The trend in cattle prices over the last year has been up and down with a general trend toward the upside. These changes in market values and higher interest rates are having an impact on beef cow share and cash lease agreements in determining what is “fair” to both cow owners and those who are leasing the cows.

For a cow owner, the following are the four major drivers that determine what is "fair" in terms of a cash lease or percentage of the calf crop the cow owner should receive. Those factors are:

• Average cow herd value
• Cow value leaving the herd or weigh-up price
• Replacement rate
• Expected rate of return (interest rate) on cow value

The average market value of weigh-up cows and bred cows are generally strong. Even with areas being impacted by dry conditions, most areas are seeing hay and grain prices that will be lower this fall than they were last year. The change in market value is impacting what is “fair” in terms of the amount of cash lease that would be expected to go to cow owners, or the percentage of the calf crop a cow owner should receive. This change is due to the current market value of a bred cow versus what bred cow and weigh-up cow values were valued at just two years ago. The higher interest rates are impacting what is a “fair” share and cash lease rate as well.  The change in cow value as well as increasing interest rates means the person owning the cows may need to receive a larger cash lease payment or percentage of the calf crop to reflect more accurately what is “fair” compared to where things were a couple of years ago.

For the upcoming 2025-year, cow-calf share leases or cash leases should be reviewed. The lease should accurately reflect what each person will contribute to the production of weaned calves and what their compensation should be either in cash or in a percentage of the calf crop.

The Center for Ag Profitability hosted a webinar titled “What is Fair in Cow Leasing: Cash vs. Shares” which highlights the differences between these lease agreements. The webinar also presents information on key things that cow owners and operators need to discuss before entering into or when reviewing an agreement. The UNL Beef website has additional resources that can help both cow owners and those leasing cows in determining what a “fair” lease arrangement should be. Two resources are: the Beef Cow Share Lease Agreements Extension Circular 841, and a video explaining the use of the Cow-Calf Share Lease Cow-Q-Lator, an Excel® based spreadsheet.

Annually reviewing cow-calf share or cash cow lease agreements is prudent under fluctuating market conditions. For cow share or lease agreements to be successful long term, it must work for all parties involved.

Interviews with the authors of BeefWatch newsletter articles become available throughout the month of publication and are accessible at https://go.unl.edu/podcast.  You can subscribe to the BeefWatch newsletter here: http://go.unl.edu/Beefwatch_subscribe