Cattle on Shares?

Discussion in 'Cattle' started by Mike in Ohio, Nov 23, 2004.

  1. Mike in Ohio

    Mike in Ohio Well-Known Member

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    Is anyone running cattle on shares or know of anyone that is?

    I'm looking at fencing my hay pasture and working out a deal with my neighbor to run feeder steers. Apart from providing pasture and fencing I am willing to put up some of the money towards stocking the steers. He would be putting up primarily the care of the animals.

    I currently have 27 acres of pasture and am currently negotiating to pick up another adjacent 10 acres. I'm not sure how much I'll fence this year. I'm kind of leaning towards fencing "the north pasture", which is a bit over 7 acres and adjacent to his property, as a start.

    I'm not looking to squeeze the last dollar out of this, I'm just trying to figure out what would be fair to him and fair to me. My alternative is not to fence and to plow under the hay field with a mind to planting mixed wild flowers or clover as forage for my bees.

    Thanks in advance for your input.

    Mike
     
  2. genebo

    genebo Well-Known Member Supporter

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    Mike,

    As a short term deal it can't pay off. The cost of fencing is too high.

    As a longer term deal, you'd have to look at adding handling facilities for the cattle. The payback could be a few years with the number of acres you have.

    Pasture maintenance has to be factored in, also. The cattle will turn good hay into poor pasture in a hurry without good practices. Rotation, liming, fertilizing and reseeding.

    The cost to buy the feeders may not equal the cost of the pasture at first.

    I'd be interested only if he bought the feeders and did the work and we split the profit 50-50.

    Hope this helps.

    Genebo
    Paradise Farm

     

  3. mpillow

    mpillow Well-Known Member Supporter

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    Not the same deal but....

    My friend bought a Jersey cow at auction and asked me if I would buy a share or whatever....and I didnt because I dont live close enough to her to be sure the cow is being cared for properly and did not want to ruin our friendship over possible accusations and be out my portion of the cow (milk). I'd rather pay or barter (I traded tomatoes, windows, a fridge) for milk. Sometimes I help milk. I gave her glass jugs etc...

    In your case I might let him purchase his own beef (1/4 of what you have total)and raise in your pasture if he does chores on the weekends....and buys his own grain and hay. Summer rent for land is $75 per acre/month for cleared pastureland or tillable.
     
  4. rambler

    rambler Well-Known Member Supporter

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    The cattle game is so hard to play.

    You will need about 2 acres per head per year to _depend_ on a good supply of all-grass for them to gain. Any more than that and you will run into depleting your grass, or need to add expensive supplimental feed.

    So you are looking at less than 4 head on your new pasture, and less than 15 for the total acreage if you fence it all.

    (Certainly you can flood 27 acres of good pasture with more cattle, let 75 or more clip down the grass (for a short time 2-3 times a year) & rotate them to someplace else. But, then you are not raising 75 head of cattle - you have to figure out your share of the feed - which will usually come to 2 acres per head per hear in a climate like you have.)

    Weaned calves are expensive, feeding out steers takes labor & feed $$$. You & the neighbor are doing the easiest, cheapest part - or so you will be told by $$$$ :) . So you will make the least off any head of cattle that pass through.

    By the time you pay for the fencing, pasture fertilizer, & upkeep, there won't be much left for either of you. If anything, on such a small scale.

    You can increase that stocking rate by improving the pasture with legumes, intensive grazing, and good management. But all that costs more money, more fence - hard to make it pay.

    I'm not telling you not to, but just pencil it out & realize what you can hope to get out of it. This is a long term investment, you won't see profit for 5-10 years. Don't let the neighbor do it for free, while you have all the risk, labor, & expense! :)

    If the pasture can be hayed, you will make a lot more money leaving the fence out of it & baling the crop off of it.....

    --->Paul
     
  5. Mike in Ohio

    Mike in Ohio Well-Known Member

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    Paul,

    I'm looking at this as a longer term sort of deal. I'm planning on fencing the property eventually (haven't been sure exactly what kind of fence) so it's not really a fence/don't fence situation. I have other portions which I plan on fencing (eventually) and keeping some sheep on. It's ground that's not really suitable for cattle.

    I don't want to overgraze the pasture and I'm not looking at this as a "get rich" quick. I'd like to get some freezer beef for ourselves and be able to offer a few people some as well. This is just a nice addition to what we sell our current customer base. If it were just renting our the pasture I wouldn't do it. I'm trying to create a value added situation for both of us.

    As far as hay, been there done that. The first year when I had someone doing it as custom work it was ok. He decided that he was getting on in years and didn't want to do custom work anymore. Doing it myself makes less sense than fencing and working a deal. Making hay on a small scale makes keeping bees seem easy.

