Farm Ireland

Saturday 16 December 2017

The nitty gritty of contract rearing


For both the dairy farmer and the replacement rearer the biggest question is cost
For both the dairy farmer and the replacement rearer the biggest question is cost

Theresa Murphy

Q I am a young trained farmer and have always wanted to set up my own dairy farm. I am planning to take over our family farm but in order to make it a viable business I will need to milk more cows than the farm can currently house. I can't borrow any more money for building a shed but I am interested in the possibility of having replacements reared off farm to allow me increase my numbers quicker and milk more cows. What are the issues I need to consider in relation to the contract rearing?

A. There is a very strong culture of contract rearing of replacements off farm in other big dairying countries and it can certainly provide the conditions needed for expansion. However, the key to contract rearing success is that the agreement between the farmers involved addresses all potential issues which might arise.

While the attractions of this system are obvious for the dairy farmer who can have more productive cows on-farm, there are advantages too for the farmer who is actually rearing the replacement animals.

For example, there's a regular income agreed in advance that's not dependant on price fluctuations. There's also the huge cost saving of not having to stock the farm.

This could have potential for farmers nearing retirement who wish to release some equity and it can often be possible to run the enterprise on a part-time basis.

Counting the cost

For both the dairy farmer and the replacement rearer, the biggest question is that of cost. The margin to be realised by the rearer (per hectare for land and labour) varies considerably with the daily fee paid by the dairy farmer, the stocking rate and productivity.

Grassland management will be the key to leaving profit for the rearer.

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The cost per head, per day should be calculated - having considered which party will pay for large costs like AI, vet bills and transport.

The contract between the rearer and dairy farmer should set out clearly which party bears these costs. Focussing the mind on what costs are arising with the rearing of the animals is essential so neither party underestimates what is involved.


As with any business arrangement, it is essential that the contract prepared between parties provides for the worst case scenario and everything in between.

This should include who bears the cost of loss of life of the animals while in the care of the replacement rearer. Obviously prevention is the best cure so it is essential that the agreement sets out clearly what conditions the animals should be reared in and also what condition (including weight) the owner wants the animals to be in after rearing.

Target weights should be included in the agreement for difference ages in line with the breed of the animals in question.

While there is always scope for variation, Teagasc have compiled detailed guidelines on this topic. When drafting the contract/agreement between farmers, the reaching of target weights should be included in the contract.

To provide some security for the dairy farmer, payments can be linked to the reaching of these goals.

In all cases, clear targets must be agreed by both parties in advance of entering the contract arrangement.

In addition, an independent arbitrator should be nominated in advance to deal with conflict occurring between the owner and contract rearer.

One obvious fear is that of diseases like Tuberculosis (TB) - which have the effect of 'locking up' the herd and the animals within it. What happens in this situation? In this case, both herds would be locked up.

However, provided there was a bone-fide contract, in-calf heifers could be moved on welfare grounds and normal TB compensation would be payable.

If the contract rearer is simultaneously taking heifers from other owners or has another livestock enterprise the risks may be further increased.

Contingency plans must be put in place to ensure that an outbreak of disease does not have implications for the smooth return of the heifers to the dairy farm at the end of the rearing period or result in calving heifers being 'stuck' with a contract rearer with no facilities to calve or milk such animals.

This should be built into the contract and also who will bear the costs involved.

Theresa Murphy is a barrister based in Ardrahan, Co Galway

Drawing up a contract

Contracts allow for some of the day to day issues that will arise to be identified, discussed and agreed upon before the heifers arrive on the contract rearer's farm.

These include:

* Ownership status of the animals

* Dates of arrival/planned removal of animals to/from the contract rearer's farm; are any penalties etc to be applied?

* Agreed final and intermediate weights - will the heifers be weighed and if so, by whom and at what stage?

* Dosing, testing and vaccination programmes - who pays/who administers?

* Will heifers be mixed with stock from other herds?

* Breeding programme - AI or stock bull and who does the heat detection?

* Mortality - who covers the cost of disposal

* How often will the owner visit the contract rearer's farm to check the heifers?

* What method of payment is most suitable to operate?

* How will empty heifers be managed - will they be fattened on the contract rearer's farm or returned?

* How will heifers be managed across the winter eg, baled silage, pit silage?

* How will heifers be managed during the grazing season?

* Timing and quantity of concentrate supplementation. Although this may seem like a daunting number of questions to be answered, many of them are very easily addressed and for many of the good rearers, replacement owners will seek you out.

It is worth consulting the Teagasc template contracts on contract rearing, but each agreement should be tailored to the individual needs of both farmers to ensure the smooth running of the agreement.

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