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Midwest/North: Evaluating your beef cow lease agreement

Erika Lundy for Progressive Cattle Published on 24 October 2019

A cow herd offers diversity and flexibility to the farming enterprise; however, start-up or expansion of the cow herd can be a high-capital investment.

A cow lease agreement is an opportunity to share resources and responsibilities to reduce the risk but also brings benefit to both parties involved in the arrangement if organized properly. However, the agreement should be reviewed annually to ensure it’s still serving its purpose.

Here are some tips for reviewing a lease:

1. Ensure the agreement runs on a production year rather than a calendar year. Most arrangements run from one weaning season to the other, since income is reaped from calf sales.

2. Consider how replacement heifers are managed. Often, if replacement heifers are retained, the cattle owner is responsible for those developmental costs, which are kept separate from the mature herd. Another option may be to purchase bred females to add to the herd.

3. Determine how income from market cows and bulls will be handled. In many agreements, the cattle owner would collect the income, since the laborer is providing a service. In a situation where the owner and laborer are on a cost-share agreement, income may be split between parties.

4. Review the past year’s expenses and income to ensure that production costs were shared as intended. Use of production records to assess death loss, cull rates, conception rates and percent of calf crop weaned can aid in benchmarking against past-year records to confirm management is meeting expectations. Setting realistic standards for production parameters (90% weaned calf crop, 12% culling rate, etc.) before entering the year’s arrangement helps to encourage good management.

5. Consider how costs of other investments will be shared to make improvements to the cow enterprise. This may include pasture and facility renovations, addition of other forage resources such as cover crops or cornstalks into the operation or cattle management strategies such as incorporation of A.I. or creep feeding.

No two arrangements are the same, so it’s important to have the agreement in writing to ensure it properly outlines expectations of both parties. Several resources exist to compare beef cow lease arrangement options, including this Iowa State University decision tool (Iowa State University - Whole Farm).  end mark

Erika Lundy
  • Erika Lundy

  • Extension Beef Program Specialist
  • Iowa Beef Center - Iowa State University
  • Email Erika Lundy