leasing cows ?

[chaser]

Good evening. I have a friend who is ready to retire. Son wants to take over cow herd. They have 200 cows, cows expensive to buy out so was wondering what is a fair deal for father to lease cows to son on share or what else works thankis

[farmers_son]

How can anyone say what is fair?

I can point you to this site on "What's a Fair Cow Lease":

http://beefmagazine.com/mag/beef_whats_fair_cow/

I would say what is fair is what meets everyone's needs. And that may include factors other than money. Like a need or desire to keep the farm in the family. I note the reference to cows are expensive. Well, at auction, they do cost more than they used. Why does that have to change anything in this case?

I presume the father, somewhere down the road, expects to die with an estate. Probably with children as beneficiaries. Why not give what you can to your children when you are alive, especially if that means the farm and the herd that the father has spent a lifetime building can stay intact.

Some farms are so marginal that there is only enough income to keep one family. The father still needs to live yet the farm will not support both him and his son’s family. It is certainly common for sons to work off farm today. Does the father have to retire cold turkey? Could he ease back, let the son take on more of the load yet still have dad look after things while the son is at work?

There are always tax implications to consider. Bringing a son in can facilitate income splitting which is useful. Nowadays many incorporate. Ultimately there is no tax advantage to incorporation but short term it can defer tax payments.

[farmers_son]

Quite often, the decision to let go of the herd and bring in children has an emotional component and is not just an easy dollars and cents decision.

Check out:

http://www.elainefroese.com/farm-succession-planning/

Saying the father is ready to retire is often kind of avoiding the real fact. The inevitability for all of us is our own mortality. There is a huge what I call "terror barrier" when it comes to facing that.

[ASRG]

Trying to remember back when my mother and I did a lease deal on the estate cows.
If I am correct I got one third of the calves for my labour. I owned about 1/3 of the land..she owned the machinery/cows/etc. She got the money from all the culls....I got the replacement heifers at cull cow price.
She paid all the bills fuel/repairs/etc.
Now without a doubt this was a "family deal" and my mother never wanted to leave the farm? It took about ten years......I got everything (including all land and other assets) but I had to pay all of her expenses(utilities/taxes/vehicle/etc.) until she left the farm for the old folks home.
Again....this was my mother.......who had a great desire to see me stay on the farm. She had personal income to be able to do this.

[ASRG]

One further note on this: My mother and father were "old school" who never believed in the almighty buck. They truly believed that man should be "wedded" to the land and that being a farmer and a "keeper of the garden" was the highest calling from their creator!
....everyday I try to remember that.

[ALLFARMER]

2 great posts asrg, "keeper of the garden"

[chaser]

Nice to here your story asrg. good to know dollar not always driver good for you