Parsons shares some tips for what to cover in cover crop lease agreements
Because cover crop grazing is a relatively new concept, Jay Parsons with the University of Nebraska says producers may have to pencil out what they consider a fair rental agreement when leasing cover crops for grazing.
“I think one of the places to start is with the quality of what we are offering,” he tells producers. “Do we have something lush and green to offer compared to something that may not be so lush and green? What do we have growing in there, how much is there and what do we want to graze it with? Are we maintaining cows, cows with calves at side or growing calves?”
“Animal performance ties are a good starting point to structure a lease agreement,” he states.
Because cover crop lease agreements are considered new ground, Parsons says there is no one size fits all.
“We should structure the agreement to fit our specific situation,” he says. “It probably won’t be perfect or fair the first time, but we will know whether we need to do something different the next year.”
The most common way producers rent cover crops for grazing is per head per month, which makes the crop producer assume the risk for low forage production if the animal unit months (AUMs) aren’t there. The livestock grazer only pays for the actual grazing used but may have to assume some risk of finding an alternative feed source if the grazing isn’t there.
Some producers also rent on a per acre basis, which allows the cattle owner or livestock producer to assume the risk if there is not sufficient forage available.
“They are paying a flat fee per acre, and if that acre doesn’t produce what they thought, they are assuming the risk and are stuck with those results,” Parsons explains.
If producers enter into this type of agreement, Parsons says they should establish a latest acceptable planting date, what is actually being produced and start and end dates to graze that forage.
They should also agree on a stocking rate.
“These are details that need to be worked out ahead of time and put in writing so there are no misunderstandings,” he says.
Some producers also choose to rent based on gain, if they have growing animals. This type of agreement allows the livestock and crop producer to share the risk and the rewards.
“With this type of agreement, I would encourage both parties to spell out the weighing conditions and arrangements in the agreement,” Parsons emphasizes. “They should consider how the gain basis will be determined, in and out dates and if both parties will share in the risk for forage production and animal performance.”
“There are a lot of details to work out, but typically, the crop producer figures these things out and leasing is on top of that,” Parsons explains. “If that is the case, it is pretty straightforward.”
“However, in some cases, if the crop producer isn’t using cover crops but the livestock producer is trying to talk him into it, a crop producers may not want to be responsible for some of these things in an agreement to be able to graze it,” he explains.
Parsons reminds producers the same questions need to be specified in an agreement for the termination, especially when it will take place and who will pay for that.
“There is also the potential effect on the primary crop that will follow, so that needs to be considered.” he continued.
Parsons also notes planting the cover crop should be discussed including details like who plants it, when and how it’s planted and what the latest agreeable planting date is.
“Based on how it is planted, what cost will be attached to its potential effects on the primary crop? What will be planted, what is the species mix and what is the seeding/planting rate? Who will pay for it?” he asks.
He also encourages producers to consider whether programs like the Environmental Quality Incentives Program (EQIP) are being used and, if so, who the beneficiary will be.
During grazing, fencing and water are also important to consider, Parsons says.
The availability of fencing, as well as who is in charge of fences, should be spelled out in lease agreements. Parsons encourages producers to ask whether fencing will be provided by the land owner, crop producer or livestock grazer and understand who is responsible for establishing, paying for, maintaining and moving fences.
“Are water sources present, and if not, who will provide and maintain them?” Parsons asks, noting that the availability of water, including who is responsible for breaking ice in the winter and making sure livestock have water access should be delineated in lease agreements, as well.
Finally, livestock health and daily care are important provisions. Parsons says producers should establish with the landowner who is responsible for checking cattle, putting out salt and mineral and providing day-to-day management.
“Who is responsible for inventory counts, emergency feed sources and liability insurance for any potential damage the livestock may cause should be written in lease agreements,” he comments.
“These are all areas to negotiate between the crop and livestock producer,” Parsons says. “These are also opportunities for the crop producer to provide some service in terms of checking fences daily, making sure the animals are in and checking the water.”
“There are ways to enhance the income side for crop producers,” he says.
Gayle Smith is a correspondent for the Wyoming Livestock Roundup. Send comments on this article to firstname.lastname@example.org.