As indicated in the farmdoc machinery cost estimates publication, acreage decreases of 50% result in 80% increases in costs, on average. If the difference in expected returns for the two crops widens planting decisions may be affected. The farmdoc daily website falls under University of Illinois copyright and intellectual property rights. At this point, our return estimates are not suggesting large changes in acreage. The rates presented in this publication represent the responses of a statewide survey conducted from February to March 2013 by Mississippi State University Extension agricultural economists. This report summarizes farm income and earnings for FBFM enrolled farms for 2012-2016. If it occurs, the $25 per acre increase will be the second-highest, only exceeded by a $33 per acre increase in cash rents between 2010 and 1011. Fortunately, ag economists at the University of Illinois keep up on all those numbers, and have an entire listing of costs for various field operations located on their Farmdoc website. ) This publication shows estimated costs of performing agricultural field operations. http://www.farmdoc.uiuc.edu/manage/newsletters/fefo06_16/fefo06_16.html, http://www.farmdoc.uiuc.edu/manage/machinery/machinery_summary.html. Fuel costs will vary with each operations fuel use. Farm Progress Show annually hosts more than 600 exhibitors displaying new farm equipment, tractors, combines and farm implements; seed and crop protection products; and many additional farm supplies and services. Post Application Coverage Endorsement Tool (Sheet), Balance Sheet & Historical Financial Statements, Briomass Crop Budget Tool Miscanthus & Switchgrass, Illinois Soil Productivity & Yield Utilities, Farmland LEasing Facts Sheets & Pricing Information, Swanson, K., G. Schnitkey, N. Paulson, C. Zulauf and J. Coppess. These estimates are useful for determining custom rates and for analyzing machinery costs on farms. As shown in Table 2, a 15-foot chisel plow used on 630 acres has an economic cost of $14.50 per acre and a 21-foot chisel plow used on 882 acres has an economic cost of $16.00 per acre. These returns are at record levels and will result in very high incomes in 2021. The "Ohio Farm Custom Rates 2022" publication reports custom rates based on a statewide survey of 223 farmers, custom operators, farm managers, and landowners conducted in 2022. Most machinery cost estimates are based on a 1,400 acre farm. ", Revenue and Costs for Illinois Grain Crop, Revenue and Costs for Illinois Grain Crops, Revenue and Costs for Illinois Grain Crops, Actual for 2015 through 2020, Projected for 2021 and 2022, Management Decisions Relative to High Nitrogen Fertilizer Prices, Net Change in CRP Acres, 2020-2021 Program Year, Department of Agricultural and Consumer Economics, Department of Agricultural, Environmental and Development Economics, Overall increases in production and land costs, and. If this level of detail is not available, it is common to use annual hours of use and machine age to estimate repair and maintenance costs. Twenty percent of the respondents perform custom work, 16% Authors: Bob Battel, Field Crops Educator . An additional amount for profit should be added to our cost estimates, as we have not added an amount for returns. All rights reserved. Much uncertainty exists about all three prices levels, and it is likely that there will be changes in prices moving into the spring planting season. These budgets represent average returns no matter the preceding crop and are summarized from farms enrolled in Illinois Farm Business Farm Management (FBFM). Lattz, Dale and Gary Schnitkey. The "Ohio Farm Custom Rates 2022" publication reports custom rates based on a statewide survey of 223 farmers, custom operators, farm managers, and landowners conducted in 2022. Estimating Farm Machinery Costs, available by searching Iowa State University agriculture decision maker and machinery management. Fuel. Corn is projected $15 per acre higher than soybeans in northern Illinois, corn is projected $14 per acre higher than soybean on low productivity farmland in central Illinois, and soybeans are projected to be $1 more profitable than corn in southern Illinois. Oklahoma Farm and Ranch Custom Rates, 20212022. Users can select the state, county, and crop combination that they wish to consider. Therefore, as use increases, costs generally go down. Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, updated December 7, 2021. Guidelines are available here. Ownership costs include depreciation, interest, and insurance and housing. Includes tractor overhead, platform overhead, fuel and lube, and labor: Combining only for corn at $37.60 per acre, Combining only soybeans at $32.60 per acre, Grain cart for soybeans at $7.80 per acre. Two methods for managing tillage costs are to 1) reduce tillage passes and 2) outsource tillage operations. We provide machinery cost estimates which may be helpful in setting custom rates. It is important to note that machinery costs per acre vary widely among farms. Strategies then for lowering costs are to use equipment on the maximal acres. This program calculates premiums, evaluates insurance payments, and provides historical data useful when making crop insurance decisions for multiple crops. The purpose of this publication is to provide information on custom work . Illinois Farm Management Handbook, available by searching University of Illinois farmdoc. Depending on your situation, you may want to consider the following spraying and ammonia application total costs from 2019: Self-propelled at $4.40 per acre. The total of all economic costs per acre for growing corn and soybeans in Illinois. And he expects 2021 costs to be 8% to 10% higher than 2019. HARVESTING September 2021 This publication shows estimated costs for combining, using grain carts, and hauling grain. Depreciation results from wear, obsolescence, and machine age. Eliminating a tillage pass in a single year will reduce fuel, labor, and repair costs for the given year, but the ownership costs will remain. farmdoc daily (10):147, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 11, 2020. These cost rates are dependent on annual hours of use and useful life. Fuel costs will vary with each operations fuel use. 7 ag stories you cant miss March 3, 2023, Jill Reiter, Virginia State FFA Vice President, Soymeal rally sends soybeans higher on the week. This report is based on data obtained from farm business records on Illinois farms. NASS county yields are not the same yields that will be used to calculate Agriculture Risk Coverage at the county, Farmers will again have until March 15 to make commodity title program selections. Second, purchase prices, insurance and housing, and repair costs were adapted using information contained in Edwards (2015) and Lattz and Schnitkey (2017a; 2017b). It would be more cost effective to outsource the task than owning an implement of that size for 735 acres. As part of a forthcoming Farm Bill, Congress may consider changes to farm programs to incorporate margins, expected to be defined as the difference between a, Note: This article is based on testimony given before the House Agricultural Committee Subcommittee on General Farm Commodities and Risk Management on June 9, 2022. Overhead includes depreciation, interest, insurance and housing, and repairs. Anhydrous ammonia at $16.50 per acre. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine . Fertilizer prices may decrease in the spring when many fertilizer purchases are made. For 2021, Price Loss Coverage (PLC) did not make payments for corn, soybeans,, High input costs have reinvigorated arguments in Congress for farm support programs where payments are triggered when the cost of production rises. Assuming a 1200lb round bale is 15% moisture, the nutrient value per bale is $12.91. 1 Min Read. In 2018, she received her associate degree from Lake Land College, where her time was spent as an active member in clubs such as Ag Transfer club and PAS. Several options exist for reducing non-land costs, with this article focusing on tillage related costs. For vertical tillage and chisel plow, the economic cost is lower than the lowest custom rate reported. Costs will be at all-time highs in 2022. farmdoc daily (11):150, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, November 2, 2021. Disclaimer: We request all readers, electronic media and others follow our citation guidelines when re-posting articles from farmdoc daily. At this early stage, The National Agriculture Statistics Service (NASS) recently released county yields. This article outlined the conceptual framework needed to estimate machinery costs per acre. This Microsoft Excel spreadsheet will estimate Price Loss Coverage (PLC) and Agricultural Risk Coverage at the county level ARC-IC (Agriculture Risk Coverage Individual) has received less attention than ARC-CO (ARC County) and PLC (Price Loss Coverage). Tillage passes that may fall in this category are those associated with heavier, deep tillage that are not performed on all acres in every year. Guidelines are available here. Costs for most operations are higher in 2021 than in 2019, with most of the increases due to increases in list prices of machines. The following two comparisons drawn from Table 2 further highlight the importance of implements sized for acreage use when managing costs on the farm. Crop Insurance Summary of Business Tool (Sheet), Post Application Coverage Endorsement Tool (Sheet), Balance Sheet & Historical Financial Statements, Post Application