Grazing Contracts for Livestock


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Grazing Contracts for Livestock

  1. 1. Grazing Contracts for Livestock A Publication of ATTRA—National Sustainable Agriculture Information Service • 1-800-346-9140 • www.attra.ncat.orgBy Tim Johnson Grazing livestock for other farmers is a way to make a land investment return additional dollars to theNCAT Agriculture land owner. It requires knowledge of livestock, but more importantly, knowledge of how to make moneySpecialist from grass. This publication discusses some of the issues involved with contract grazing, includingJanuary 2005 various classes of livestock, equipment, sample contracts, some of the economics to consider and otherUpdated 2010 resources available on the Hannah SharpNCAT Intern andLee RinehartNCAT Agriculture IntroductionSpecialist O wning and working the© 2010 NCAT land is one of the great dreams for many Ameri- cans. To know that the groundContents under your feet belongs to you andIntroduction ..................... 1 your family — to walk on it, playForage and pasture on it, plant grass on it, raise kidsresources ........................... 3 and cows on it — is one of life’sClasses of livestock tograze .................................. 4 joys. Land ownership gives a senseEquipment ....................... 6 of stability and permanence rarely found with anything else in life.Contracts .......................... 8 What to do with the land once youEconomic projectionsand budgets ..................... 9 own it is where things begin to getReferences ..................... 10 complicated. Photo courtesy of NRCS.Further resources ......... 10 In many cases, owners want to find an opportunity that will generate the greatest else to do with their land, so they think return on their investment. But what oppor- they want to be cattle producers. This tunities are these owners willing to capitalize publication describes how to minimize on, and what expertise do they possess that the capital investment required to generate could provide that critical input to make the an economic return from land owner- project a success? What opportunities are ship by grazing cattle on contract. For there that are sustainable — opportunities to some landowners, a return large enough to improve and coexist with the land? In some pay the property taxes is often sufficient, cases, owners just want to make enough to off ering a cattle grazier the opportunity pay the overhead associated with owner- to rent very affordable pasture during the ship. Others want to actually make a living growing season.ATTRA—National Sustainable and support a family from their investment.Agriculture Information Service Could you possibly contract graze either( is managed Whatever the goal, one must always evalu- rented or leased pasture to generate a returnby the National Center for Appro- ate any potential opportunity thoroughlypriate Technology (NCAT) and is with very little or no capital investment?funded under a grant from the and make sure that the desired outcome is In his book No Risk Ranching: CustomUnited States Department of sustainable and realistic.Agriculture’s Rural Business- Grazing on Leased Land, Greg Judy describesCooperative Service. Visit theNCAT Web site ( An executive in the cattle industry once his method of utilizing rented, leased orsarc_current.php) for said that cattle ownership is a by-product bartered land to make money raising cattlemore information onour sustainable agri- of land ownership. That is to say that cows on contract. See the Further resources sectionculture projects. are there because folks don’t know what for information on ordering this book.
  2. 2. While this publication focuses primarily on may be convincing the livestock owner that the contract grazier, many of the ideas dis- you can properly manage both the land and cussed are equally useful to the livestock the animals, especially if you have no experi-Related ATTRA owner, especially regarding what he or she ence in contract grazing. The first few yearsPublications may be the most difficult, until you have should look for in a grazing operation toSustainable Pasture meet the needs of the livestock. demonstrated some success. One sugges-Management tion is to start small and ensure success withNutrient Cycling Contract grazing is not a casual enterprise. It fewer animals and more acres than you thinkin Pastures requires a thorough knowledge of both pas- you need. It is better to get a smaller returnAssessing the Pasture ture and animal husbandry. For instance, with limited grazing than to overgraze andSoil Resource continuous mob grazing of an extra parcel have to purchase additional feed. Building of land may not result in the weight gains a history of the land’s actual productionRotational Grazing expected on stocker cattle or dairy heifers, capabilities, along with some personalPaddock Design, and continuous grazing often results in prob-Fencing and Water experience, will allow you to fine tune the lems with persistence of forage and erosion system as you gain the knowledge necessarySystems forControlled Grazing in environmentally sensitive areas. Contract for successful grazing. grazing requires some management skills onManaged Grazingin Riparian Areas the grazier’s part to get the results that live- stock owners will expect. Typically, the cus- Ideas for developing a stocker orDairy Resource List: grazing business: tom grazier is expected to achieve what theOrganic and The success of your business depends onPasture-Based livestock owner can’t achieve at home due to identifying and developing these resources: resource or management limitations. Any-Raising Dairy Heifers relatively inexpensive feed resources, cattleon Pasture one considering contract grazing should have stockmanship, financial and grazing expertise several years of grazing experience and good and personal relationships.Cattle Production: stockmanship skills prior to engaging in anyConsiderations for Conduct honest business. Build partnershipsPasture-Based Beef legally binding arrangement. with honest individuals.and Dairy Producers Most custom grazing is