Leasing Arrangements in Times of Drought and Beyond

.
.
(KSU)

Leasing or buying is often the debate that people have when deciding on their next vehicle to drive. Many in the agricultural community also enter arrangements to lease pastures, farm ground and — sometimes — even cows, according to the experts at the Kansas State University (K-State) Beef Cattle Institute (BCI).

“Whether it is leasing cows or pasture, it is important that the arrangement is fair and equitable for all parties involved,” said K-State agricultural economist Dustin Pendell on a recent Cattle Chat podcast.

Pendell said there are three steps that cow-calf producers and landowners need to work through from a cost standpoint prior to setting up an arrangement.

  1. Identify the expenses, and know who is going be responsible for paying the expenses.
  2. Understand the opportunity costs, and don’t forget hidden costs, such as unpaid family labor.
  3. Know how these costs are going to be allocated to the parties respectively.

Regarding revenue, Pendell said those dollars also need to be shared on an agreed percentage basis. He pointed to the agmanager.info website from K-State’s Department of Agricultural Economics as a resource for how to set up these agreements.

“Whether it is leasing cows or pasture, it is important that the arrangement is fair and equitable for all parties involved.”
— Dustin Pendell

In addition to a temporary leasing arrangement, veterinarian Bob Larson said that he has observed many successful lease-to-own arrangements in operations where there is a generational shift.

“If there is an older cattle producer who still has the land but wants to reduce the labor involved with cattle production, there are options to involve a younger cattle person who can provide the labor in exchange for an increasing ownership percentage of the cows over time,” Larson said.

Regardless of the arrangement, Pendell stressed the importance of putting the contract in writing.

“Spend the time upfront thinking through all the costs and incomes, including cull cow incomes, and then get everything documented,” he said. “If something happens down the line and you need to terminate the arrangement, you have it in writing and it is much easier than if it was a verbal agreement.”

To hear the full discussion, listen to the Cattle Chat podcast online.

 

Latest News

Biden Administration Restores Wildlife Protections
Biden Administration Restores Wildlife Protections

The U.S. Fish and Wildlife Service plans to reinstate rules protecting endangered plants and animals, action that would reverse changes made during the Trump Administration that weakened the Endangered Species Act.

Across Breed EPD Adjustment Factors
Across Breed EPD Adjustment Factors

EPDs from multiple breeds can be compared by adding/subtracting the appropriate adjustment factors to the EPDs resulting from the most recent genetic evaluations for each of 18 breeds.

APHIS Now Thinks Wild Birds Are to Blame for Highly Pathogenic Avian Influenza's Arrival on Four U.S. Dairies
APHIS Now Thinks Wild Birds Are to Blame for Highly Pathogenic Avian Influenza's Arrival on Four U.S. Dairies

The livestock industry continues to grapple with the first confirmed cases of HPAI in cattle, while federal and state agencies continue to assure consumers there's no concern about the safety of the U.S. milk supply.

Skills Survey Reveals U.S. Agriculture & Food Industry Workforce Needs and Gaps
Skills Survey Reveals U.S. Agriculture & Food Industry Workforce Needs and Gaps

U.S. employers report challenges in finding suitable job candidates with work-ready skills to fill open roles in ag. The AgCareers.com U.S. Skills Survey offers insights, data and trends to address skill development.

USDA Authorizes CRP Graze and Hay Donations to Wildfire Victims
USDA Authorizes CRP Graze and Hay Donations to Wildfire Victims

Conservation Reserve Program (CRP) participants can donate emergency grazing authority to ranchers in Nebraska, Oklahoma and Texas impacted by recent wildfires.

New Guide Helps Producers Maximize Values of Cull Cows
New Guide Helps Producers Maximize Values of Cull Cows

A new resource developed by the National Cattlemen’s Beef Association and CattleFax helps cattle producers maximize profitability from their culling decisions.