This in turn indicates that there should be no common lease for cattle leasing throughout the sector. But that`s what I tend to come across. Each rental agreement can and should be adapted to the business situation. Let`s take a detailed look at this planned joint venture and examine how these two trading partners could reach a “fair” agreement, i.e. how they share the production costs and total revenues of the rented cow herds. In this case, the working farmer could develop the replacement dyes each year, and these new cows are all his and are kept out of the lease. Today, the owner of the cow receives the proceeds from slaughter only from cows originally rented. The farmer who works receives the income from the slaughter of replacement tints when they are finally slaughtered from the herd. A model cow calf lease is available from the North Central Farm Management Committee as follows: www.aglease101.org/Doclib/docs/NCFMEC-06.pdf. In joint agreements, the question also arises as to how to distribute income. The basic principle is that calves or income from the sale of calves are distributed in the same proportion as the total cost of production. Non-solvency contribution costs, such as unpaid work and grazing, should be taken into account with the out-of-pocket costs. In addition to work, management fees should be included to reflect both day-to-day and long-term decision-making.
A basic rule of 10 per cent of all other costs is often used to assess the administrative contribution. At regular intervals, I get a call asking what a fair cow leasing agreement would be. Normally, one partner wants to own the cows and the other the cow partner. Your question is general: how should they share the calf harvest? Breeding herds should be treated as capital investments, as should land, machinery or buildings. The ownership documents of each animal must be carefully kept for tax documents. Proceeds from the sale of slaughter cows, bulls and dyers should go to livestock owners, regardless of how calves are shared. Similarly, the herd owner should provide replacement bulls and dyeing.