    As usual, just trying to figure things out.

    Mike
     
  6. milkstoolcowboy

    milkstoolcowboy Farmer

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    Paul is right. Making hay might seem like more work, but I would be willing to bet it'll pencil out to generate more net income. Losing money on any scale doesn't make sense.

    You have to try to forecast what fat cattle prices will be when you get these steers fed out, so you have to figure out what the price of the feeder cattle will be, what your feed costs per lb. of gain will be, additional expenses (fence, handling facilities, bunks, etc.). Just had our first special feeder sale of the year here, had a run of 1500 head, 240-600 lbs. and they sold from $1.21 to $1.50 per lb. I looked at December 05 cattle futures, believe it was $82.10. At these prices, you better be able to put a pound of gain on them for under $0.25/lb or you will lose money.

    Now, it sounds like you are going to try to market them yourself, so you are going to face some additional processing costs there. I don't know what the regs are for direct sales in your state, but I'm reasonably sure that you'll have to have them processed at a USDA-licensed processor and then have the meat expected. (There are a lot of others on this board who have direct sales experience.)

    I'd have thought you were going to run some cow-calf pairs on that land. If you are going to grass-finish these steers, they'll gain a lot slower and feed cost _per pound of gain_ will be higher, given where corn and bean meal prices are now. You'll most likely want to supplement that pasture with grain, so you'll have to divvy up that cost.

    Maybe we're missing something here, like you have a full-time job or a lot of other irons in the fire, but I have to agree with Paul that I'll net a whole lot more income off those 27 acres with 3-4 cuttings of alfalfa/mixed-grass hay. At our local hay auction, small square bales are going from $120 to $155 per ton last week.

    Don't know the size of your family, but if you just want beef for yourself, you don't need 27 acres to raise a steer. At the current prices and feed costs, I'd say pass. I've fed a few thousand head of steers in my life, and got my *ss handed to me more than once. Nothing will put a long face on you like taking a shellacking on feeding out some steers.
     
  7. bumpus

    bumpus Well-Known Member

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    If one or two calves die how do you split that loss?

    If calf prices go down and they probably will when the market is flooded with more cattle than they need. Your profit will go to pot but you will still have your part with no profit for all of your fence and other expenses.

    Your partner has none.

    .
     
  8. cloverfarm

    cloverfarm Well-Known Member

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    I would consider the fencing as an improvement to the land ... a capital investment. It might make the land more versatile, in case you wanted other livestock, or more valuable if you wanted to sell it to other livestock owners. (In this area, fenced pasture would make teh property more valuable. We have lots of small farms and horse owners)

    DH has cattle on shares with two ohter land-owners. With one he has a small cow-calf herd and they split the costs. With the other he has feeder cattle and they split the costs of buying the calves, feed bill, vet bill and so on. Farm repairs are up to the other land-owners. We have to keep tally books up to date and settle up at least once a year.

    Each land-owner has his own freezer beef customers. We have a choice of three custom butchers in this area. THe customer pays us for the steer (hanging weight) then pays their own butcher bill and picks up the meat from teh butcher's.

    That's what works here in this area.

    HOw well do you know your partner? We got into a situation where DH said fences needed repairs, the land-owner disagreed and turned the cows out ... they all got out on the road and a gal hit one and totalled her car. We had three insurance companies duking it out, who was liable.

    Before doing anything or agreeing to anything, be sure you pencil it all out.

    Good luck!
    Ann
     
  9. Mike in Ohio

    Mike in Ohio Well-Known Member

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    Ann,

    This is along the lines I'm thinking. I have a number of small (5 acres or so) parcels (with homes) along my northern property line. If I fence I would be doing a line fence and put gates (with locks of course) at strategic points. If I ever wanted to lease the improved pasture to someone else I could (or eventually use it myself).

    I would be looking to do something along the lines of what your husband is doing.

    Thanks for the reply.

    Mike
     
  10. Jena

    Jena Well-Known Member

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    Why have the partner at all? Taking care of steers on grass is not that hard or time consuming. If you plan to feed them out, it might be a different story.

    I think you'd be better off with some bred cows. Buy older cows ready to calve in the spring. Split the pairs in the fall and sell the whole lot, cows and all...or keep the cows if you can get them re-bred. Do it again in the spring. You shouldn't need any feed if your pasture and stocking rates are ok.

    This can work IF you know how to buy cows AND you make sure they are preg checked! If you buy those cows from someone you know, you can be assured of getting cows that have not have calving problems in the past. They will probably calve on their own with no problems.

