OrganicValley726x88
Loading...
You are here:  Home  >  Money Matters  >  Current Article

Are Your Cow-Calf Share and Cash Lease Agreements Up to Snuff?

By   /  November 26, 2018  /  No Comments

    Print       Email

For the upcoming 2019 year, cow-calf share leases or cash leases should be reviewed. Photo credit Aaron Berger.

 

The fall of the year is often a convenient time for those involved in cow-calf share and cash leases of spring calving cows to revisit the terms of the agreement.  Market values of cattle, interest rates, pasture rental rates and feed costs can change significantly from year to year.  Discussing how the share or lease is working and if adjustments need to be made is a good way to ensure the agreement is fair.

For a cow owner, the following are the four major drivers that determine what is fair in terms of a cash lease or percentage of the calf crop the cow owner should receive. Those factors are:

  • Average cow herd value

  • Cow salvage value

  • Replacement rate

  • Expected rate of return (interest rate) on cow value

If the cow owner is providing other inputs into the lease or share agreement beyond cows, these need to be reviewed as well.  Sometimes cow owners may provide inputs such as bulls, pasture or facilities as well as share in veterinary expenses as part of the share agreement.

For the person who is the operator caring for the cows the main things that they need to include are:

  • Pasture and Feed

  • Labor

  • Equipment Expense

  • Operating Expense

If the operator is responsible for providing bulls and veterinary expenses, these should be included as well. Sometimes the operator is asked to develop replacement bred heifers for the cow owner. This activity should be treated as a separate enterprise and not included into the cow-calf share agreement.

Resources to Help Set Up Good Agreements

The Beef.unl.edu website has several resources that can help both cow owners and those leasing cows in determining what a “fair” lease arrangement should be. Two resources are: the Beef Cow Share Lease Agreements Extension Circular 841, and a video explaining the use of the Cow-Calf Share Lease Cow-Q-Lator, an Excel® based spreadsheet.

Annually reviewing cow-calf share or cash cow lease agreements is prudent.  In order for a cow-calf share or cash lease agreement to be successful long term, it must work for all parties involved.

    Print       Email
  • Published: 2 weeks ago on November 26, 2018
  • By:
  • Last Modified: November 12, 2018 @ 4:57 pm
  • Filed Under: Money Matters

About the author

Aaron Berger is a Beef Systems Extension Educator for the University of Nebraska-Lincoln. He works out of the Panhandle Research and Extension Center. His areas of focus are beef systems for sustainability, profitability, health and well-being, quality and wholesomeness.

Leave a Reply

Your email address will not be published. Required fields are marked *

OrganicValley726x88

You might also like...

Diverse Family Farms Are Important To Us All

Read More →