Lease requirements

[tncattle]

Just talked with a man who has 386 acres of good pasture for lease with complete cattle working facilities, the works. Seriously it's a turn key operation, even selling the cattle-72 mama Angus. Anyway, whoever leases it must fertilize as necessary by University Tennessee recommendations. He just told me they spent $35K the last 15 months fertilizing! He said they were on a regular fertilizing program. That's a lot of grass for this area but I can't figure out how to make it work on paper. On top of the fertilizer expense we still need to negotiate the price per acre for the yearly lease! Seems to me that it would be around $45K-$55K a year just in fertilizer $ lease expenses, then you have hay, meds, fuel etc. Someone make this work on paper for me cause I sure can't. :???:

 

[Dixieangus]

Assuming you are near North Mississippi (our stocking rate is 1-2 acres/pair) and it being good fertilized ground, you should be able to run many more mamas or even stockers?

 

[tncattle]

The farm is 10 miles south of Clarksville, Tn. so upper middle Tn. stockers only make $100-$200 per head so you would have to run around 400 a year to cover fertilizer & lease payment! If I'm wrong y'all show me cause if it can work it's a great place to have.

 

[shaz]

Assuming you are near North Mississippi (our stocking rate is 1-2 acres/pair) and it being good fertilized ground, you should be able to run many more mamas or even stockers?

Probably not. Tn typically has more rock and less flat land. I wouldn't know without seeing the place but 35K per year for fertilizer on 386 acres and that many cows sounds like the owners need to get out of this business altogether.

70+ cows will only gross around 35K. There's got to be some misunderstanding or something...

 

[tncattle]

Assuming you are near North Mississippi (our stocking rate is 1-2 acres/pair) and it being good fertilized ground, you should be able to run many more mamas or even stockers?

Probably not. Tn typically has more rock and less flat land. I wouldn't know without seeing the place but 35K per year for fertilizer on 386 acres and that many cows sounds like the owners need to get out of this business altogether.

70+ cows will only gross around 35K. There's got to be some misunderstanding or something...

I haven't seen the grass yet but it will hold more than those 70 cows that's just all they had on it. But I don't know how many it will hold for sure until I see it.

 

[regolith]

If you can't make it work on paper you need to walk away.
Unles you're prepared to subsidise the lifestyle with another income.

Don't forget that they may be getting out because they can't make it work - but they still have the right to set the high fertiliser inputs as a requirement of the lease, and heck knows what else.

IME the paper budgets are always more optimistic than reality - unexpected things happen and throw the budgets out, or ruthless individuals quote one price and charge another and there's no paperwork to prove the original agreement... or there's stuff they don't tell you that could cost you big.

 

[tncattle]

If you can't make it work on paper you need to walk away.
Unles you're prepared to subsidise the lifestyle with another income.

Don't forget that they may be getting out because they can't make it work - but they still have the right to set the high fertiliser inputs as a requirement of the lease, and heck knows what else.

IME the paper budgets are always more optimistic than reality - unexpected things happen and throw the budgets out, or ruthless individuals quote one price and charge another and there's no paperwork to prove the original agreement... or there's stuff they don't tell you that could cost you big.

Hey, our pastor lived in New Zealand for I think two years--I'll have to ask him where as I can't remember. The owners of the property have a successful construction business and I think they are just tired of the cow thing.

 

[jedstivers]

Ask for the soil test and see what it calls for. Then see what that will cost.

 

[Dixieangus]

Maybe you need to talk him out of the fertilizer. Or get a soil sample, cause he may not even need that much fertilizer?

 

[B&M Farms]

I figure that at $73 per acre per year. With today's fertilizer prices I can see it. In 2009 I spent about a $100 per acre fertilizing hay meadows(almost $400 a ton for the mix my soil tests required). In 2010 I saved quite a bit by switching to chicken manure. This year I didn't fertilize because of the drought. I usually sale hay to recoup some of that expense. I have never put that much into fertilizing pasture running cows, just couldn't pencil it out. My soil test usually call for more nitrogen on hay ground. You might could use chicken manure to save with fertilizer and lime expenses if it's available in your area. I am assuming that you would just be required to fertilize according to a soil test every year. With fertilizer prices as high as they are, I have been unable to do that every year on all the ground I'm using.