    Prices are just too high right now to invest in feeder cattle. The Candian border should be opening back up sometime this year...at least they are working on it. That will send our market back down in a hurry. Wait and buy then....

    Jena
     
  11. Mike in Ohio

    Mike in Ohio Well-Known Member

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    Jena,

    The main reason is that I live an hour and a half from the farm. It's one thing if I decide to go a day later (or skip a week because I'm traveling) with the bees and other stuff I'm currently doing. With animals I don't have that luxury.

    This approach potentially benefits both of us. I'm not at a point where I'm interested in keeping animals myself. If I can find a way that makes sense...great. If not, I can live with that too. I don't have enough land that livestock would ever be "significant" money for me (unless I got more land).

    Mike
     
  12. milkstoolcowboy

    milkstoolcowboy Farmer

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    Is this potential partner really interested? If you have to buy the feeder calves and run them on pasture, at what weight will you purchase them? Will you feed them out?

    There's a reason why most pasture is rented on a cash basis, usually per acre or per cow/calf pair. The reason is that there is a clear delineation of risk and reward. Renter is bearing all the risk of making money on these cattle, and gets all the potential upside. Once you start on shares, unless you have everything spelled out in a contract, someone's gonna be unhappy. Are you gonna give him free rein about what to feed, where to get feed, etc.

    The other issue is maintaining the fence. If you are property owner, you're typically responsible for maintaining the fence. Since you're not around much, this is not a good arrangement. The "other guy" will be the first to see needed fence repairs, and most likely do it, but then he'll feel he's doing more than his share. I've rented a lot of pasture land over the years and this has frequently been a problem.
     
  13. Mike in Ohio

    Mike in Ohio Well-Known Member

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    Well, I spoke a bit with my neighbors and there are a few other factors:

    1) He will help me put in the fencing. He is also willing to haul the fence posts and fencing.

    2) I expressed my concern about overgrazing and they are willing to go with what the ag agent says is appropriate stocking. They are also willing to do the rest of the hay pasture (cutting and baling) and pay in cattle. This saves me brush hogging. We started to talk about liming, etc but left that for another discussion as I had some other things to get done.

    3) All the decisions are theirs as far as feeding (they will be grazed with mineral supplements but no additional feed except for possible corn finishing), breeding (they favor AI), vet, etc. They are building a herd of black baldies (They explained to me that you get the characteristics of Black Angus but the behavior of Herefords. That means beans to me <G>).

    4) We will be spelling things out in a contract. I guess my comment on that is that a contract may reduce the risk of problems happening but it won't save you if it's someone you shouldn't do business with in the first place.

    5) They aren't looking to do the feeder calf thing. That was my idea because I didn't want to be involved in overwintering, etc. They'll handle whatever cattle is our share along with their own (we are talking about whether there are specific animals that are "ours" or if we get to pick.

    This is not a long term agreement to start. If it grows into something long-term, great. If not we are trying to structure things to minimize potential bad feelings.Both sides recognize that there are potential issues but we are looking for ways to work together. People working together can generally accomplish more than people trying to totally go it their own. This allows me to test the water in an area I wouldn't otherwise get involved with. Neither of us is looking to be cattle barons.....They want to build up a herd and eventually buy additional property in the area. I'm looking to improve my land and generate something extra from land that otherwise doesn't fit my focus (but provides a buffer against development).

    I do want to thank everyone for their input.

    Forgot to mention that fence maintenance for what he is using will be his responsibility.

    Mike
     
  14. rambler

    rambler Well-Known Member Supporter

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    Be sure to work that part out in the contract, and get things covered with your own insurance agent. This is an unusual arangement, & may raise red flags somewhere down the chain. You want to discover this _before_ there is a $500,000 lawsuit letter on your door step. The issue will be that the landowner always is ultimately responsible for the shape of the fence. Someone hits a cow wandering on the road late at night (as I beleive someone in this thread mentioned happening...) and you need to be covered, for fence you are not maintaining.

    This issue specifically involves people you do not know - not your partner...... That is why it _is_ an issue.

    Otherwise make sure that is in order, & sounds like you are entering into this on a pretty good way. I'd not like to single out individual cattle if I were going into a sharing partnership - what if 5 out of 25 die, and they are all your individual or his individual critters? Bad feelings right off... Kinda gotta work that out a bit, but should not be a problem.

    --->Paul
     
  15. Mike in Ohio

    Mike in Ohio Well-Known Member

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    Good point about the insurance Paul. I carry an umbrella policy but this is definately something to be spelled out in the agreement.

    Mike