Shared Machinery: Tractors, Hire Records & Recovering the Real Cost
A cooperative tractor is a member service, a revenue line and a capital asset that quietly consumes the surplus of the whole society. Charging a rate that recovers real cost, tracking custody and hours, and knowing when the machine has stopped being worth keeping.
Cooperatives buy machinery for good reasons — a tractor, a planter, a chaff cutter, a coffee pulper — so members can access equipment none of them could justify individually. Then the machine is hired out at a rate set by reference to what the neighbouring society charges, maintained when it breaks, and after four years nobody can say whether it has cost the cooperative money or made it any.
The uncomfortable part is that this is usually knowable. The information exists as fuel purchases, repair invoices and a hire book — it has simply never been brought together against one machine.
What an hour of machine time actually costs
A hire rate that covers fuel and the operator feels like it is making money and is usually losing it, because two costs are missing and both are large.
A tractor, costed honestly, per season
Illustrative, in KES. The society believed it was making 1,800 an hour against roughly 1,100 of fuel and wages. It is actually losing about 667 an hour, and the loss is funded from the surplus that would otherwise have gone to members. The two lines that create the gap — maintenance and the replacement provision — are the two that never appear in a hire rate calculation.
The replacement provision is the one that generates the most argument and it is not optional in any real sense. A machine wears out on a schedule, and a cooperative that has not been setting aside against replacement will face a capital call, a loan, or the loss of the service entirely — usually at the least convenient moment.
A hire rate that covers fuel and the operator is not a hire rate. It is a subsidy funded from the members' surplus, and nobody voted for it.
Hours are the meter you do not have
Everything above depends on knowing hours worked, and this is the practical gap: there is no meter or hours tracking in the asset register. Engine hours are not a field, and nothing accumulates them.
So the working arrangement is a hire log — date, member, hours or acreage, operator, fuel issued — maintained per machine and entered weekly. It is unglamorous and it is what makes the costing above possible. Two disciplines make it reliable: the log is completed at the job rather than at the end of the week, and the fuel issue is recorded against the same job so consumption per hour becomes a check on both.
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Book the machine, do not just take it
A booking creates the expectation of a record. Machines that are simply taken generate hire that never gets billed, which in cooperatives is a recurring source of member resentment.
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Record custody when it leaves
Named operator or member, expected return. A machine at a member's farm for two weeks longer than agreed is a scheduling problem for everyone behind them.
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Issue fuel against the job
Not to the machine generally. Fuel per hour worked is the only cross-check you have on both the hours claimed and the fuel drawn.
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Record servicing as it happens
A maintenance event on the asset, so the repair history builds. This is the record that eventually answers the replacement question.
Member rates and commercial rates
Most societies charge members below cost deliberately, which is a legitimate choice — the machinery exists to serve members, not to generate profit. What matters is that the subsidy is quantified and approved rather than accidental.
| Approach | What it requires | What it prevents |
|---|---|---|
| One rate for everyone, below cost | A decision at the AGM about the size of the subsidy | Members discovering later that the tractor consumed the surplus |
| Member rate and non-member rate | Non-member work priced above full cost to cross-subsidise | The society subsidising people who are not members |
| Full-cost rate with a member rebate | Slightly more administration | Ambiguity — the true cost and the subsidy are both visible |
The third is the most transparent and the least popular, which is a familiar pattern in cooperative governance. Whichever you choose, present the machinery service as its own line at the AGM: hours worked, revenue, full cost, and the subsidy. Members are generally comfortable subsidising a service they use; they are not comfortable discovering one they were never told about.
Knowing when to stop
The repair-or-replace decision on shared machinery is usually made emotionally — the tractor has been with the society for years — and it should be made from the maintenance record. Rising frequency of breakdowns, days out of service during the season, and cumulative repair spend against replacement value are the three numbers, and all three come from recording maintenance events as they happen rather than filing invoices.
Days out of service during a planting window is the one that matters most in agriculture and the one nobody counts. A tractor unavailable for eleven days in the planting season has not merely cost repair money — it has cost members a planting window that does not come back, and that is the number that should decide the argument. The general discipline is in maintenance records.
What we do and do not do
What AWRA OpsHub does today
- Machines as registered assets with named custody, condition and full movement history.
- Check-out and check-in with approval, including expected return dates and reminders.
- Maintenance events recorded as movements, building a repair history on the machine.
- Fuel and parts as issued stock, chargeable to a job or a member.
- Invoices and receivables per member, so hire charges are billed and chased like any other balance.
- Costs coded to the asset or job, which is what makes the seasonal costing above possible.
What it does not do
- No hours or meter tracking. Engine hours are not a field and nothing accumulates them — the hire log is yours.
- No booking calendar. Which member has the machine on which day is scheduled outside the system.
- No hire rate or automatic charging. Hours multiplied by a rate is computed by you and raised as an invoice.
- No depreciation or replacement provision. Both are accounting decisions made in the books, not in the register.
The hours gap is the one that shapes the whole process. Everything in this article is achievable with a paper hire log entered weekly plus the register underneath it — but the log is not optional, and nothing will remind you to keep it.
Our take
Cost each machine per season including maintenance and a replacement provision, then compare that against the rate you charge. Keep a hire log with hours and fuel per job, record every service on the machine, and present machinery as its own line at the AGM with the subsidy stated. Members will accept a subsidy they voted for and resent one they discover.
See asset custody and hire
Machines as registered assets with named custody, approved check-out with expected return, maintenance history and costs coded per machine.
Explore asset trackingFrequently asked questions
How should we set a hire rate?
From full seasonal cost divided by hours worked — fuel, operator, servicing and repairs, insurance and licensing, and a provision for replacement — and then decide deliberately how far below that you want to price for members. Rates set by reference to what the neighbouring society charges reproduce their mistakes, and a rate covering only fuel and wages is a subsidy nobody voted for, funded from the surplus that would otherwise reach members.
Does the system track engine hours?
No — there is no meter or hours tracking, and hours are not a field on an asset. The working arrangement is a hire log per machine recording date, member, hours or acreage, operator and fuel issued, entered weekly. It is the input to every calculation in this article, so treat it as part of the process rather than as paperwork, and record it at the job rather than reconstructing the week afterwards.
Should members be charged the same as non-members?
Usually not — most societies charge members below cost deliberately and price non-member work above full cost. What matters is that the subsidy is quantified and approved rather than accidental: present machinery as its own line at the AGM showing hours, revenue, full cost and the subsidy. Members are generally content to subsidise a service they use and distinctly less content to discover one nobody mentioned.
How do we decide whether to repair or replace?
From three numbers in the maintenance record: the frequency of breakdowns over time, cumulative repair spend against replacement value, and days out of service during the season. The third is the one that should decide it in agriculture and the one nobody counts — a machine unavailable for eleven days of a planting window has cost members a window that does not come back, which is worth far more than the repair invoice.
Why include a replacement provision if we have no plans to replace?
Because the machine will need replacing whether or not there is a plan, and a society that has set nothing aside faces a capital call, a loan or the loss of the service — usually at the worst moment. Including it in the cost calculation does not require a separate bank account to be credible; it requires the rate to reflect that the asset is being consumed. Note that neither depreciation nor the provision itself is computed in the register — both are accounting decisions made in your books.
