Livestock Lease Agreements A New Option
MEXICO, MO.
Older farmers and young farmers strapped for capital are teaming up in increasing numbers to form livestock lease alliances.
“Leasing land is common. Why not cattle?” said University of Missouri Extension agribusiness specialist Mary Sobba.
Young producers who may not have adequate finances are working with ready-to-retire producers to share income and profits on cattle by sharing land, machinery, breeding stock, labor, seed, fertilizer and other costs.
Sobba suggests that producers and would-be producers test the fairness of a lease by using a two-column worksheet, one for the landowner and one for the tenant.
Owners can cash lease beef cows, or the owner could furnish a set of bred cows or heifers for a predetermined lease price. The operator receives the livestock, cares for and manages the animals, keeps a percent of the calf crop, and returns the cows to the owner at the end of the lease.
Ways to determine cash rental rates are livestock ownership costs, livestock owner net share, rent and operator’s net return to livestock.
Some considerations include fence repair, bull expense, how and when cows are culled and sold, how and when calves are sold, and replacement females.
Owners and tenants also should decide the length of the lease, incentives for lower death loss and higher calving percentages, and provisions for drought and disaster.∆