May 17, 2022
A good bull is expensive to buy and more expensive to maintain the other nine months of the year when he’s not working. Therefore, operations may choose to lease a bull rather than to own. When done properly, a bull lease arrangement can be beneficial to both parties, reducing the carrying costs of the bull battery.
The key to any successful lease agreement is to put it in writing. A written agreement ensures both the owner and the renter are on the same page, alleviates disagreements before they happen, and preserves the business relationship.
Here are six crucial items to consider in a bull lease agreement: Cover the basics.This should include specific information on the bull such as individual identification, breed composition, the dates that the bull will be in the leasee’s possession, as well as details of what the bull will be expected to do during the breeding season including duration, bull to cow ratio, and if the bull will be held separate or comingled with other bulls. Additional information might include any bull guarantees such as genomic testing to enhance EPDs and specify defect status, outline vaccinations, and identify who is responsible for transportation between farms.
Some leases may require information transfer between the herds, such as the owner receiving birth dates and weaning weight data. Consider insurance. Make sure the bull is carrying an insurance policy that will cover death as well as liability if he causes damage to property or injury to people. Ensure both parties know who is carrying the insurance, agree on the value the bull is insured at, and that the policy specifies the appropriate location(s) of the bull. Ensure a passing breeding soundness exam. All bulls should pass a three-part breeding soundness exam (BSE) before the start of each breeding season.
A lease agreement should specify the results of that BSE conducted within 30 days from the start of the lease.The agreement may also specify the need for a BSE at the end of the breeding season to ensure the bull did not develop fertility issues and who is responsible for covering the cost of the second BSE. Establish health protocols.
During a BSE, consult with the vet on testing for reproductive diseases that a bull can silently carry which negatively impact pregnancy success and other common herd health issues such as trichomoniasis, BVD, anaplasmosis, or Johne’s disease.There may be benefits to testing at the end of the lease agreement for peace of mind as well. Additionally, specify the responsible party for any vet care during the lease period and who will absorb those expenses.
Some owners may also offer a replacement if the bull becomes injured or ill during the lease period. Assess the bull’s physical condition. Expect bulls to lose between 100 - 300 pounds during the breeding season. Getting the bull back into shape for the next breeding season can be difficult and result in an expensive feed bill. Therefore, consider adding guidelines to the lease outlining acceptable weight or body condition loss, so that the nutritional demand post-breeding season can be kept in check. To fairly evaluate, collect a delivery and return weight.
Taking pictures, videos or having a third-party evaluation at the start and conclusion of the lease period can help document physical changes and help avoid conflict. Determine the lease value. Finally, a lease agreement cannot be complete without assigning a fair value to the bull’s service provided and outlining the terms of payment. Like any livestock lease, no two agreements are alike and vary based on an operation’s goals, resources and information available, and expectations. Although not the only methods, here are a few approaches to determining the value of a lease.
Remember there may be value in adjusting based on the number of cows to be serviced as well as added services and guarantees provided.
Assign a value based on breeding success with an artificial insemination (AI) cost as the base. If a producer was to use AI rather than the leased bull, they could realistically expect a 70% conception rate with a $35 semen cost/cow. Assuming the leased bull will exceed a 70% conception rate, one might value the bull’s services at $50/cow ($35/70%). This value scenario is likely reserved for bulls sourced from a reputable breeder that are backed by genomic testing, above average health protocols, and highly sought-after genetics.
Consider the value of the bull as a yearling and his breeding life expectancy. Most bulls remain in the herd for less than fi ve breeding seasons, depending primarily on if heifers are retained and other farm goals. So, if a bull is valued at $4,000 as a yearling and is expected to go through four breeding seasons, the owner may charge 25% of yearling value per year or $1,000. Owners may choose to adjust this price based on bull age knowing that a yearling or two-year-old will cover fewer cows than a mature bull.
Determine the daily cost for a bull standing idle. Regardless of where the bull is housed in the off-season, he costs money to feed, requires time to do chores, and warrants a yardage charge for facility and fence upkeep. Assuming the feed bill is $1.85/day, yardage (excluding labor) is costing $0.35/day, and labor is $1/day, he is costing $3.20/day to stay on-farm. For a 90-day lease, that’s $288 total or about $12/cow if covering 25 cows. Keep in mind that this value approach is simply covering the maintenance cost of the bull, so should be adjusted to refl ect premiums based on genetic merit, guarantees of the lease, and any additional feed input and health protocols to get him ready for the next breeding season.
Source: Iowa State University, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
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