 

[tncattle]

I figure that at $73 per acre per year. With today's fertilizer prices I can see it. In 2009 I spent about a $100 per acre fertilizing hay meadows(almost $400 a ton for the mix my soil tests required). In 2010 I saved quite a bit by switching to chicken manure. This year I didn't fertilize because of the drought. I usually sale hay to recoup some of that expense. I have never put that much into fertilizing pasture running cows, just couldn't pencil it out. My soil test usually call for more nitrogen on hay ground. You might could use chicken manure to save with fertilizer and lime expenses if it's available in your area. I am assuming that you would just be required to fertilize according to a soil test every year. With fertilizer prices as high as they are, I have been unable to do that every year on all the ground I'm using.

It seems too risky to sign off on the lease requiring fertilizing according to the soil test every year. I don't know know enough about fertilizer to do that. Might have a easy year and then get hit with a massive fertilizer bill the next.

 

[thendrix]

You might could use chicken manure to save with fertilizer and lime expenses if it's available in your area.

If the soil needs nitrogen Chicken litter will sure enough put it there. I agree with the others on the soil test. Make sure of what you need rather then go by somebody's word of mouth.

 

[shaz]

It could be that the owners just want someone who will put some money into the land. Surely they don't expect you to go broke on the place

 

[Goodlife]

This post has me thinking. It is interesting first to consider why they are willing to lease this land for such a small amount (like Shaz was saying)? If it is $55k to lease and fertilize, and if you are assuming $25k of that is fert, then they are basically asking $30k to lease 386 acres or less than $100 per acre. I obviously made some of these numbers up trying to be conservative based on what I have read so far. If land is worh $4000, and it is worth twice that for good pasture here, that is less than 2.5% on the value of the land. Add the cattle and buildings etc... and they may be looking at CD like returns. Why hang on to it at those prices? Perhaps they are looking for you to continue to improve the land for them so they can sell it when the market makes some recovery? That means if you do end up leasing it, be sure it will be guaranteed available next year, and the next to get a reasonable return on your investment. That is if you can find a way to make a profit here.

I played with some numbers and it seems you must sell somewhere in the range of $150,000 worth of cattle to cover the $55K plus other expenses, and have anything left to come close to a living income. Looks like this goes to show what has been discussed many times on this board...you cannot cover the land cost with your cattle income. That is a separate investment you hope to recover with some gain some day (or at least your kids be able to).

 

[tom4018]

I would want a set term like 3 or 5 years in a lease. In this area which is not far from Clarksville I would think it would be hard to pay more than $50-$60 a acre unless the ground is exceptional and still make a profit on a cow calf operation.

 

[JSCATTLE]

I've never paid mOre than 12 dollars an acre and we can run a pair per acre or acre and a half . Say yOu can run 200 head on that place . Cow prices are sky high now . I would assume you are buying more cows to stock it . At 1200 a head it will take 4 years at best to pay for herself . Then he expects you to put 20 k worth of fertilizer . And pay x amount for a lease plus mowing fence fixing etc. I would be worried he is putting to much fertilizer or getting to much run off . If its just cow pasture I would think at least half of the fertilizer goes back from the cow . Sounds like you will be paying a note on someone else's land instead of your own. Around here we pretty much pay the taxes on the place and mow once a year in the fall keep fences up etc. if the pasture needs more fertilizer you should be able to run less stock and relieve some grazing pressure and leave some organic matter .

 

[marksmu]

JS hit the nail on the head....this guy is looking for you to improve his pasture and pay his note. Not going to happen. Lease rates at $12/acre is a little high for my area. Most folks around us charge $7-$9/acre and I must be really close to JS because we can run 1 pair for every 2 acres. If we do nothing - no hay, no fertilizer, no winter pasture, etc we can run 1 pair to 4 acres...this year was tough with the drought, but we never ran out of grass, and our winter pasture came up just like it always has and looks great.

Looks to me like this price is astronomically high - your lease should pay the taxes and maybe a little something for the guy to get a nice dinner once per year. Do you get any mineral royalties for that price? J/J

 

[tncattle]

I threw out $35 an acre and the owner said it "might" not be enough but didn't say no either. He said I would be responsible for weed control and upkeep of the fences which are in very good condition and they are installing some new high tensile with wood post along an area that needs it. I talked with the extension agent and he said they have poured a lot of $ into the fertilizing. The farm was there parents and they both loved cattle, the sons kept everything looking great and spent whatever they had to because they had the $ and wanted mom & pop to be happy--they have both passed on. The extension agent said the soil was in a high state of fertility and it would be much less in fertilizer to keep it that way if not over-stocked. Decisions, decisions :?

 

[Anonymous]

No real decision to me. Guys trying to get over on you from what i gather. And do tou want to enter into any business relationship with anyone looking to get over on you?

 

[Isomade]

You need to walk away before you find yourself in a predicament.