done with stocker Partnerships allow you to run more livestockRuminant Nutrition cattle, taking weaned calves at about 500 for longer portions of the year, thereby spread-for Graziers pounds and grazing them up to 800 pounds, ing input costs over more pounds of grass orGrazing Networks for when they would typically be placed in feed gain and allowing you to sell and buyLivestock Producers a feedlot. For example, the wheat fields in closer to the same market.Multispecies Grazing Kansas, Oklahoma and Texas support large Grazing or feeding partnerships must bePasture, Rangeland numbers of contracted stockers for seasonal developed and nurtured so that all partiesand Grazing grazing. The value of annual wheat grain involved benefit.Management production in Oklahoma is estimated at We are not talking about a get-rich-quickSolar-powered $318 million, second in value of all com- scheme or a series of business deals. We areLivestock Watering modities produced in the state. The value of talking about a solid, enjoyable approachSystems wheat pasture for cattle production is esti- to making a living on a farm or ranch in the mated at $1.2 billion, almost four times livestock business.Organic LivestockFeed Suppliers more than the value of the grain alone (Doye Source: Cates, 2000Agricultural Business and Krenzer, 1989). In many instances, landPlanning Templates that is unsuitable for row-crop production isand Resources capable of producing quality forage that can The following are key points to considerThe Economics be used to graze cattle and generate a return before entering into a contract-grazingof Grass-based to the owner. Grazing may also improve the arrangement:Dairying quality of the land by maintaining a perma- • Forage and pasture resources: What nent vegetative cover to recycle nutrients and is the quality of the forage base? What improve soil quality over time. kind of grazing system will you use? If you are interested in contracting with a • Class of livestock: Will you graze livestock owner to graze animals on your stocker steers, replacement females or land, the most difficult part of the process cow-calf pairs?Page 2 ATTRA Grazing Contracts for Livestock
  3. 3. • Equipment and facilities: What is will be available during different times of the available and what will you need to year. Some producers also interseed annual purchase or barter? grasses at the proper time of year to supply • Contracts for grazing: What is the additional high-quality feed. In many cases, basis of your contract? Dollars for a few paddocks planted with annual grasses pound of gain? Dollars for animal unit and legumes can make the difference between month (AUM)? simply surviving the summer slump and maintaining weight gain at the desired rate. • Economics of contracting: Use of budgets to plan and evaluate new Pastures should also be rested to maintain enterprises. forage quantity and quality. Most pasture forages do not persist or perform well under • Resources and information: ATTRA continuous grazing. In some situations, the publications available at www.attra. rest period may be only a few weeks in an intensively grazed, multi-paddock system where animals are moved regularly. OtherForage and pasture resources situations may involve resting pastures forHaving a continuous supply of quality for- a year or more, where native rangeland is Hage is crucial to success in contract graz- aving a grazed and moisture is limited. Maintain-ing. In many cases, to optimize the available ing the appropriate forage cover will reduce continuousresources, some type of managed grazing sys- weed pressure, lessen erosion and improve supply oftem — managed intensive grazing (MIG) or drought resistance. quality forage iscontrolled grazing, depending on the termi- Some producers are reluctant to adopt new crucial to success innology you want to use — will be needed toensure that forage quality and quantity can systems or make changes to their current contract maintained throughout the growing sea- continuous grazing practices. They cite inad-son. Regional differences will dictate what equate returns, increased risk and the diffi-forages are appropriate for the different sea- culty of assessing the efficiency of improvedsons and environments. In many cases, local pasture management as deterrents to theassistance with forage selection and pasture adoption of more intensively-managed sys-improvement is available from the Coop- tems. A Canadian study, however, founderative Extension System or the Natural that when grazing systems were evaluatedResources Conservation Service (NRCS). for total efficiency and net returns, a six-day, high-stocking-rate system was the best of those studied (Phillip et al., 2001). NRCS and Cooperative Extension phone numbers can be obtained in the federal and The researchers evaluated beef cow- county government sections, respectively, of calf pairs grazed under three different your local telephone directory. Also, you can rotational frequencies: two-day, six-day access local NRCS and Extension directories on the following Web sites: or continuous; and three different stock- ing rates: 1.23, 1.77 and 2.22 acres for a Natural Resources Conservation Service – cow-calf pair. While animal performance showed little benefit from intensive grazing, app?agency=nrcs the efficiency of land use and total economic Cooperative Extension System – www.csrees. performance was significantly improved. On a 100-acre farm, even considering the additional labor and fencing, the six-day,You should diversify your forage base, real- high-stocking-rate grazing system returned $10,000 more than a continuous system.izing that different forage varieties fill a widerange of environmental niches or microcli- Perhaps the most interesting finding ofmates on the farm. A diverse forage base the report was that the use of a managed,will also help ensure that seasonal impacts intensively grazed system reduced overallon the pastures are minimal and that forage variability of net returns by 51 percent. ATTRA Page 3
