Contract grazing considerations
When the topic of contract grazing is brought up, there are a few questions that may arise. Land availability, contracts, facilities and equipment, and payment rates are all things to consider.
What is contract grazing? According the Iowa Beef Center, contract grazing is a livestock production system in which land ownership, livestock ownership, and management of the system may be de-coupled. The arrangement may involve as many as three separate entities carrying out distinct roles: a landowner, a livestock owner, and a grazier (the grazing manager).
Typically, there are three different scenarios that contract grazing falls into. The first one is when a grazier owns pasture and facilities contracting to manage another famer’s livestock. The second is a livestock owner leasing pasture from a landowner and managing his or her own livestock on that land. The final scenario is a farmer contracting with a grazier to manage the farmer’s livestock on the farmer’s own land or on another party’s land.
Is contract grazing a good fit for your operation? For someone looking to expand their livestock or start grazing if they do not already own livestock, it is a good decision. Contracting as a grazier can be done without owning land; it can also be a good way for beginning farmers to start a grazing operation. However, for land owners, contract grazing can be used to diversify their farming operation without livestock and without the responsibility of livestock care. Even for landowners who are nonfarmers, renting land for contract grazing is an alternative to renting the land for annual row-crop production. Even renting or leasing the land to a contract grazier qualifies landowners to maintain agricultural use tax benefits and achieving conservation goals.
From an environmental conservation perspective, pastures offer reduced potential for soil erosion and nutrient runoff from agricultural areas for improved water quality, high-quality grassland wildlife habitat, and many others, according to Iowa Beef Center.
Contract grazing is not limited to cattle; it can be done with almost any species of livestock (cattle, sheep, goats, bison, etc.) or any class of livestock (breeding, growing meat, or dairy). Typically, contract grazing only includes the summer months. However, with appropriate facilities, a year-round arrangement is possible. As with any grazing operation, a good quality of forage is necessary. Knowing the limits of the land is essential to successful grazing. A grazier should know the capacity of land being grazed and its actual production capacity; that will make it possible to fine-tune in the future.
A payment rate needs to be discussed prior to grazing. The production goals and livestock class being grazed can affect the payment rate charged by the grazier. For example, when weight gain is the goal, the payment plan may be based on weight gain over a period of time. On the other hand, it may be more practical to charge a flat-rate fee on a daily basis or charge on a sliding scale based on the weight of the animal grazing. It is crucial to discuss the payment rate and plans in a written contract.
A written contract should clearly define the responsibilities of each party, how payments should be made, and how the parties will handle any problems or disagreements that arise. A decision about who is responsible for facility maintenance, marketing, and animal transportation should also be addressed before the grazing begins.
According to the Agriview, it is important to differentiate between a “lease” and a “rental agreement.” A rental agreement is month-to-month with no set period of residence. It typically renews every 30 days. A lease, however, is for a set term. The tenant can’t vacate the property without breaking the lease, in which case he or she can be held liable for the rest of the rent due.
Contract grazing can be a great venture for all parties involved, but it’s important to know the details before putting livestock out to pasture.
Sources: Iowa Beef Center and Agriview