Contributed by William Edwards, extension economist
Question: What is a fair rental price for a pull-type silage chopper? The custom rate survey includes tractor, fuel, etc., but we have a request for just using our chopper due to the circumstances this year.
Answer: While the Custom Rate Survey does not directly address this question, the worksheet at the bottom of the second page of the survey bulletin can be used to estimate a rental rate for a machine. An example is below. This assume the person using the chopper supplies labor, fuel and the tractor to pull it. You can use your own estimate of the horsepower needed to pull it. Adjust the first step if it is more than a 2-row chopper.
1. Custom charge for chopping corn silage ($44.85 (average value)/ row x 2 rows = $89.70 per hour)
2. Take 80% (deduct 20% for fuel and labor) (80% x $89.70)
3. Repairs, depreciation, interest on chopper and tractor (= $71.76 per hour)
4. Subtract tractor rental value (($.25 x 200?? hp) = $50.00 per hour (tractor rental charge from first row under Machine Rental section))
5. Implement rental value ( = $21.76 per hour (to cover . repairs, depreciation, interest on chopper, only))
For more on Custom Machinery Rates, see Ag Decision Maker Information File A3-10, 2012 Iowa Farm Custom Rate Survey, and the Decision Tool on Calculating Machinery Costs. Other drought related answers and resources from ISU Extension and Outreach are available on the Dealing with Disasters website.
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