Cattle Leasing

[Pnw Farmer]

Hello all, hope everyone is doing well. We received an offer from a gentleman we run a couple head on about buying cows and leasing them to us. We just picked up a nice little pasture and the funds aren't there quite yet to buy the numbers it'll support. I don't know anything about leasing cattle so I thought I'd come to the forum and see if people have done this, what are the pros/cons, fair rates for both parties, things of that nature. There would be a written agreement in place. Thanks in advance.

Farmer

 

[Brute 23]

Interesting idea. I would live to hear the details on it if you don't mind.

I will tell you from leasing bulls you are still responsible for the animal if it dies or gets injured. So if the funds aren't there to buy a bull you can't really lease one either.

 

[Mrcopier]

Not sure why you would lease cattle. Enlighten me on this. OR I would lease the land to someone who has cattle

 

[Brute 23]

Not sure why you would lease cattle. Enlighten me on this. OR I would lease the land to someone who has cattle

That is what my brother and I did. We had more grass than stomach to spend on cattle so we took extra steers from the place I take care of and turned them out with our cattle. We made a deal to use some equipment instead of cash for housing and caring for them.

 

[Pnw Farmer]

Not sure why you would lease cattle. Enlighten me on this. OR I would lease the land to someone who has cattle

That's why I'm here asking, he'd heard of somebody in Oregon doing it but didn't know any details. He asked if I knew anything about it which I don't. A calf share agreement, similar to a crop share with a landlord in farming was what he threw out there. Farmland though is perpetual, outside of development or CRP it's guaranteed to be there the next year whereas livestock has a certain time span. He's raised cattle for quite a few years so he's familiar with livestock, sold everything several years back before we started.

This will be a simple example, I know there's more details to figure out but what he threw out there was him buying 10 young cows, we maintain the herd with no involvement from him and for his investment he takes 3 calves at sale time, guaranteed whether all 10 drop calves or only 5 drop calves. We're just wondering if anybody has done anything like this and how you made it work or is it a horrible idea.

We bought a young bull this spring because of the liability factor involved with renting, I just haven't posted him on here because he's not a world class specimen, Polled Hereford with a little too much white but he passed his BSE, knows he's a bull and which end of the cow is important to make a calf, isn't flighty or aggressive in close quarters (so far), and was the right price.

 

[Brute 23]

That's why I'm here asking, he'd heard of somebody in Oregon doing it but didn't know any details. He asked if I knew anything about it which I don't. A calf share agreement, similar to a crop share with a landlord in farming was what he threw out there. Farmland though is perpetual, outside of development or CRP it's guaranteed to be there the next year whereas livestock has a certain time span. He's raised cattle for quite a few years so he's familiar with livestock, sold everything several years back before we started.

This will be a simple example, I know there's more details to figure out but what he threw out there was him buying 10 young cows, we maintain the herd with no involvement from him and for his investment he takes 3 calves at sale time, guaranteed whether all 10 drop calves or only 5 drop calves. We're just wondering if anybody has done anything like this and how you made it work or is it a horrible idea.

We bought a young bull this spring because of the liability factor involved with renting, I just haven't posted him on here because he's not a world class specimen, Polled Hereford with a little too much white but he passed his BSE, knows he's a bull and which end of the cow is important to make a calf, isn't flighty or aggressive in close quarters (so far), and was the right price.

Does he own the cattle the entire time?

Do you know how much it costs you to raise a calf?

I have to think on that one but I am not seeing a down side at the moment for either of yall. I'm interested to hear every ones thoughts on this.

 

[GoWyo]

My son still owns a handful of cows, but is not involved in the ranch. We pay him a cash lease per cow each year and take the calf and pay all the expenses. When the cow is sold, he gets the proceeds.

 

[Dave]

I have known people who did this. Been some years ago so I don't remember details. But I know they just paid X amount per cow and I know they didn't have any old cull cow looking ones in the field.

 

[Pnw Farmer]

Does he own the cattle the entire time?

Do you know how much it costs you to raise a calf?

I have to think on that one but I am not seeing a down side at the moment for either of yall. I'm interested to hear every ones thoughts on this.

All good questions I don't have answers to, I would think they'd be technically owned by him the whole time but have something in the contract splitting a cull cow sale. That'd have to be hashed out, pro rate of some kind based on age possibly? One that won't take her calf when she's 3 or 4 would be a different percentage than one who gives a nice calf each year but comes up open at 10 or 11.

We can raise a calf for pretty cheap, or what sounds cheap to me with current prices. We're fortunate to have a couple free pastures half the herd runs on in summer then dry lot half and run half on free pasture in winter, I put up my own hay to minimize cost. Maybe $600 into a pair annually to make a marketable calf?

GoWyo, do you mind me asking what you pay per year per cow? I'm not a fan of asking people their business, I'm just looking for a good starting point if you have one.

Thanks to everybody who's chimed in so far.

 

[GoWyo]

It started at $250/hd/yr and we pay a little more now because they are registered Angus cows.

 

[Brute 23]

I have never done this but was thinking about this since I read it yesterday. I'm thinking out loud here.

Most people who have cash to put up for some one else in a business are trying to return around 20% on their money.

So if they bought $3k cows, x 10 cows, $30K, $6k per year. Imo, you 3 calf deal was pretty darn close, and even potentially pretty good deal for you, depending on the details. I woud do like 3x the avg calf sales. That covers you and him.

Ideally, they would but a set at a give age, 2yrs old, and sell at 6 or 8yrs old, and hopefully get at least $1500 each. That adds another $250 per head to cover the depreciation.

That would put them needing in the neighborhood of $8-8500 a year. Some one would still have risk if a cow died mid-term.

That gets pretty tight at $850 per head rent, plus your expenses on top, you would definitely have to sell big, good calves in the $1750+ range to keep money on them.

I guess in the right situation if you could clear $500 off each one it would be worth considering.