Coverage Endorsement Tool, Biomass Crop Budget Tool Miscanthus and Switchgrass, Illinois Soil Productivity and Yield Utilities, Illinois Crop Budgets and Historic Returns, Department of Agricultural and Consumer Economics. University of Illinois Extension provides equal opportunities in . Schnitkey, G., N. Paulson, K. Swanson, C. Zulauf and J. Baltz. Tillage operations are typically used to prepare a desirable seedbed, reduce weed growth, incorporate fertilizer, or improve soil conditions. The information below is based on 122 responses and 3,389 custom rates provided by Iowa farmers, custom operators, and farm managers. Survey respondents include both providers and users of custom services, and data reflect the prices paid for typical farm and ranch custom operations. Includes tractor overhead, implement overhead, fuel and lube and labor: Includes tractor overhead, platform overhead, fuel and lube, and labor: . For a detailed statement, please see the University of Illinois Copyright Information and Policies here. Crop Insurance Summary of Business Tool (Sheet), Post Application Coverage Endorsement Tool (Sheet), Balance Sheet & Historical Financial Statements, Post Application Coverage Endorsement Tool, Biomass Crop Budget Tool Miscanthus and Switchgrass, Illinois Soil Productivity and Yield Utilities, Illinois Crop Budgets and Historic Returns. Economic useful life is not necessarily the same as service life. The updated budgets result in a comparative returns situation between corn and soybeans that does not indicate acreage would deviate from recent rotations. These price changes will influence the relative profitability of the two crops. As Day got older, she began to understand the importance of transitioning from a member to a mentor for other youth in the industry. University of Illinois Extension, Farm Business Management, June 2017 (a). farmdoc daily (11):147, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 26, 2021. hb``` eaVCz @ .m&n\`h``) J20ii TEjA@JGCbs>1Um_iF L:C#u` (^ Black piggy bank with downward trend line representing recession. Subscribe to receive top agriculture news, Be informed daily with these free e-newsletters. A farmer evaluating costs and returns may consider whether to own specialized equipment for a tillage operation versus outsourcing the task. According to Lattz and Schnitkey (2017b), a self-propelled sprayer can cover 80.6 acres per hour. If corn and soybeans prices fall, 2022 net farm incomes could be very low. Includes tractor overhead, implement overhead, fuel and lube, and labor: Depending on your situation, you may want to consider the following spraying and ammonia application total costs from 2019: Fuel costs are based on $2.50 per gallon for diesel fuel. Labor. The second publication Revenue and Costs for Illinois Grain Crop shows yearly returns and costs of producing corn, soybeans, wheat, and double-crop soybeans by region of Illinois. What impact would a recession have on farming. FAST aids users in performing financial analysis, assessing investment decisions, and evaluating the impacts of various management decisions. A 40-foot chisel plow used on 1,680 acres has a cost of $11.90 per acre, while a 47-foot chisel plow used on 1,974 acres has nearly the same cost at $12.10 per acre. Understanding the difference in the intent of the two reports, and acknowledging some differences in general assumptions (for example, fuel rate of $2.50 versus $2.63 per gallon), explains the potential differences in rates reported from each source. %%EOF Check out the entire list of cost estimates at Farmdoc: A 10th-generation agriculturist, Sierra Day grew up alongside the Angus cattle, corn and soybeans on her familys operation in Cerro Gordo, Ill. These estimates are useful for determining custom rates and for analyzing machinery costs on farms. Farm Progress Show annually hosts more than 600 exhibitors displaying new farm equipment, tractors, combines and farm implements; seed and crop protection products; and many additional farm supplies and services. Edwards, William. in 2021, while 2022 custom rates for . A $19 per hour rate was used in 2019 compared to a $20 per hour rate in 2021. CUSTOM FARMING: Looking at arranging custom farming on your operation? This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Lattz, D. and G. Schnitkey. Machinery cost estimates for 2021 have been released and are available on the farmdoc website (see Management section of farmdoc). Trends in Table 1 for high-productivity farmland also occur across regions. For a detailed statement, please see the University of Illinois Copyright Information and Policies here. From time to time, Prairie Farmer gets requests for the custom rate estimates on various field operations. Schnitkey, G., K. Swanson