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The Basics of Contract

Grazing

Spring 2013 Factsheet 1 of 4 in the Contract Series

What is Contract Grazing? they already own ) or start grazing (if Contract Grazing (also known as Custom they would like to incorporate grazing on their Grazing) is a livestock production system in , and may or may not already own which land ownership, livestock ownership, and livestock). Since contracting as a grazier can be management of the system may be de-coupled. done without owning land, it can also be a good This arrangement can involve as many as three way for beginning to start a grazing separate entities carrying out three distinct operation. For land-owners, contract grazing roles: a land owner, a livestock owner, and a can be used to diversify their farming operation grazier (the grazing manager) who provides the with livestock, without having to be responsible grazing management expertise and oversees for livestock care. For absentee or non-farming the grazing activities. Some common scenarios land owners, renting one’s land for contract include: grazing is an alternative to renting the land for  A grazier who owns land and annual row crop production. Renting or leasing facilities contracting to manage another to a contract grazier qualifies land owners to ’s livestock. maintain agricultural use tax benefits while  A livestock owner leasing pasture land achieving conservation goals. from a land-owner and managing his or her own livestock on that land. Grazing Considerations  A farmer contracting with a grazier to Contract grazing can be done with almost any manage the farmer’s livestock on the species of livestock (e.g. , , , or farmer’s own land or on another party’s ) or any class of livestock (breading, land. growing, or dairy). Usually the arrangement only includes summer grazing, Is Contract Grazing a good fit for but, with appropriate facilities, a year-round arrangement is possible. For all grazing me? operations, it is crucial to have a continuous Well-managed offer environmental supply of good-quality . Because of this, a benefits, such as reduced potential for soil custom grazier should know the carrying erosion and nutrient runoff from agricultural capacity of the land being grazed. Knowing the areas for improved , high quality land’s actual production capacity will make it wildlife habitat, and many others. possible to fine-tune the system to ensure Becoming a contract grazier may be a good fit successful grazing. Graziers should also be for someone who has a farming operation and aware of the production goals for the livestock is looking for ways to either expand grazing (if

1 being grazed. Different livestock classes may charge of vaccination and other health costs, require different quality forage. For example, cattle insurance policies, etc. The land owner is dairy heifers or stocker cattle generally require typically provides effective perimeter fence, and higher quality forage than cow-calf pairs in initial soil fertility inputs. Decisions about who is order to meet production goals. responsible for facility maintenance, marketing, and animal transportation should also be Payment Rates addressed. (For more information about what The production goals and livestock class being to expect in a contract, please refer to the grazed also can affect the payment rate charged companion publication “Pasture rental and by the grazier. For example, when weight gain is lease agreements). the goal, the payment plan may be based on weight gain over a period of time ($/lb. of gain). Facilities and Equipment In other instances, it may be more practical to Contract grazing arrangements can be a good charge a fee on a flat-rate, daily basis ($/day), way for farmers to be profitable without a large or to charge on a sliding scale based on the capital investment. However, there are some weight of the animal grazing (lbs. of facility and equipment costs that must be animal/acre). Before grazing begins, it is considered. Fence and water development are important to define the payment rate and two important infrastructure costs to consider. payment plans in a written contract. Contract grazing also requires livestock handling facilities that minimize stress on the animal and Contracts ensure worker safety. Livestock scales will be Written contracts allow for documentation of necessary if payment will be made based on the the payment scheme, as well as other animals’ weight gain. considerations. A written contract should clearly define the responsibilities of each party, Further Information how payments should be made, and how the  Grazing Contracts for Livestock parties will handle any problems or https://attra.ncat.org/attra- pub/summaries/summary.php?pub=243 disagreements that arise. For the grazier, these  Custom grazing contracts: Successful responsibilities typically will include decisions models to grow profit, avoid pitfalls about cattle rotation and movement during the http://www.leopold.iastate.edu/grants/e20 grazing season, providing a continuous supply 07-11 of water, and ensuring that pasture quality is maintained. Animal owners are usually in Factsheet Series produced by the Midwest Perennial Forage & Grazing Working Group: Richard Cates, University of Wisconsin--Madison Other fact-sheets in this series include: Vance Haugen, University of Wisconsin Extension  Evaluating Land Suitability for Grazing Jane Jewett, MN Institute for Sustainable Ag. Cattle Bob Olson, Cooperative Development Services  Pasture Rental and Lease Agreements Laura Paine, Wisconsin Dept. of  Rates Charged for Contract Grazing Jim Paulson, University of Minnesota Extension Arrangements Joe Sellers, Iowa State University Extension Terry Vanderpol, Land Stewardship Project Grace Wilson, Green Lands Blue Waters

For more information contact: Laura Paine, Wisconsin Dept. of Agriculture Dick Cates, University of Wisconsin—Madison Phone: (608) 224-5120 Phone: (608) 588-2836 Email: [email protected] Email: [email protected]

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