  4. 4. addition, the managed systems showed a higher cull cows around to serve as trainer animals likelihood of generating a positive return when for the new calves. Most producers have compared to the continuous grazing system in found that small corrals close to the barn, this particular study. Teegerstrom et al. (1997) with solid fences and several offset hot wires, reported that when measures of economic opti- work well in training cattle to electric fences mization are applied, contract grazing is more without the risk of escape. See the Fencing likely to generate positive returns than owning segment under the Equipment section below stockers, which in turn generated better returns for more discussion on training pens. than cow-calf operations. This was because there was less variation in profitability from An important consideration for younger ani- year to year. Contract grazing in this study mals is the quality of their forage. Typically, had the most stable profits over time, while contracts for this class of animal are based cow-calf operations had wide swings from on the weight they gain during the graz- year to year. ing period, and higher-quality forage should make for better weight gain. Improving pas- tures and seeding annuals are important for Classes of livestock to graze ensuring that the nutritional needs of young, Once you decide that you want to graze ani- growing animals are met. In some instances, mals for someone else, one of the biggest depending on your location and situation, questions is: What types of animals are you supplemental energy may also be included interested in working with? There are many to enhance conversion and utilization of options that depend on your facilities, your high-quality pasture, since in good pastures, expertise and your willingness to work. adequate protein is rarely lacking. Especially in cool-season pastures, the energy-protein Stocker or background calves balance for efficient conversion is often tilted Probably the easiest grazers in terms of too far toward the protein side of the equa- workload are stocker or background calves. tion, and supplemental energy can often In many cases a load of calves will be deliv- improve overall gains and profitability. Be ered for a set period of grazing, after which sure to assess your situation accurately so they are picked up and continue on to a that you can supplement correctly. feedlot. Grazing this class of cattle can be As a grazier, you want to make sure that a challenge at times due to their inexperi- you receive healthy animals that have good ence with certain feedstuffs and lack of pre- growth potential and will make you money vious exposure to humans. Every group has to be trained to respect fences and not all with fast weight gains. Work with the live- cattle have had contact with electric fences. stock owner to ensure that the animals are To help reduce the training problems, some vaccinated, healthy and have already been producers have found it useful to keep a few weaned. This will reduce stress on the ani- mals and make the first few weeks of adap- tation much smoother. Be cautious about groups of calves recently purchased from sale barns. Since calves may have been exposed to additional stress and pathogens, they may not perform as well as animals coming from a single source. Consult with your local veter- inarian for proper health procedures and vac- cinations that will make your job easier and result in healthier, faster-gaining animals. Beef heifers Beef heifers can require more management,Photo courtesy of USDA-ARS. facilities and labor than are required withPage 4 ATTRA Grazing Contracts for Livestock
  5. 5. beef stockers, depending on the arrangementbetween the owner and grazier. The key dif-ference is that the heifers would be bredwhile on the farm and would be expectedto calve at approximately 24 months of age.Therefore, the heifers may be grazed for alonger period, perhaps left with the grazierfrom weaning until close to calving time 16months later. Managing heifers can be labor-intensive when synchronizing the mating ofsizeable groups of females. This may requiremore facilities and equipment, and probablysome training, since the human factor inthese types of heifer development operationsis critical for success.Well-managed heifer development opera- Photo courtesy of USDA-ARS.tions allow heifers to receive the attentionthat they need to be bred within a short time during calving (dystocia). Contract graziersso that calving can be more easily handled may want to consider establishing a set feeby the owner. For the additional work, there for each animal that is grazed under thisis additional return, but the expectations are system, with incentives for making breed-also higher. In many instances, it is expected ing targets and weights during development.that a high percentage of the heifers will be Calving out heifers should not be the firstbred to specially selected bulls via artificial contracting choice for people with limitedinsemination. If this is the case, additional cattle experience.arrangements need to be made for semen,supplies and breeding expertise. If bulls are Dairy heifersgoing to be used for breeding, it is necessary Much of the information about beef heif-to have enough of them to ensure that all ers also applies here. With dairy heifers, theheifers are bred within an acceptable time. cliché that heifers are the most overlookedYoung bulls can be expected to cover only 20 enterprise on the farm is too often true (Cadyto 25 females, whereas a mature bull, about and Smith, 1996). Therefore, the opportu-2-3 years old, can cover up to 40 females if nity to contract graze dairy heifers is sizeablehe is in excellent physical shape. If bulls are and getting larger all the time. Replacementgoing to be used, be sure to get their fertil- rates on most dairies are 25 to 30 percent;ity tested before each breeding season. Just therefore, on most dairies a large number ofbecause a bull settled cows last year doesn’t heifers are needed to fill the vacancies alongmean he is still able to settle cows this year. the way. Another consideration is the cost ofMany cattle owners have suffered major set- replacement animals, which accounts for 15backs due to the incorrect