SASKATOON – Going to the bank for a loan isn’t the only way to start a cattle herd, as Russell Bardak discovered.
When the Duffield, Alta. farmer finished university he had little money and no way of financing his own cattle herd. He did some fancy pencil work and decided if he couldn’t own cows he’d rent them.
“I just dreamt it up,” said Bardak.
Eight years later he’s worked out the wrinkles of the renting arrangements. He rents 200 cows from two separate owners. For a yearly $120 per cow rent, he gets the entire calf crop. He supplies the bulls, feed, labor and any medicine or maintenance. He also guarantees a live cow. If a cow is culled from the herd it is replaced with a bred heifer to keep the herd young.
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For the owner of the cow the money is greater than bank interest, but less than the money they would get from operating their own herd.
“I have no interest whatsoever in owning cows. … Pride of ownership has a high cost associated with it,” Bardak said.
For Sid Wilkinson, leasing cattle became a viable alternative in developing another purebred cattle herd. The Ridgeville, Man. farmer already had a herd of 130 purebred Maine Anjou, but was interested in diversifying into purebred Red Angus cattle.
“I didn’t have the money sitting around to buy them,” he said.
So Wilkinson and his partner, Harry McKnight, of Roland, Man., lease the purebred Red Angus from Saskatchewan producer Neil White, who had run out of room to expand his own herd.
Wilkinson raises the two purebred cow herds on his farm and McKnight feeds the Angus calves at his farm through the winter. By spring, McKnight’s pens are empty and he can concentrate on his grain farm.
“When I’m busy calving, he’s busy selling bulls,” said Wilkinson.
Unlike Bardak’s arrangements, no cash changes hands. There is a calf share, and in purebred operations the greater calf share generally goes to the owner.
Fifteen years ago Joe Kasahoff began leasing his cattle. The herd was becoming too much work and at $200 a head weren’t worth selling, said his son Darrell, of Langham.
They now lease 200 cows to several different farmers. In return, they get 40 percent of the calf crop back from the renters. The Kasahoffs already have between 300 and 400 calves at their own farm.
Leasing works for them. It’s an additional source of money without expanding.
“Another 200 more calves would be way too much work,” said Kasahoff.
Financial arrangements are as varied as breeds of cattle, said Lorne Erickson, farm management economist for Alberta Agriculture in Edmonton. Erickson has just finished the final draft of a cattle leasing manual, to be published in the spring.
The manual was prepared in response to increased interest in leasing arrangements. Tough economic times have forced farmers to look at alternative ways of farming. Leasing cattle is a “reasonable alternative to financing with equity of debt,” Erickson said.
There are limits for both parties with leasing and the manual tries to address some of the pitfalls.
“It doesn’t attempt to provide the answers … it shows the implications of some of the choices,” Erickson said.
