Having a written agreement can help reduce miscommunication and frustration down the road.
• It ensures a better understanding by both parties.
• It serves as a reminder of the terms originally agreed upon.
• It increases the likelihood that the relationship will continue in future years.
When it comes to rental agreements for grazing corn residue, a number of questions need to be asked and answered up front to avoid disagreements later.
1. What is the latest start date that residue will be available for grazing?
• Have a written start date with an agreed upon penalty (such as an extra fee) if the corn is harvested late.
• Having this agreement in writing can keep both parties feeling okay about the outcome if weather or equipment issues delay harvest and availability of the residue.
2. What is the latest end date for removing cattle?
• A common frustration that corn farmers voice when renting out corn residue for grazing is that the cattle are not removed in a timely fashion.
• Have a written removal date with an agreed upon penalty (such as an extra fee) if cattle remain longer can keep both parties feeling okay about the outcome even if an unexpected event (such as a snow storm) keeps cattle on the land longer than planned.
• Who is responsible for gathering and removal of the cattle?
3. How will the appropriate stocking rate be determined and how will grazing be priced?
• Using the corn stalk grazing calculator (http://go.unl.edu/wgm9) to determine stocking rates is a good way to ensure proper stocking rates are utilized. It is important to utilize proper stocking rates to ensure cattle have access to adequate amounts of leaf and husk and that performance is maintained.
• Get your pricing right- by the acre OR by the head:
►Priced on a per acre basis. This type of arrangement is simple to administer but can have negative consequences if the start date, end date, stocking rate and adverse weather policy is not specifically spelled out. Without these items being outlined the crop producer can be exposed to the risk of over grazing and the cattle owner could be exposed to the risk of paying for something he/she can’t use if adverse weather prevents grazing.
►Priced on a per head per day or AUM basis. With this method the cattle owner only pays for actual use. Again the start date, end date, and stocking rate need to be laid out. The duration of grazing is important for the cattle producer when calculating transportation costs into the cost of feeding the cow. The crop producer is accepting the financial risk that the grazing resource may not produce the income they anticipated if the cattle are removed early.
• The plan for heavy snow or ice needs to be included in the pricing agreement, including the emergency feed source and who is responsible for providing it.
• The payment schedule and method should also be agreed upon.
4. Other things that should be outlined:
• Is there a fence present? If not who is responsible for building the fence? Who is responsible for maintaining fences?
• Is there a reliable water source for the cattle? Who is responsible for providing water and maintaining water during grazing (including breaking ice)?
• Who is responsible for the daily care of the cattle? Inventory counts? Providing minerals and salt? Monitoring animal health? How will treating sick cattle be handled? Will the cattle be commingled with other cattle?
• Who is liable for the cattle getting out? Who is responsible for gathering the cattle if they get out?
• Is the cattle owner required to carry liability insurance for potential damage caused by the cattle? What, if any, indemnification responsibilities does the cattle owner have to the crop farmer for damage caused by the cattle?
This resource is meant to provide a list of questions and issues to consider in drafting a lease agreement for grazing corn residue. Obtaining legal advice from a licensed attorney is encouraged in developing the actual agreement.
By Mary Drewnoski, UNL Beef Systems Specialist and
Jay Parsons, UNL Dept. of Agricultural Economics