assumption that to 20 percent of the total cost of milk pro-a bull was still functioning properly. Life is duction on farms, second only to feed costshard on the range; any number of things (Heinrichs, 1996). Therefore, the expense ofcould be responsible for suboptimal perfor- raising replacements gets a lot of attentionmance and result in failed matings. on most dairy farms. Since between 50 andAny feeding program — either supplemen- 60 percent of heifer costs are associated withtation during grazing or full feed during feed, contracting heifer grazing to anotherthe non-grazing period — will need to be party presents a great opportunity for dairiesclosely monitored to ensure adequate growth to reduce costs and improve profitability.of the heifers. Heifers should be on a high The period that a dairy heifer may be on theplain of nutrition but avoid allowing heif- contract grazier’s farm can be longer thaners to get too fat, as this can cause problems with beef heifers, and different age ATTRA Page 5
  6. 6. may be handled simultaneously. In some perhaps with an incentive for improved cases, the dairy heifer owner may deliver weaning weight of the calf. a group of young heifers every month and The examples used in this publication focus pick up the pregnant heifers at the same on cattle, but sheep, goats and even horses time. Dairy heifers may be smaller to start can be contract grazed if you have pasture with — perhaps a day-old calf that needs that needs to be used and a livestock owner milk or a two-month-old weaned calf. The who needs pasture. In many cases, multi- nutritional requirements for these younger species grazing to take advantage of diver- animals are much different from those of a sity within your pastures may be possible, 500-pound beef heifer that is seven months making additional economic opportunities old. Dairy heifers can usually be handled available. For more information on grazing in four distinct age or size groups: liquid multiple species, request the ATTRA publi- feeding (birth to weaning), weaning to 400 cation Multispecies Grazing. pounds, 400 pounds to breeding and breed- ing to calving (Fiez, 1993). There are targets for weight gain for each group so that heif- Other considerations ers do not become too large or too fat. It is Younger animals, such as stocker calves andC ontract critical for productive dairy heifers to reach heifers, may graze unevenly and be unwill- grazing a critical body weight at a young calving age. ing to graze the pasture down to the desired requires Some dairy experts stress the importance of residual height before moving on to the next age at first calving (AFC) as the most impor- pasture or paddock. In some cases, you willfacilities suitable tant economic trait associated with heifer have to clip or mow pastures to keep some offor handling large programs. Increased AFC raises herd costs the forages from getting too mature beforeanimals, minimizing in three ways: (1) increased days of rearing, the cattle return to them. Another way tostress on animals (2) increased number of heifers on the farm, manage this situation is to allow matureand ensuring and (3) lost production potential (Cady and cows, with generally lower nutritional Smith, 1996). requirements, to follow the younger animalsworker safety. in what is often called a leader–follower graz- If breeding the heifers is part of the contract ing arrangement. The younger animals, the arrangement, make sure this point is written leaders in this situation, get turned in first in the contract. In most cases, the owner will and are allowed to remove the higher-qual- supply the semen and breeding supplies. Who ity forage from the pasture. After the calves will supply the labor for breeding? Are you are fi nished, depending on your rotation qualified to artificially inseminate the cattle? length, the cows are allowed to follow and Since this type of arrangement is the most com- eat the remaining forage down to the resid- plicated, and demands higher levels of manage- ual height you want. This method requires ment, graziers should consult with experts in less mechanical input to manage the pasture dairy heifer development to fully understand and will reduce the problems of some for- the requirements and expectations. ages becoming overmature and less desirable to the cattle. Other classes of livestock There may be possibilities to contract for Equipment other classes of cattle. Many dairy farms do Handling facilities not allot enough room for dry cow manage- Contract grazing requires facilities suit- ment, and some farms may want to move the able for handling large animals, minimiz- dry cows to better facilities to reduce man- ing stress on animals and ensuring worker agement problems. safety. Good facilities allow single individu- Another less common type of contract als to perform multiple tasks without risking involves grazing beef cow–calf pairs over the injury to themselves or the cattle. Handling summer, or even year-round for the cows. sick cattle in a timely fashion will be easier Typically, there is a monthly fee for the pair, if proper facilities are in place. DependingPage 6 ATTRA Grazing Contracts for Livestock
  7. 7. on the size of the farm and how far the cat- A scale can be incorporated into a work-tle are from a working facility, graziers may ing facility to weigh individual animals orwant to consider temporary facilities in addi- groups. Position the scale where it can be thetion to a central location for receiving and most useful to your overall system. Sometreating sick cattle. Cattle-working facili- scales are placed in a working alley to weighties do not have to be fancy, expensive or groups of animals; others are placed in linebrand new. What is important is that they with the working chute to weigh individu-are well designed, can withstand repeated als. In most cases, unless individual weightsuse by large animals and provide protection are the only ones of interest, positioningfor both animals and workers. Effective cat- the scale in a working alley to weigh largertle handling facilities have been constructed groups as well as individuals will probablyfrom materials such as used well pipe (drill give the most flexibility to your system.stem), timbers, recycled steel silos, guardrailand railroad ties. It is more important that Fencingthe facility be built to deal with animal flow Fences are a major investment that can makepatterns and handling requirements than or break an operation. Time spent designingthat it be shiny, new and expensive. Three efficient fencing on the farm will eliminate Fgood resources for corral and working facil- ences are problems in the future and facilitate easyities include Humane Livestock Handling a major movement of Temple Grandin (2008), Modern Cor- investmentral Design by Apple et al. (1995), and Cor- The most important fence is the perimeter that can make orrals for Handling Beef Cattle by Robert Borg fence. Additional cost and effort should go into building a quality perimeter fence to break an operation.