Contract Rearing

Could you just rent the land and buildings to a farmer, or you could take the cattle into your herd number and just make it part of the deal that he has to look after them. This would be a big advantage to a lot of lads as it would help with their nitrates levels. I don’t think there are any absolute rules you have to follow, just come up with a deal that suits both.

You are looking at it wrong. For the section you are renting pretend there are no payment. Decide what “you want for it (include what you would have made as payment for it plus the land fee”. This is yours then tax free.

Its the final figure into your hand that is important regardless of if it’s

A) payments seperate and rent separate

B ) just rent (but the other farmer claims the oayemnts).

as long as B is at least equal to A you are laughing. Even if it was a little less you are still laughing as the entirety of B is tax free where in A you have to pay tax on the payments.

By the sounds of it what you want is: the farmer to transfer his cattle into your herd number, look after them and pay you for the use of the land & buildings and you get the grant money as well. You can do that, obviously the rent money would have to reflective of this, it’s just not really contract rearing because you’re not rearing them. If you do this there is a risk of his cattle getting locked up if you’re go down as someone else above pointed out. I’d guess that there are lads that would do this as it would help them with nitrates, depends where you are I suppose.

Bass offered you a clever option. Def do not bring another farmers stock into your own home herd no. As others said the next best option for you, is long term lease. Pick the right option, not the highest bidder. A lot of grief, getting the wrong client.

You can, but you won't get any tax relief. You are in fact better tied in with a good client for a period of time. You can't have it everyway, must make choices.

Well said

@Seadin Are you talking about land around Ardfert or that general area of North Kerry or land around Lyreacrompane? There'd be some difference in prices there. Best thing to do is talk to an Agricultural advisor familiar with your area. You could also talk to a local Auctioneer and see if their respective valuations are any way close.

You’re some expert for someone who’s never contract reared

we’re heading into our 6th year at it here. Very happy. Saves me a lot of labour throughout the year and has simplified the system. Contract rearer seems happy too. Making more money than he did at beef any way. He’s after buying a loader, a tractor, a mower, and round baler, reseeded half the farm and this year is going to put in a new slatted tank

he wouldn’t be doing all that if he wasn’t getting a return out of it

Just ours. His farm size suits the amount we rear. He grows about 15 acres of barley aswell

You can be guaranteed there is off farm income involved, all the investments mentioned and going at a new slatted tank would be done to keep down the tax bill some bit. Contract rearing and 15 acres of barley don’t pay for all those things that’s for sure because if they did I think a lot more would be jumping ship from dairying.

A lot of new cars are bought on pcp finance etc now and are a such not bought until final lump sump payment is made but most of the time these people will just go for a new car again and begin the cycle all over again, so they never actually own their new car they drive around in.

I didn’t presume any were new, any 20+ year old tractor or loader is considerable money now and all the other bits and a tank being done out of cash flow from the farm alone I’d see it hard done now tbh. Out of interest does the person work off farm?

To be fair the contract rearing does make investing in farm easier when you’re not relying on the farm for your income and makes it far easier to work and manage. Guaranteed income each month makes it far easier to service a loan an option a beef operation wouldn’t have.

It’s all about management and budgeting. I wouldn’t agree that payment each month is any better to having the money from the sale of one’s own cattle. If a farmer isn’t disciplined with his finances, that doesn’t make contract rearing superior to any other enterprise.

As I said, all about budgeting and discipline. Have had several loans here and managed fine and never had an overdraft either.

Pallaskenry did exactly what your last point was heifers being reared in roscommon, don’t know the exact details but didn’t work out well everything was removed from there after a year.

Contract rearing is like any other agri sector it may suit or not. It can be attractive to some farmers that are technically very efficient but not extremely profitable. A cohort of farmers that exited sucklers who were technically good farmers and lads existing dairying are attracted to it.

Personally not for me. At present net margin on a store to beef system is o er 300/ head amd climbing. You are not going to get a 5-10%/year rise in profitability from contract rearing

When you are profitable loan repayments are all about discipline, similar to buying stock or paying for any service or product.

I always pay loans half yearly so its relatively easy in a profitable system to make payments.

What annoyed a lot if drystock early in the contract rearing game was the attitude of the dairy sector that all beef was low profit or unprofitable and lads might as well rear dairy stock for land rental prices.

Ah, but exiling them to Roscommon😯

Ya they’ve a grim existence in fairness, and then back to Derek and his gang of genius’s from there