Farm Ireland

Friday 15 December 2017

New cow Leasing rules outlined

A temporary 'stock exchange' might just suit milk suppliers

Aisling Meehan

Cow-leasing arrangements that were popular in the early 1990s are coming to the fore once again. Such arrangements were, prior to last week, regulated by virtue of a circular published 20 years ago -- Circular 4/91. An update of this circular was released last week.

Certain producers who are unable to produce milk up to the full amount of their milk quota due to insufficient cow numbers may make arrangements with other producers to lease some, or all, of their cows in order to produce their full quota entitlement in respect of any superlevy year.

The Department of Agriculture, in its explanatory memorandum on the production of quotas by "Mulder" producers (issued in October 1989), set down a number of conditions in respect of cow-leasing arrangements, which are as follows:

•That the leased cows are transferred to the lessee's farm;

•That the milk from the leased cows is produced on the lessee's holding;

•That the milk must be delivered to the lessee's milk buyer.

Certain further conditions were laid down by the Department in Circular 4/91 in order to satisfy that the arrangements were bona fide and that the temporary transfer of animals between holdings would not pose any threat to the national disease eradication programme.

The following requirements, which are additional to those set out above, had to be met in the case of all cow-leasing arrangements:

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•Both the lessor's and lessee's holdings must be free from TB and brucellosis. Both parties must include a signed statement to this effect in the formal leasing document;

•The lessor's cows must have passed a TB test within the 60 days prior to the effective date of the leasing arrangement;

•The cows must be TB tested again within 60 days prior to returning to the lessor's holding;

•The formal leasing document must also include a signed undertaking by both parties that the cows will not be moved into or out of either holding unless they have passed TB tests in accordance with the animal health regulations in force at the time;

•The herd and tag numbers of the cows leased must be listed on the formal leasing document;

•The fully completed formal lease must be presented to the local district veterinary office for stamping in advance of the start date of the arrangement;

•The stamped document must be presented to the lessee's co-operative/dairy also in advance of the start date. The co-operatives/dairies will be obliged to notify the Department's local dairy produce inspectorate of the start of the arrangement so that an inspection may be carried out during the period of the cow lease.

Only those cow-leasing arrangements which meet all the conditions set out above are deemed to be acceptable to the Department.

By virtue of an update of Circular 4/91, dated July 11, the Department has reminded all registered milk purchasers of the requirements for such arrangements in order to ensure compliance with the 2008 Milk Quota Regulations (SI 227 of 2008). The requirements are set out as follows:

•The leased cows, accompanied by their passports/cattle identity cards, must be transferred to the lessee's holding.

NOTE: Under no circumstances should animals that are identified improperly or documented improperly be moved. Prior to movement, an AIM certificate of compliance for farm-to-farm movement must be obtained. A NBAS 31B form for this purpose (where the ownership of animals does not change) is available from any of the Department's district veterinary offices or on the Department's website. In submitting the request for an AIM certificate of compliance, the details of the destination to which the cows will move must be specified. Movement notification must subsequently be recorded on the AIM system.

•The milk from the leased cows must be produced on the lessee's holding.

•The milk must be delivered to the lessee's milk purchaser.

•Both parties must be fully compliant with animal health regulations.

All animals must come from herds that are officially TB free, (OTF), ie, not restricted, and the herd and relevant animals must have had a clear test within the previous 12 months. No pre-movement test is required for TB, although this is advisable as a good farming practice bio-security measure.

All animals must also come from herds that are officially brucellosis free (OBF), ie, not restricted. Females aged 18 months and over must have passed a test for brucellosis within the previous 60 days.

•A copy of the AIM certificate of compliance, which de-facto confirms the OTF and OBF status of the herds, must be presented to the lessee's milk purchaser in advance of the commencement date.

•The milk purchaser must notify the Department's local dairy produce inspectorate of the start of the arrangement so that an inspection may be carried out during the period of the cow lease.

It is further recommended that the lessor and lessee should have contracted other matters regarding necessary veterinary treatment, feeding, etc, between themselves.

Finally, the updated circular provides that only those cow-leasing arrangements which meet all the conditions set out above will be acceptable to the Department.

The rental market for dairy cows is not as well established as the market for land and buildings but many of the same benefits can be realised from leasing cows. This is especially true in the current climate, where many dairy farmers are faced with the potential of exceeding their individual quotas this year.

By leasing their cows, farmers have the benefit of retaining breeding lines while having these cows available again to them past the milk quota era.

Like contract rearing, the lessor must trust the lessee that he/she will look after the dairy cows like their own, but the consequences of the arrangement should be spelled out in a written lease agreement that is signed by both parties.

Disclaimer: The information in this article is intended as a general guide only. While every care is taken to ensure accuracy of information contained in this article, solicitor and tax consultant Aisling Meehan does not accept responsibility for errors or omissions howsoever arising. Aisling Meehan is a qualified solicitor and tax consultant from Rathlahine Farm, Newmarket-on-Fergus, Co Clare. Tel: 061 368 412. Oliver Ryan-Purcell, solicitor and accredited mediator, practises as a consultant solicitor to Aisling Meehan

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