(1993). Complete information about theseand other facility references can be found ensure livestock will remain on the farm,in the Resources section. The best advice out of roadways and clear of neighbors’regarding any livestock facility is to plan for crop fields. In most states, a legal fencefuture expansion and leave plenty of space is defi ned under state statutes. Talk withfor ventilation, equipment, trailers, penning, your local Cooperative Extension or NRCSmanure storage, drainage and more. Do not office to make sure your perimeter fencesshoehorn a new investment into a space too are adequate.small for it. Once the perimeter fence is in place, simpleGrazing contracts typically include perfor- interior fences can be built by using a sin-mance standards for the grazier to meet. gle or double strand of electrified high-ten-Therefore, a quality scale that can be certi- sile wire. Some farms make extensive use offied for commerce is usually a wise invest- poly-wire and poly-tapes to subdivide largerment. In some cases, a truck scale in a nearby pastures. Th is makes it easier to controlcommunity may be sufficient, but few pro- pasture use and stocking rates and get theducers who have purchased animal scales most from your forage. Younger animalshave regretted the decision. Once a scale is will typically respect a single wire if theyavailable, monitoring animal performance are properly trained to respect an electricis much easier. You do not have to won- fence, but a double wire may be required toder whether the animals are gaining weight ensure that a few animals don’t graze aheadand at what rate, or whether they will reach of the others. With mature cows and dairythe targets specified in the contract. A scale heifers, a single wire can work well. If thecan be used not only to routinely weigh a cows have calves on the side, the single wire can be raised to allow calves to pass undergroup of cattle but also to compare different and creep graze ahead and return to thegroups of cattle on different forages in order herd without getting monitor what forages yield better gains atdifferent times of the year. A livestock scale If you are going to use electric fences, andwill allow you to be a better manager of both the animals you are grazing have not expe-forages and livestock. rienced them before, a training pen ATTRA Page 7
  8. 8. be necessary. A training pen, adequately sources available. Also, have a backup plan, sized for the animals to roam and rest, can just in case you lose electricity for extended have multiple strands of electrified fence periods or suffer a pump failure. — typically made very hot (highly charged) because of the proximity to the barn where Other equipment the fence energizer is housed. Animals stay in the training pen for as long as needed to Depending on your geographic location become accustomed to the folks working and local weather patterns, some shelter on the farm, to receive daily inspections for may be required to protect animals during health and condition and to learn to respect bad weather, minimize stress and ensure the fences. that proper care can be given to animals entrusted to you. In most cases, a sim- For more information on fencing, ple pole barn is adequate. Proper ventila- see the ATTR A publication Paddock tion is important, and avoid overcrowd- Design, Fencing and Water Systems for ing. For grazing animals, a crowded barn Controlled Grazing. can be worse than no barn at all. Protec- tion from the sun and heat stress can also Water be important in some places. Remember Water is one of the most cost-effective nutri- that if your goal is to maximize gains and tional ingredients and must be in ample sup- you have no trees or other form of shade, ply at all times. Behavioral studies show that your returns will probably begin to suffer when cows travel more than ¼ mile to water, when temperatures go above 70 degrees pasture utilization and time spent grazing Fahrenheit and stay there for 24 hours decreases. Utilization will suffer because cat- or more. Some heat is fi ne, as long as the tle will graze the part of the pasture closest to cattle can recover during some part of the the water supply or transit lane, while other day or night. With no recovery period, portions of the pasture go untouched. Over- heat stress will accumulate and gains will all grazing time will decline if animals have suff er. Some farms with few shade trees to spend too much of their time walking to have made portable shades consisting of and from water points. If water is readily a durable, lightweight frame covered with accessible, animals will travel individually to shade cloth. Moving the shades also helps it as needed. If water is not readily accessible, spread out the impact that large groups the entire herd will travel together seeking of cattle can have on a pasture. For wind water. This behavior has an impact on how protection you can use windbreaks, both well pastures are used and how much time natural and man-made, to provide shelter. cattle spend harvesting that pasture. Make sure that your pastures have plenty of water Contracts Photo courtesy of USDA-ARS. A grazing contract is an agreement between two parties to perform certain functions over a certain time period. The contract can be as complex or as simple as both parties agree to. What is important about a contract is that it gives both parties a record of what they have agreed to. There are three main points to remember about contracts: 1. The agreement must be equitable to both the livestock owner and the grazier. 2. The contract should provide protection to both parties.Page 8 ATTRA Grazing Contracts for Livestock
