Livestock leasing good option for producers willing to share risk, reward
STILLWATER, Okla. – These days, you can lease cars, machinery and places to live. But, what about beef cows? Absolutely.
For producers looking to expand their operations and who are willing to share some risks in pursuit of mutual reward, beef cow leasing is worth consideration, said Damona Doye, Oklahoma State University Cooperative Extension farm management specialist.
A livestock lease can involve several parties: a landowner, a cow owner, the person providing labor, management and other inputs, she said. It’s a way to rebuild without having to borrow as much money.
The concept of livestock leasing has been around for years, but has been more of a Midwest practice, and rarely used in Oklahoma.
Doye remembers researching the concept about 15 years ago, and finding very few Oklahoma producers who were involved in the shared agreements. However, she believes that trend is changing.
When we started looking at how people might be able to rebuild herds given tight financing after the drought, some of our state and county specialists said we needed to analyze livestock leasing because it provides some opportunities, Doye said. I do expect to see more as people begin seeking alternative ways of rebuilding and growing their herds.
Generally, in a beef cow leasing arrangement, the property owner provides land and pasture, while the cow owner provides animals (cows and/or bulls), labor and other inputs for a percentage of the calf crop.
Building, rebuilding and expanding a beef cow operation takes longer going the leasing route, and it does require more sophisticated decision making and a high level of communication.
On the other hand, it spreads the risk and gives producers a chance to continue adding to their herd when money is tight and picking up 50 head at the sale barn just is not financially doable.
If you do it on a percent of the calf crop, both of you have something at stake, but no one party bears all the risk, Doye said.
Leasing also could potentially lead to access to higher quality animals with better genetics.
Last year, some producers lacked pasture, but were hesitant to sell cattle for which they’d spent decades building up the quality of the genetics, Doye said. If they were able to maintain cows but are short of pasture this year, there may be a unique opportunity to build a high quality herd.
In anticipation of growing interest in share agreements in Oklahoma and surrounding areas, Doye is collaborating with Kevin Dhuyvetter, Kansas State University Extension farm management specialist, on a publication outlining the process in explicit detail.
The authors also will provide cost worksheets and a customizable template for an actual leasing agreement.
The publication and accompanying forms will become part of the resources of the North Central Farm Management Extension Committee and will be available at http://www.Aglease101.org by this spring.
The publication and forms are designed to walk people through the different terms they need to think about. For instance, who is responsible for death losses? Who is responsible for care? Is a partnership being formed for legal purposes? Doye said. We strongly encourage people to develop written contract so there’s very little misunderstanding about their agreements.