leasing out cattle...Common percentage split?
 

So we've been talking about selling our three Angus pairs. Pair market is about as high as I've ever seen (I watched some plain old commercials pairs go through the ring a month ago at $2,000!).
Ours are quite young, healthy, compact and easy to handle. I'm not sure we'd get $2,000, but we'd probably do pretty well. We don't really want to sell, though. For the same reasons I think we'd do pretty well selling them, we want to keep them. They're exactly what we've been wanting for cows and we hate to have to start over again in the future, but we don't have any grass.

Asking a friend yesterday whether he knew of anyone who might want to buy some pairs, he suggested leasing them out. He wants a few more, but the market is so high he can't afford to buy.

So we're now trying to arrive at a percentage of the calf check that would be agreeable to both of us.

They'd get turned out ASAP, for the summer grazing/breeding season. I think they're coming home for winter/calving, and then we'd do it again next year if it's agreeable for both of us.

Does anyone have any experience with this? What's a typical split? Keeping in mind this isn't for the entire year, just summer/fall and I've already got them calved out. 50/50? 60/40 or 75/25, his favor?

We are doing a 60/40 this year with some angus pairs, the couple who own the cows are providing us with some winter hay and keeping our heifers on thier pasture for the summer. We keep thier cows and all year and cover all the expenses, do all the work. If they stop providing hay and keeping the replacement heifers in the summer it will go to 70/30.

is there anything written in as to who gets first pick or if anyone gets a preference if there are heifers?

I have a 100 or so beef cow herd that that I may be able to increase to 120 or more but after that I would probably be at my max. I have a guy that hauls my cattle for me and has some of his own ,but could run 20 more probably.
We have discussed me supplying the heifers and he taking care of them and we just split the calf crop, The cows would always be mine and if one ever needed to be culled I would sell it.
I gues there all kinds of deals that could be made, but if I could get half and not touch them that sounds pretty good to me, provided you have confidence in person you are working with

Just sell them this is how friend ships end . Some unforseen circumstance will come up feelings will get hurt and someone will lose money .

AGREE was waiting for somebody else to say this

60/40 is what it was around here a few years ago. That is for year round care and feed. Some leases have some stipulations on how to deal with death loss. It is usually split the same way unless it exceeds normal parameters, as a way to protect the owner of the cows against poor management or neglect.

If you don't work deals like this with your friends/neighbors, who DO you work them with? :confused:


Another friend suggested just going with a basic cash lease; $30 per pair, per month, and another $20 for the breeding months for the bull.
I think we're leaning toward just selling, though, and taking our money now. The cattle market has got to start cycling downward soon...

always SELL OR GIVE Never do a deal with way too many variables


What would happen in your deals if the cows got out and run off never to be found

what would happen if several of your cows died while he was on vacation

what would happen if he said they were gone and you saw some that looked like them sale at sale barn

what would happen if after all his taking care of your cows 1/2 year and the calf market crashed like back in the first mad cow outbreak and 400 pound calves sold for $100

or like back in 1996 when cow and calf pairs sold for $250 and the best calves sold for 50 cents a pound

what would happen if 400 pound calves sold for $2000 would it be worth him taking care of them for 6 months

ARMY WORMS wiping out his pasture or a fire burning his grass.....

all these things except the $2000 calves have happen in the past to some of us....so those are things that WILL HAPPEN AGAIN


if any of these happen SOMEBODY would feel cheated....do you run around with people that you feel cheated you

Interestingly, none of that answered my question.

There is risk to just walking out of the house everyday, or driving down the road
In my last post I said if it was someone you have confidence in. If the guy needed to go on vacation I would go check on them for a week.
Before I did anything they would be branded and ear tagged. Unless you are dealing with a lowlife, the only way you could lose is if they die and that could happen on your farm or mine.
What else can you get you a 100% return on your money in 2 or 3 years and still own the cow?

the first line should have answered it
always SELL OR GIVE Never do a deal with way too many variables

My cattle are branded and ear tagged just because they're alive. ;)
And yeah, he's someone I have confidence in.


However, like I said in my last post, we're leaning toward selling them. But if we do lease, we'll probably just do a cash lease, at least for this breeding season.

Just to update, this is what we ended up doing:

We're sending them to his place for the three summer months. To be renegotiated this fall and/or sold.
$30 a head per month, plus a one-time $30 for the bull. Total of $300 for three months.

They're starting out for the first 45 days at ANOTHER friend's place because she's the one with the bulls. All shots to be administered prior to dumping them with the bull.

I'm a little late to weigh in on the subject but wanted to throw in a couple quarters about the market. I don't see the market for animals heading down anytime soon I think it will rise gradually over the next couple years; it will probably peak and then stay stagnant for a while. Until the economy recovers; until the perception of what big AG is doing to our food (Pink Slime) you might even see more of an increase of local grown product price increasing.

Erin, You got very reasonalble pasture rent. Here some guys are paying twice that.

It's already dropped some.
We haven't gotten much rain this spring and our area is getting a little more conservative about stocking rates...

Yep, I see that they are starting to liquidate cows in Wyoming due to drought, heard the same thing in western Kansas.

Not only will they be dumping cattle due to no grass from the drought, but if the corn crops don't get better, the price of feed will go through the roof causing a much higher cost in the feedlots, resulting in retail beef going up even more. This will drive consumer demand down and with the cattle market flooded, prices will drop,... but, I don't think it will be as bad as it has been in the past.

I would just rent grass for the cows or sell them.

so what you are saying...its a buyers market?

yes. Right now there are too many things happening, drought will not only cause slaughter numbers to increase due to the lack of grasses, but it will also mean that there will be less grain per acre produced increasing feed costs, again sending more animals to market early.

I am hoping to close on my land within the next 20 days, assuming the bank loan goes through. After that I will be starting my herd so a good price on cattle will help out.

I don't think the market will drop too drastically. I think prices will stay high, just not quite as high as they are now. That's why if I was the OP, I would either sell now, before the long term economics come into play, or just hang on and rent some grass and wait out the droughts and the repercussions.

If you guys are right, higher grains prices generally means lower slaughter weight. Also if the cow herd is culled that means less calves next year. If the dollar goes up because of the Euro mess it pressures beef exports. If the dollars declines against foreign currancies it make our beef cheaper to them. Do y;ou need more variables? Its a crap shoot, if someone REALLY new where prices were going you wouldn't have to own cattle just future contracts on the board.

Not yet. But it might be soon, if you live in a drought-striken area...
As it stands, total numbers are DOWN nationwide, so it's still a seller's market for the most part.

They currently are keeping replacment heifers out of my cows for me at their place. they have first pick of the heifers form thiers if anyone wants them we will "buy" them at the average market price that week at the local sale yard, same goes for the steers if we want to feed one out.