  9. 9. 3. The contract should acknowledge the actual A flat-fee structure can also be used; how- cost of production to provide an accurate ever, this kind of contract should only be and fair fee arrangement (Fischer, 1996). entered into after considerable experience with a particular owner’s cattle to ensure that it provides adequate returns. Key points to consider in a grazing contract Contracts based on weight gain rely on the Identify the responsibilities of both named grazier’s forage management and the owner’s parties — who will provide what and when? supply of healthy, fast-growing animals. The grazier has an incentive to keep rotating the Define labor, equipment and management of animals so that adequate forage is available and livestock, including animal health. the owner has an incentive to supply healthy Specify targets appropriate for the type of animals that will grow well and be profitable. animals, including weight gains, body condi- tion scores and more. In almost all cases, the owner is respon- sible for supplying mineral supplements Define who will pay for various types of services, such as additional feed, vet bills, and covering other costs associated with medications, trucking and more. animal care. However, make sure that the C details are spelled out in the contract, where ontracts Specify the dates that the contract will be in everything is subject to negotiation. If based on force and the types, sizes and sexes of animals to be grazed under the contract. supplemental feed is required, delineate weight gain in the contract who will be responsible. In Specify how and where the animals will be rely on the grazier’s some cases, supplemental feed costs could be weighed; specify any appropriate shrink. subtracted from the grazier’s fee at the end of forage management Specify under what conditions the contract the contract. Other items can also be nego- and the owner’s can be terminated – by either party – and the tiated. For example, if the grazier is located supply of healthy, notice required to terminate a contract. at some distance from the owner, and sup- fast-growing Specify how the grazier will be paid after plemental feed is required, the grazier could animals. animals are removed and on what basis, be responsible for purchasing acceptable feed such as rate of gain, number of days or other locally and billing the owner. options. Source: Kidwell, 2000. Other considerations Since you as a custom grazier are ultimately responsible for someone else’s property, you should have a discussion with your insurancePrices for grazing agent to determine your possible liability in aThere are several means that owners and contract grazing arrangement. Mortality is agraziers can use to calculate payments. Most common point to include in a contract, butcontracts are based either on time or animal what about theft? Weigh your risks carefully;weight gain. it may help you sleep better at night know- ing that some of those risks are covered.One time-related payment method is theper-acre fee for the entire grazing season.With this arrangement, there is not any Economic projectionsincentive for the grazier, and the owner suffers and budgetsif growing conditions – due to lack of rain The following projections and budgets areand forage growth – are poor. only starting points for your own economicA similar pricing structure is the per-head evaluations, since the numbers used are sim-per-month fee, calculated on the incoming ply averages. Based on your geographic loca-weight of the animals. For example, at $4 a tion, forage production and competition,month for a hundredweight, a steer weighing the numbers used may not represent your500 pounds would cost $20 a month. farm. The budgets have pricing matrices ATTRA Page 9
  10. 10. the bottom to help estimate the break-even PDF: points for cost of production. It is important Contracts/beefStocker.pdf to realize that you need to ensure long-term returns above total costs, since this is where true profitability begins. In the short run, Dry Cows returns above variable costs are important. Spreadsheet: If an activity has no returns to variable costs, grazingContracts/dry_cows.xls then you should not engage in it, even for a short time. Any return above variable costs PDF: could be used to pay for fixed costs, and in Contracts/drycows.pdf some cases, some return to fixed costs is pre- ferred over no return at all. Dairy Heifers Budgets Spreadsheet: grazingContracts/dairy_heifers.xls Beef Stocker Calves Spreadsheet: PDF: grazingContracts/beef_stocker.xls Contracts/dairyheifers.pdfReferencesApple, Ken, Raymond L. Huhnke, and Sam L. Harp. Grandin, Temple. 2008. Humane Livestock1995. Modern Corral Design. Oklahoma State Univer- Handling. North Adams, MA: Storey Publishing.sity Extension Circular E-938, Stillwater, OK. 58 p. Heinrichs, Jud. 1996. The Importance of Heifer RaisingBorg, Robert. 1993. Corrals for Handling Beef Cattle. to a Profitable Dairy Farm. Proceedings from the Calves,Alberta Agriculture, Food and Rural Development, Heifers, and Dairy Profitability National Conference.Edmonton, Alberta, Canada. 91 p. Harrisburg, PA. January 10-12. NRAES-74. p. 1-6. Kidwell, Boyd. 2000. Contract Grazing. ProgressiveCady, Roger A., and Terry R. Smith. 1996. Economics of Farmer Magazine. November. p. 22-25.Heifer Raising Programs. Proceedings from the Calves,Heifers, and Dairy Profitability National Conference. Matches, Arthur, and Joseph C. Burns. 1995. SystemsHarrisburg, Pennsylvania. January 10-12. of Grazing Management. p. 179-192. In: Robert Barnes,NRAES-74. p. 1-6. Darrell A. Miller, and C. Jerry Nelson (eds.). Forages – Volume II: The Science of Grassland Agriculture. 