and N. Paulson. In situations, where a farmer determines it is cost effective to perform a tillage operation, the next step in a cost management approach is to determine whether it is more cost effective to own and operate the tillage implement or to outsource the operation. . However, any appreciable decline from the $5.00 per bushel corn and $12.00 per bushel soybean prices without corresponding increases in yields will result in very low incomes. "Machinery Cost Estimates: Tractors." Understanding the . Unlike the farmdoc machinery cost estimates which represent actual economic cost of performing the field operation, the custom rate survey reports actual rates expected to be charged or paid in 2020. Thus, her professional and career focus is centered around educating agriculture producers and youth to aid in prospering the agriculture industry. Farm Progress is part of the Informa Markets Division of Informa PLC. At this point, those historical relationships suggest much lower prices than are being offered by CME futures contracts. 2020 Survey Responses Below are tables summarizing the results of the 2020 Ohio Farm Custom Rate Survey. Represents the rate obtained from surveys of actual farm data surveys for 2014 & 2015 from Universities listed below to do this type of . Third, custom rate comparisons were derived from Langemeier (2017) and Plastina and Johanns (2017). Analyzes the cost of completing fieldwork and generates machinery costs. The $230 per acre does not reflect the over $1,300 high price point for anhydrous ammonia in November. And how do you set a rate? Machinery costs would have been higher had not interest rates been reduced from 2019 to 2021. Fuel costs are based on a $2.25 per gallon price for diesel fuel. Guidelines are available here. 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The $25 projected increase considers these variations and gives an average. Machinery Costs; Finance; Illinois Crop Budgets and Historic Returns; . October 11, 2021. The information in table 3 was used to help compute the total machinery costs for spraying on the case farm reported in table 4. Illinois Farm Management Handbook. Much uncertainty exists concerning fertilizer prices moving into spring. Salvage values for the tractor and implement were assumed to 30 percent of the purchase prices. Recently released crop budgets (farmdoc daily, August 4, 2020) project losses for corn and soybeans on Illinois farms, given current assumptions for 2021. Respondents were asked to report custom rates they had either paid or received during the past year. The total machinery cost per acre ($9.58 per acre) for the case farm is under these custom rates, indicating that it is economical for the case farm to own a field cultivator. Includes tractor overhead, implement overhead, fuel and lube and labor: Vertical tillage, rolling basket at $11.70 per acre, V-ripper (shanks only) at $22.50 per acre. Here, we are talking about economic depreciation rather than tax depreciation. Conversely, the economic cost of owning and operating a mulch tiller and moldboard plow are both higher than average reported custom rates, indicating it would likely be less expensive to outsource these tasks than owning and operating the equipment to complete the task. Number 8860726. Fertilizer prices have skyrocketed in recent months (see farmdoc daily, October 26, 2021, November 2, 2021, and November 30, 2021). Salvage value is an estimate of the sale value of the machine at the end of the economic useful life. It is best to use a farms actual repair records to estimate these costs. Some cash rents will not increase, while others will have much larger increases than $25 per acre. County yields and market year average (MYA) prices are brought in for a user-specified state-county-crop combination. From time to time, Prairie Farmer gets requests for the custom rate estimates on various field operations. Understanding the . Machinery Cost Estimates: Tractors. Illinois Farm Management Handbook, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, updated October 11, 2021. 