An example of a full and fair rental agreement is published on my website, www.ag.ndsu.nodak.edu/cow/lsmanews/11-10-99.htm. By total cost, I mean that the budget covers all resource costs, including a fee for unpaid family work and operations, management and the capital invested by both parties in cow farmers. (The figures used to illustrate a fair relationship between cattle and cow shares in the example below are those of my demonstration homes in North Dakota.) Here are three steps to establishing a fair lease. A fair agreement should be based on projected full-rate production costs, including two components. The first is the direct operating cost plus annualized overhead. The second is the opportunity cost of the resources used by the working farmer`s family, plus the investment costs of both parties. These planning price forecasts (Table 1) are based on both the futures market price and the North West Dakota selling price for the current week. The price forecasts in Table 1 were used to evaluate six marketing alternatives for 2000 calves presented in Table 2,2000. A good written business plan documents in detail how the contract is terminated – things like the return of cows, the condition of the cows at the end, how to manage death, who feeds the animals last year, etc. Most of the legal and financial problems encountered during termination can be avoided by a well thought out, well thought out and written business plan at first. In my example herd, the owner should contribute 29% of the total cost, while the rancher will contribute 71%.
A fair agreement would therefore be an agreement in which the owner receives 29% of the income of the calves and the breeder 71%. The three columns are compensated to determine the contribution to each partner`s costs. Then calculate the total allocation of each partner as a percentage of the total cost of the herd. These percentages become the right equity-leasing ratio. Leases often end because of angry partners. A poorly designed business lease can lead to all kinds of legal and financial problems. I have recently received several requests for the leasing of cattle cows. Some came from owners interested in renting their cows.
Others came from people who wanted to rent cows. The question of all was: What is a beef cow leasing just for my unique situation? No equity leasing report is fair to all producers. If the funds were available to varying degrees, the fair lease would be different. There is no acronym for a fair report on equity leasing. Upstream time spent developing a fair proportion for cattle can avoid most problems on the road, particularly legal fees that may occur at the end of the contract. Direct costs are combined operating and annualized overheads for primary resources used primarily in cattle operations. Feed establishments are fed at a fair market price and overheads are annualized only for equipment and buildings used by the cattle herd.