Although the concept of a customs agricultural contract is simple, close communication between the customs operator and the landowner is essential. In any event, a written contract for the contract should be prepared to determine the amount of payment by the landowner to the customs duty operator and all other relevant details. Here are some points that are to be considered for the personalized agricultural agreement: Below are custom average customs breeding rates for 2013, based on the Iowa Farm Custom Rate Survey (including soil, planting and harvesting fees): Editor`s note: Kent Thiesse is a former University of Minnesota educational extension and is now vice president of MinnStar Bank, Crystal Lake, MN. You can contact him at 507-726-2137 or email kent.thiesse@minnstarbank.com.
