Cow Leasing - A Strategic Option for Beef Producers

By Blake Jackson

University of Missouri Extension offers a new resource, "Introduction to Beef Cow Leases," to explore the benefits of leasing cows for calf-calf producers. This strategy can be particularly helpful for those facing capital limitations.

"Lack of capital is often a barrier for new producers and producers wanting to expand," explains Jacob Hefley, an MU Extension agricultural business specialist. "Leasing alleviates high input and startup costs, opening the door to a less capital-intensive and lower-risk option than purchasing cows."

Leasing offers not only financial advantages but also potential knowledge transfer from experienced herd owners to new producers. Conversely, herd owners seeking less hands-on involvement can benefit from leasing while retaining ownership and income through lease payments.

According to Hefley, there are several lease structures to consider:

• Cash Leases: Lessees (operators) have the most control and responsibility for the cattle.
• Share Leases: Owners and lessees share expenses, income, management decisions, and risks. Profits or calves are split based on contributions.
• Flexible Cash Leases: Combining fixed and variable payments, this option offers a balance between security and risk-sharing.

Leasing can be a tool for gradual herd ownership transfer. Herd owners can benefit from tax advantages and a smoother succession plan. Lessees can gain expertise and manage financial pressures by acquiring ownership gradually.

“Maintaining detailed and accurate production and financial records is crucial when leasing cows,” said Katie Neuner, MU Extension ag business specialist. “And the leasing agreement needs to be in writing.”

Download resource at https://extension.missouri.edu/publications/g434

Photo Credit: gettyimages-vwalakte