5thCates, Dick. 2000. Getting Grass Cattle to Your Farm edition. Iowa State University Press, Ames, IA.or Ranch. Proceedings from Great Lakes International Phillip, L.E., P. Goldsmith, M. Bergeron, and P.R.Grazing Conference. Shipshewana, IN. p. 15-16. Peterson. 2001. Optimizing pasture management forDoye, Damona G., and Eugene Krenzer, Jr. 1989. cow-calf production: the roles of rotational frequencyShould I Buy (or Retain) Stockers to Graze Wheat and stocking rate in the context of system efficiency.Pasture. Oklahoma State University Extension Service. Canadian Journal of Animal Science. 81(1) p. 47-56.Stillwater, OK. F-212 6 p. Teegerstrom, Trent, Gerard D’Souza, Phillip Osborne,docushare/dsweb/Get/Document-3271/AGEC-212web.pdf and Kezelee Jones. 1997. To Contract or Not to Con- tract? A Decision Theory and Portfolio Analysis of CattleFiez, Edward A. 1993. Contract Considerations for Contract Grazing. Agricultural and Resource EconomicsDairy Replacements. Western Large Herd Management Review. 26(2). p. 205-215. Proceedings. Las Vegas, NV. p. 85-92. bitstream/31566/1/, David B. 1996. Contract Heifer Raising. Further resourcesIllinois Dairy Report. University of Illinois DairyNet. Contracts1 p. Livestock Production Contract Checklist. 1996. Attor-cfm?ContentID=224 ney General Tom Miller’s Production Contracts TaskPage 10 ATTRA Grazing Contracts for Livestock
  11. 11. Force. Office of the Attorney General, Iowa Department PO Box 2300of Justice. Accessed 2009. Ridgeland, MS 39158-9911Grain/Topics/LivestockProductionContractChecklist.htm (601) 853-1861Pasture Lease – Contract Grazing Agreement. Polk 1-800-748-9808 • (601) 853-8087 FAXCounty Division of Cooperative Extension of the sgf@stockmangrassfarmer.comUniversity of Wisconsin-Extension. Accessed June Morrow, Ron, Jim Gerrish, and Paul Peterson. Practi- This form was prepared to assist in reaching and recording cal Use Leader-Follower Grazing Systems. The Missouri a lease agreement. Agriculture Experiment Station. University of Missouri. Accessed June 2009. archives/nl94v3n1.stm.Matches, Arthur, and Joseph C. Burns. 1995. Systems Rayburn, Ed (ed.). 2007. Forage Utilization for Pasture-of Grazing Management. p. 179-192. In: Robert Barnes,Darrell A. Miller, and C. Jerry Nelson (eds.). Forages – Based Livestock Production. Natural Resource, Agri-Volume II: The Science of Grassland Agriculture. 5th culture, and Engineering Service. 185 p. Order from:edition. Iowa State University Press, Ames, IA. NRAES Cooperative ExtensionBlanchet, Kevin, Howard Moechnig, and Jodi PO Box 4557Dejong-Hughes. 2000. Grazing Systems Planning Ithaca, NY 14852-4557Guide. University of Minnesota Extension Service. orPublication No. BU-07606. For UPS, FedEx or pick updistribution/livestocksystems/DI7606.html NRAES, Cooperative ExtensionJudy, Greg. 2002. No Risk Ranching: Custom Grazing B-16 Morrison Hallon Leased Land. Green Park Press. ISBN 0963246089. Ithaca, NY 14853-4801236 p. (607) 255-7654 • (607) 254-8770 FAXcgi?id=360 • Based on his personal experience, Greg Judy shows how to make a living from the land without owning it. He Contract dairy heifers describes his successes, as well as his mistakes, to help oth- Fiez, Edward A. 1993. Contract Considerations for ers on the road to profit. By leasing land and cattle, he Dairy Replacements. Western Large Herd Management went from 40 stockers to more than 1,100 head and Conference Proceedings. Department of Animal and was able to pay off his farm and home loan within three Veterinary Science, University of Idaho, Las Vegas, NV. years. Today he has 12 farms totaling more than 1,560 acres. Easy-to-follow chapters explain how to: • Find idle pastureland to lease Professional Dairy Heifers Growers Association • Calculate the cost of a lease and write a contract 801 Shakespeare, PO Box 497 • Develop good water on leased land Stratford, IA 50249 • Figure costs for fencing 1-877-434-3377 • (515) 838-2788 FAX • Lower risk through custom grazing • • Promote wildlife and develop timber stands • Cut costs as well as keep accurate records Beiler, Joseph. 2000. Dairy Heifer Contracting:Order from: Motives, Forms, and Arrangements. The Ohio StateStockman Grassfarmer University Extension Fact Sheet. AS-0005-00.PO Box 2300, MS 39158-9911 Gunderson, S.L. Heifer Raising Contract (Version 2.1).or Manitowoc County UW-Extension Dairy Agent.1-800-748-9808 is $33.60, including postage and handling HeiferRaisingContract.pdfGerrish, Jim. 2004. Management-intensive Grazing: Moore, Robert, Joseph Beiler, and Gary Schnitkey.The Grassroots of Grass Farming. 314 p. Order from: 2000. The Economics of Heifer Contracting. The OhioThe Stockman Grass ATTRA Page 11
  12. 12. State University Extension Fact Sheet. AS-0006-00. (970) 229-0703 Grandin’s book Humane Livestock Handling explainsDairy Heifer Housing. 1997. Penn State Dairy animal behavior principles to reduce stress on your ani-Housing Plans. NRAES-85. 106 p. This publication (a revision of Penn State Freestall and mals and contains layouts of corrals for ranches, feedlots Heifer Housing Plans, 1994) is a collection of 29 plans and meat plants; designs for large and small beef cattle developed by faculty and staff of the Department of Agricul- operations; and complete instructions and illustrations tural Biological Engineering at the Pennsylvania State Uni- to show you how to build chutes, loading ramps, fences, versity and the Penn State Cooperative Extension. Included gates, latches, crowd pens and sliding gates. It also are 12 freestall housing plans, six heifer housing plans, four contains sheep and bison layouts. dry cow and maternity housing plans and seven plans for Apple, Ken, Raymond L. Huhnke, and Sam L. Harp. details and components. Plans have been revised to incor- 1995. Modern Corral Design. Oklahoma State University porate the latest recommendations for freestall design, ven- Extension Circular E-938. Stillwater, OK. Order from: tilation and cow movement. The freestall section contains PBIS plans for various two-row, three-row, four-row and six-row Biosystems and Agricultural Engineering Department freestall barns. Included in the heifer section are plans for 214 Agriculture Hall bedded pack housing, counter-slope housing, single-slope Oklahoma State University housing and three types of heifer freestall barns. The section Stillwater, OK 74078-6021 on dry cow and maternity housing contains ideas for hous- ing dry cows in bedded pack groups, multiple pen barns Borg, Robert. 