Farmers and custom operators will face higher machinery costs in 2025, but the rate of increase has slowed significantly from recent years. The latest cost estimates from Farmdoc, released this week, show that most categories of farm machinery-tractors, planters, sprayers, and harvesters-are 1% to 14% more expensive to operate than in 2023.

The 2025 estimates are a welcome shift after the dramatic 30% rise in some equipment categories between 2021 and 2023. This year's more tempered increase is largely due to stable labor costs and falling diesel prices, even as equipment list prices continue to climb.

Equipment and Field Operations See Smaller Increases

The Farmdoc team of Dale Lattz, Gary Schnitkey, Nick Paulson, and Carl Zulauf published five updated machinery cost reports covering field operations, tractor usage, harvesting, forage work, and a full summary. These are widely used to set custom rates for shared machinery services.

One standout example is the 310 horsepower (PTO) tractor, where costs rose by just 3% from $249.10/hour in 2023 to $255.80/hour in 2025. That compares with a 32% jump between 2021 and 2023, making the current hike the smallest two-year increase since 2016.

Fuel, Labor, and Overhead Shifts

Breakdowns of cost drivers show interesting movement:

• Diesel fuel costs dropped from $3.50 to $3.00 per gallon, reducing fuel expenses from $52.50/hour to $44.80/hour.

• Labor costs ticked up slightly, from $21/hour in 2023 to $22/hour in 2025, factoring in a 10% buffer for total operator time.

• Overhead costs-which include depreciation, interest, insurance, housing, and repairs-rose in line with the 7.5% increase in equipment list prices, pushing overhead costs from $173.70/hour to $186.80/hour for the 310 HP tractor.

Cost estimates assume a purchase price at 85% of list value, meaning a tractor now priced at $623,657 in 2025 (up from $579,945 in 2023) significantly affects total ownership and depreciation costs.

Across-the-Board Increases, But Less Volatile

Table comparisons from 2019 through 2025 show modest increases in combined equipment setups-typically used in corn and soybean production-with overall cost hikes between 1% and 15% for various machinery configurations.

These estimates use a standardized methodology from the American Society of Agricultural Engineers (ASAE) and are considered a reliable benchmark for budgeting, rental contracts, and cost-share planning.

Summary and Future Outlook

While machinery costs remain on an upward trajectory, 2025's calmer increase offers some relief to producers after years of volatile inflation in farm input costs. The trend is driven by slower increases in labor costs and lower fuel prices, though rising equipment prices continue to exert pressure.

The next full update to Farmdoc's machinery cost data is scheduled for late summer 2027. Until then, these latest estimates will help inform decision-making across the agricultural equipment, lending, and management sectors.