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Senior Advisor

Borrowed Machinery Value

I've got a neighbor who is a good friend in which we do significant labor swapping.  He has done some custom drilling for me and in return, I allowed him to graze some of my milo stubs.  Throughout the year, he has also borrowed a few other pieces of smaller equipment, such as box scraper, rotary mower, all my corral panels along with the carrier, etc, etc, etc...   My question, I have no problem loaning him anything since he takes good care of it all, but using my equipment has some value, how does one figure out that value?  Finding a common dollar per acre for custom work isn't an issue, but finding a value of borrowed equipment as another issue.

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6 Replies
Senior Advisor

Re: Borrowed Machinery Value

The second page of the 2012 Custom Hire Survey includes a formula for figuring the rental rate.  I didn't look for your equipment, but at least there is a methodology that you might consider or perhaps use to give you an idea on how to derive your own rates.

 

http://www.extension.iastate.edu/agdm/crops/pdf/a3-10.pdf

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Advisor

Re: Borrowed Machinery Value

Does the equipment come back in a timely manner and in good condition? Does he want to reimburse you for using your things? Is the exchange of labor "equal"? How much do you value this friendship? I will say that as I get older , even 20 minutes of help for a two-man job has a high value to me. I helped a friend yesterday, and I know he will help me back if he can. This is a tough one and there are people that I would prefer not to loan anything to. They could wreck and anvil with a rubber hammer. good luck

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Senior Contributor

Re: Borrowed Machinery Value

Nothing in the world worse than when I burrow something, then have to have dad finish the job. Usually results in me spending a lot of money and a embarrassing talk with the neighbor. Point is if you loan something you don't always know who is really using it.
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Senior Advisor

Re: Borrowed Machinery Value

The one I remember is the friend that rented my 5 bottom plow automatic reset. He broke the front standard on the plow and had it replaced and decided himself that the repairs was adequate compensation for the use of the plow paying me nothing.

 

I didn't complain but I could have left my plow in the shed and earned as much. I don't know the circumstances that broke the plow standard. Metal fatigue or misuse. I don't know but an automatic reset plow should trip a bottom before breaking off a standard. None the less the water is long under the bridge. There is no regret or bad feelings, but I would have thought he would choose to discuss a proper settlement instead of dictating the final terms.

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Veteran Advisor

Re: Borrowed Machinery Value

As a rule of thumb, I figure average rate for the machine rental, plus fixing anything that was the fault of the one who broke it.   I carry liability insurance for any equipment I rent or borrow, and so do the guys who I swap equipment with, which is a VERY good thing to have, in case you do some major damage, all you are out is your deductable.

In return, I figure about $15-$25 an hour in labor rate, towards the swap, $50 if it includes my welder, grinder, etc.


We keep very loose records, of who owes what to whom, as it is no big deal if our corral panels come back with a little poop on the paint, as long as the borrower straightens or replaces the bent gate, and fixes the flat tire on the trailer.  We kind of get together every couple months, and if it seems like I owe one or more of the neighbors a little, I treat him & his family to supper, and if they  owed me something, they treat us.

 

So far, it works out very well, but also keep in mind, there are certain people in the neighborhood, that when they need to borrow something, it tends to be 'busy'.

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Senior Contributor

Re: Borrowed Machinery Value

I use/rent some machinery from a friend/neighbor every year. First of all I return in same shape as when I removed it from his shed...which I also rent part of for mach. storage. I have put rebuilt injection pump on his IH826 , hydraulic pump on his 1850 Oliver and installed electronic ignition on an IH400. And in addition to that give him addition cash [ amt. determined by me ]. So far.....we continue to be friends and I continue to barrow/rent some of his equipment. He is fully retired from active farming. Seems to be working OK !!!  John

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