2H8so:e`!g[ a Moreover, our return estimates do not suggest large changes in acres from 2021 to 2022. Ohio Custom Rates. Custom hay mowing and baling are common in parts of Indiana where people have small patches of hay but don't want to own the equipment needed to mow, rake and bale hay themselves. Air-seeder at $16.80 per acre. Custom work is defined as a service or operation performed for the customer with the . Lattz, D. and G. Schnitkey. For tillage operations that are not expected often, it is likely more cost effective to outsource those tillage operations when needed as opposed to purchasing or owning relatively new equipment. Users then can change 2018 through 2020 county yields and prices to see ARC-CO and PLC payments under those yields and prices. Lattz, Dale and Gary Schnitkey. This program calculates per-acre budgets for different crops and a whole farm budget and includes breakevens. This Current Report summarizes data collected from Oklahoma farmers, ranchers and custom operators during the fall of 2021. Subscribe to receive top agriculture news, Be informed daily with these free e-newsletters. The . Iowa Farm Custom Rate Survey was mailed to 327 people by the US Postal Service and 232 people via email in early February 2022. From 2019 to 2021, most of the estimated machinery costs went up. Due to the fuel price increases, fuel costs for the 310 horsepower tractor increased from $37.30 per hour in 2019 to $41.10 per hour in 2021 (see Table 1). The Gardner Payment Calculator provides estimates of expected payments and likelihood of payments for ARC-CO and PLC. USDA is forecasting a $4.80 corn price and $10.50 soybean price in its preliminary long-run forecasts. ceres imagaging lindsay irrigation partner. An active member of organizations such as 4-H, FFA and the National Junior Angus Association, she was able to show Angus cattle on the local, state and national levels while participating in contests and leadership opportunities that were presented through these programs. Acres farmed, annual hours, useful life, and interest rate represent those of the case farm. Projected financial statements and, Illinois crop budgets for 2023 have been revised from their initial release in August (farmdoc daily, August 2, 2022). This publication reports custom rates based on a statewide survey of 377 farmers, custom operators, farm managers, and landowners conducted in 2020. Interest, insurance and housing, and repair cost rates were assumed to be 5 percent, 1 percent, and 3 percent, respectively. Number 8860726. Similarly, soybean non-land costs are projected at $476 per acre, a $101 per acre increase over the 2021 level. In certain weather and field conditions, tillage operations may be necessary to prepare the field, while other times tillage may not be necessary. Summary of costs for Field Operations, Havest Operations, Tractor and Forage Operations. It is also important to check your report to become an informed consumer of information being used to make decisions about you. The total costs per hour for the tractor and implement were estimated to be $203.06 and $75.61 for a total combined cost per hour of $278.67. "Cash Rents in 2020 and 2021." Estimated machinery costs often are used in setting custom rates where one individual performs a field operation for another individual. Here, a look at cost estimates of field, forage and harvesting operations, plus per-hour tractor operating costs. Formulas are used to estimate each cost, and the purchase price enters those formulas. Authors: Dale Lattz and Gary Schnitkey. Day currently resides back home where she owns and operates Day Cattle Farm with her younger brother, Chayton. Year Applies: 2021. Copyright 2023. The University of Illinois farmdoc machinery costs estimates are intended to represent costs associated with buying new machinery and owning the machinery for ten years (links provided in farmdoc daily, August 6, 2019). Langemeier (2017) and Plastina and Johanns (2017) indicate that the custom rate for using a self-propelled sprayer is approximately $6.70 to $7.65 per acre. Ruraltax.org contains many articles on taxes aimed at farm and land owners. Copyright 2023. Guidelines are available here. Farms that use custom operators or provide custom operations to other farms need to compare machinery costs per acre with published custom rate survey values. Operating costs include repairs and maintenance, fuel, lubrication, and labor. Another consideration is owning tillage implements that are sized appropriately for acres of expected use rather than total farm acres. hbbd```b``+@$S7di'EHi` ,""A$& Q`D]k@${ d[Vq Numerous farms that are either hiring a custom operator or providing custom rate services to other farms use published custom rate surveys. farmdoc daily (11):160, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, November 30, 2021. In addition to the costs outlined in table 1, the costs in table 2 include fuel, lubrication, and labor costs. The farmdoc daily website falls under University of Illinois copyright and intellectual property rights. Tables 3 and 4 present machinery costs for a self-propelled sprayer operation on the case farm. Annually, Iowa State University surveys those who hire and/or perform custom farm services and compiles a report of results. Post Application Coverage Endorsement Tool (Sheet), Balance Sheet & Historical Financial Statements, Briomass Crop Budget Tool Miscanthus & Switchgrass, Illinois Soil Productivity & Yield Utilities, Farmland LEasing Facts Sheets & Pricing Information, Department of Agricultural and Consumer Economics. These higher fertilizer costs reflect higher prices for diammonium phosphate and potash. First, a case farm in north central Indiana with 3000 acre of corn and soybeans was assumed. Based on the ISU data, average custom rates for tillage, planting and harvest operations in 2021 are expected to decrease by about 3%, compared to the rates for similar operations in 2020. Registered in England and Wales. It is an annual summary of such records obtained from farmers cooperating with University of Illinois Extension, the Department of Agricultural and Consumer Economics, and the Illinois Farm Business Farm Management (FBFM) Association. 122 0 obj <> endobj Lets say you dont want to retire and rent out your farm, but you dont want to do it all yourself either. Many of them are involved in the Extension Income Tax Advisory Committee. 164 0 obj <>stream Labor costs per hour increased from $20.90 per hour in 2019 to $22.00 per hour in 2021 (see Table 1). The computations of interest, insurance and housing, and repair costs assumed that the tractor and implement had one-half of their useful life left. Moreover, to fully obtain all cost saving from reduced tillage, the amount of equipment on a farm must be reduced. Black piggy bank with downward trend line representing recession. Learn, Introduction Knowledge, experience, and collaboration work hand in hand with one another to improve farm output per unit of input (i.e., productivity). All regions have about equal corn and soybean returns (see the corn-minus-soybean returns in Table 2). There will be great diversity in cash rent increases across farms. For example, a generational family farm may have different levels of ownership, own separate pieces of machinery, or have acreage shares that dont align with ownership, and these costs can be used as a resource for settling with other farm members. RP-HPE has a lower premium and thus a lower cash, The impacts of the Russia-Ukraine conflict on Ukrainian corn and wheat supply are reassessed at the wars one-year anniversary. 2017 Indiana Farm Custom Rates." Unlike fuel and labor costs which vary with use, depreciation and interest costs vary little with use. University of Illinois ag economists publish machinery costestimates intended to represent the actual costs associated with individual farm field operations, which can provide a baseline for setting a custom rate to ensure that costs are covered. Both corn and soybean costs will be at record levels. "Management Decisions Relative to High Nitrogen Fertilizer Prices." These estimates are useful for determining custom rates and for analyzing machinery costs on farms. farmdoc daily (11):112, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, July 27, 2021. Lattz, D. and G. Schnitkey. Spraying. May 25, 2019. Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, updated December 7, 2021. This report is based on farm income and earnings data on Illinois farms. A survey of agricultural custom operators is conducted in Nebraska every two years. The reference price escalator was introduced in the 2018 Farm Bill and uses effective reference prices to calculate Price Loss Coverage (PLC) payments. February 4, 2007. The duo strives to raise functional cattle that are show ring quality and a solid foundation for building anyones herd. A total of 193 survey responses were received in 2022 with information reflecting the current rates charged by custom operators for machine hire services and other work they provide for neighboring farms and ranches or as part of a business enterprise that covers a broader area. CBO recently, The operational efficiency of any industry is key to long-term profitability, no less so for the U.S. ethanol industry. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. United States Department of Agriculture Local Extension Councils Cooperating University of Illinois Extension provides equal opportunities in programs and employment. Table 1 illustrates the computation of depreciation, interest, insurance and housing, and repairs. Thus, it is imperative that farms compute their own machinery costs per acre when making comparisons with custom rate survey data. Consider reducing tillage operations. University of Illinois will publish 2021 machinery cost estimates at the end of September. Planting. With that level of use, owning a chisel plow is clearly more cost effective than outsourcing the job. Many farmers booked nitrogen purchases earlier in the fall when ammonia prices were below $1,000 per ton. Factors impacting costs are illustrated for a 310 PTO horsepower tractor in Table 1, which shows per hour costs of operations from 2017, 2019, and 2021.