1993. Corrals for Handling Beef Cattle. with drive-through feeding, pre-fresh and maternity pen Alberta Agriculture, Food and Rural Development. areas, convalescence areas and post-fresh housing facilities. Agdex 420/723-1. Edmonton, Alberta, Canada. 91 Included in the detail and components section are sidewall p.$department/deptdocs.nsf/all/ curtains and drainage, watering locations, floor surfaces, agdex27?opendocument feed barriers, freestalls and ventilation openings. Also new This best-selling book features information on cattle to this edition are introductory discussions with each section behavior, handling techniques, corral design, corral and a list of suggested readings. geometry and corral components. It has more than 60Order from: designs and corral plans. It has been reviewed by indus-NRAES Cooperative Extension try experts including Temple Grandin, the internation-PO Box 4557 ally recognized expert on cattle behavior from ColoradoIthaca, NY 14852-4557 State University.(607) 255-7654 • (607) 254-8770 FAX To order: 1-800-292-5697 or (780) Beef Housing and Equipment Handbook. MWPS-6. 136 pages. 4th edition. ISBN 0-89373-068-8id=39&_UserReference=31777E4712C476E7498AD652 Current agricultural engineering recommendations are New York residents add 8 percent sales tax (calculated summarized in this complete housing guide. Essential com- on both the cost of publications and the shipping and ponents for an efficient operation such as building design, handling charges). operation size and equipment are discussed. Figures, tablesRoth, Sarah, Jud Heinrichs, and Coleen Jones. Dairy and discussions to help improve, expand and modernize anHeifer Contracting Fundamentals. Department of operation are included. Topics cover cow-calf, cattle han-Dairy and Animal Science. The Pennsylvania State dling and cattle feeding facilities; feed storage, processingUniversity. and handling; water and waterers; manure management;heifercontract.pdf farmstead planning; building construction and materials; ventilation and insulation; fences; gates; and utilities.Corral design and Order from: MidWest Plan Servicehandling facilities 122 Davidson HallGrandin Livestock Handling System, Inc. Iowa State UniversityTemple Grandin, Ph.D. Ames, IA 500112918 Silver Plume Drive, Unit C3 1-800-562-3618Fort Collins, CO 80526 USA www.mwps.orgPage 12 ATTRA Grazing Contracts for Livestock
  13. 13. Burns, Robert T., and Michael J. Buschermohle. Selection Estimated Costs and Returns for Commercial Beefof Alternative Livestock Watering Systems. Agricultural Cattle and Forage Systems – Intensive Production,Extension Service. University of Tennessee. East Texas. Dr. Greg Clary, extension Texas Agricultural Research and Extension CenterGerrish, James R. Fence Systems for Grazing Management PO Box 381: Electric Fence Energizers. Extension Beef Cattle Overton, TX 75684Resource Committee. Beef Cattle Handbook. University (903) 834-6191 • (903) 834-7140 FAXof Wisconsin-Extension, Cooperative Extension. Clary also provides budgets online that do not requireGrandin, Temple. Cattle Behavior During Handling downloads at Corral Design for Ranches. Beef Cattle Handbook. University of Tennessee Livestock Budgets. BudgetsExtension Beef Cattle Resource Committee. University for row crops, forage and livestock production.of Wisconsin-Extension, Cooperative, David W. Heifer Housing Considerations: Texas Center for Rural Entrepreneurship. www.tcre.orgDesigning Facilities to Enhance Heifer Performance.Center for Dairy Profitability. Biological Systems Engi- Beef Budgetsneering. Compilation of 15 different budgets for cattle productionHeiferHousingConsiderations-NRAES2005.pdf and several pasture and forage budgets. http://economics.Quam, Vernon, and LaDon Johnson. Windbreaks for Operations. University of Nebraska Coop- Gadberry, Shane. Cow-calf Enterprise Budget. Universityerative Extension. of Arkansas Cooperative Extension Service. www.uaex. edu/Other_Areas/publications/PDF/MP-413.pdfTAMU. 2005. Value Added Calf (VAC) -Management Program. Texas Cooperative Extension. Gadberry, Shane, Tom Troxel, and John Jennings. Practices to Improve Beef Cattle Efficiency. UniversityVAC_Management.pdf of Arkansas Cooperative Extension. This document covers pre-weaning and backgrounding Other_Areas/publications/PDF/fsa-3060.pdf program including health management and vaccinations. Livestock Enterprise Budgets—Iowa 2003. Drs. GaryTurner, Larry W. Shade Options for Grazing Cattle. May, William Edwards, and John Lawrence. Iowa StateUniversity of Kentucky Cooperative Extension Service. University Extension, Ames, IA. Publication Additional livestock economic information can be foundGrazing budgets and economic on Dr. Lawrence’s Web page at faculty/lawrenceNOTE: Most state universities and Cooperative Extension University of Missouri Farm Budgets.have budgets for agricultural products in their states. Below a sample of some of the budget and economic information Source of forage, livestock and crop budgets.that is available in electronic format. For an electronic copyof these resources, please e-mail Lee Rinehart, NCAT Virginia Cooperative Extension. 2001-2002. Virginialivestock specialist, at Farm Business Management Crop and LivestockEldridge, R.W., Kenneth H. Burdine, and Richard Budgets. Publication Number 446-047.Trimble. 2005. The Economics of Rotational Grazing. Spreadsheets and PDF files with various budgetsUniversity of Kentucky Cooperative Extension Service. for agricultural products are available from Cooperative Extension at agecon/446-047/ ATTRA Page 13
  14. 14. NotesPage 14 ATTRA Grazing Contracts for Livestock
  15. 15. ATTRA Page 15
  16. 16. Grazing Contracts for Livestock Updated by Hannah Sharp, NCAT Intern and Lee Rinehart, NCAT Agriculture Specialist © 2010 NCAT Holly Michels, Editor Amy Smith, Production This publication is available on the Web at: or IP247 Slot 248 Version 012710Page 16 ATTRA