As dairies expand, more dairy producers look to custom growers to raise their herd replacements. This expansion offers windows of opportunity for new and existing growers to expand. If you’re starting to raise calves you need to develop a contract. And, even if you’ve been in business for a while you may want to review your existing contracts to make sure the agreements cover everything it needs to, since situations, markets and conditions change over time.
At the Dairy Calf and Heifer Association meeting last month, four calf experts offered tips on how to write a strong contract and what should be included in the contract. Lewis Anderson, calf-care specialist with Calf-Tel, Matthew Oesch, business consultant with Lookout Ridge Consulting, Eugene Myatt, owner of Kentucky Heifer Growers, and Sean Quinn, owner of Sunset View Farm, LLC offer the following list of questions in seven broad areas that should be answered in your calf-raising contracts.
Death, injuries and poor doers
There is a difference between death or injury via natural incidence versus neglect. How will neglect cases be defined? What is an acceptable rate of natural incidence? How will the dairy be compensated for injuries and death in cases of neglect? Are fees returned? Is the grower penalized over a certain percent death loss? At how many days of age does death loss begin to count? What are the reporting requirements for death, injury and poor doers? What procedure is used to determine what animals are culled and how are the economics of that cull handled?
Vaccination and testing requirements
Do you do BVD testing? Do you require Johne’s testing? What are the vaccination protocols? Do you perform blood serum tests? What is an acceptable IgG level? Who will be responsible for conducting and funding these tests?
Breeding program
Who decides which bulls will be used? Who pays for semen? Where is semen purchased? How many opportunities does a heifer have for A.I.? What are the goals for conception rates? If natural service is used at some point what is the criteria for the bulls that are used? How are non-breeders handled? Who takes the loss? At what age are they culled and what are the criteria for culling?
Animal health
How are heifers that are returned with udder damage handled? Who pays for veterinary services? (i.e. hernia surgery, extra teats, tail docking, etc.) Who is responsible for treatment cost?
Payment terms
Do you charge a per head per day rate? Do you have a peak days or dollars that can be charged per head? Is there a premium if an animal calves between 22 and 24 months of age? If feed prices increase, who absorbs the cost? If fuel prices go up who absorbs that cost? Do you require a wire transfer before cattle ship? What happens if payment is not received on time or is late? Depending upon what state the calf grower resides in there may be a vendor lien in place that establishes that the calf grower must be paid before any animals are removed from the farm.
Site visits and communication
Do you require dairy owners or managers to visit the site monthly or quarterly? How often do you contact the dairy? A backlog of problems can occur when the dairy is not visiting the grower often enough. What are the recordkeeping requirements? What herd management software is used by the dairy? How will you provide feedback to the dairy on issues?
Contract cancellation
If either party wishes to terminate the relationship how is it handled? How much notice is required? What happens to animals that are already at the calf raisers, but not at age or pregnancy status to return? Is there a penalty to the dairy for early removal?
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