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Opportunity

J

Judith

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Joined
Dec 29, 2005
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Location
BC
I have an opportunity to get into some red angus/simm cows. Average age is 6 years. They are nice cows for sure. Owner wants to do a 30/70 on them. Is that OK or ??? Nothing down on my part, but all expence comes out of my pocket. I havent done one of these deals before and I wanted to get the pro advice before doing anything silly.
 
Judith said:
I have an opportunity to get into some red angus/simm cows. Average age is 6 years. They are nice cows for sure. Owner wants to do a 30/70 on them. Is that OK or ??? Nothing down on my part, but all expence comes out of my pocket. I havent done one of these deals before and I wanted to get the pro advice before doing anything silly.
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That is kinda scary.....that makes you the only one @ financial risk sounds like. Go with yer gutz I'd say but when I am the only one putting out money...I never liked those deals and they never ended good!
 
Put a pencil to it ans see if you have a good chance of making enough money.

I run stockers for other people right now as it pencil's out for me to make more money with a lot less risk, than running share cows or buying my own.
 
The government of Alberta has a cow lease worksheet that you can use to figure out if it will be profitable or not. I would suppose the gov of BC would have it too at the district ag offices. Likely it's available online somewhere too.
 
Thanks guys, I will take all of that into consideration. I pulled the alberta one out just to put a pencil too and see how it looks on paper. What should I tack on for "error" 10-30%?
 
Since you're not putting any $$ down....and I guess the 30% interest is your part BUT all expense comes out of your pocket, 3 questions:

#1....is the profit 30/70 also?

#2....does the $$ you pay for expense go toward your ownership cost in the cattle?

#3....does your ' expense' have a limit to it, I'm talking about liability issues not just health issues? If, lo and behold, something BAD goes wrong....vets cost about as much as a cardiac surgeon per hour!!!
 
No, my share is 70 % with 30 % returning to the rancher. I would be paying for everything from vet to transport. He would supply a new bull each season so that the bloodlines would be changing. He would like a minimum 5 year commitment though. i just edited to say the 30/70 does not reflect a "profit" it is just the actual sales price on the weaned calves. Does that make sense or I am making it harder to understand :) ( I'm good at that)
 
All the share cows in this area are done on a 70/30 split depending on your costs it should work and give you some change in your pocket. Grass is in short supply here or I would be doing this. Have a good weekend
 
You get the check for 70% of all calves sold. Correct?

I turned some down at 80/20 this winter. Just didn't pencil, with the risks involved and the cost of hay, if I could have found any.
 
That is correct, so if all of the calfs died or ? There would be nothing to split and I would still have the cost of feed etc.
 
I have 30 on a 60/40 split but its a deal with my uncle and we run them on his land all summer.In our country a 70/30 split would be a money maker for sure.Our summer grass runs from 25 to 50 cents per day and hay is easily bought for $20 per bale..
 
I'd just as soon cash lease them and calve and manage the cows the way I want. Seen alot of 30/70 deals between friends or relatives go south in a hurry. That kind of lease usually favours the cow owner.
 
They are all great suggestions you guys. Thank you for all the info and advice! I really appreciate it!
 
Mornin' judy. Where were you going to do this ? BC or Sask.?

Lots of people think that the owner getting 30% is a rip off but if you figure that their initial investment may be $1200 per cow and when they are done maybe worth $250 alot of thier initial proincipal is gone.
Some shares have provisions that require replacements be put back into the herd to keep it at a viable age.
Also the 30% is not on their $1200 dollar cow but maybe a $5oo dollaer calf.
The owner at 7% on $1200 cow has $84 in interest. but may recieve
$150 for the calf. The cow could die and she has depreciated. It's not a get rich quick deal for either one.

A share deal is a way to market your own product as in pasture and hay but if your buying it your making it a three way split.
 
I had some cows out on a 75/25 split. I never made much on the deal.

The guys that got the 75 built a nice herd with the 2 years of my "gift".

I put them out to keep the cows, it was dry and I had no grass, it rained just after the deal and I had lots. Hindsight is 20-20. Regardless, I got most of the cows back. They lost 2 in 2 years, but I have lost cows too, so not all their fault.

I would never put cows out on a deal with someone with no experience. This deal is all to your advantage Judith. You can learn on someone else's dollar. Just make sure the owner knows your experience level and won't sue you for negligent management.
 

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