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Beef Cow Rental Arrangements for Your Farm

Managing risk is required for many farm enterprises to be profitable and sustainable. Leasing assets, rather than purchasing them, is a form of risk management as it typically requires less capital. Leasing or sharing arrangements between farm operators and property owners have long been used to acquire control of land. In recent years, leasing has become more common for machinery and livestock. Contractual arrangements — such as livestock leases — can be crafted to lend or transfer capital, while also sharing risk. The terms of the agreement depend on the contributions of the owner and operator, as well as the motivation for the lease. A lease agreement may be part of a plan to transfer livestock ownership to a second generation, the means for an older owner to compensate a livestock operator, or simply an alternative form of accessing capital. A pasture owner may also use a livestock lease agreement to generate income without committing labor or additional capital.

 

A key principal to remember when developing a cow herd lease is to KEEP IT SIMPLE! It is recommended that a beef cow lease only involve the beef cows and bulls. While the leasing of other items such as pasture, hay land, and machinery can be part of a cowherd lease, leasing them in a separate agreement provides better flexibility to deal with changing conditions over time. The time and effort spent developing a simple, straight forward, and equitable arrangement in the beginning will be rewarded with better relations between owner and operator and a more efficient beef-cow enterprise. This booklet describes the different rental arrangements that can be made for your farm and what those arrangements entail.

 

NCFMEC-06

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