Cow leasing can benefit both sides

COLUMBIA, Mo. — Leasing instead of purchasing cows can be an effective financial strategy for cow-calf producers. Lack of capital is often a barrier for new producers and those wanting to expand.

Leasing alleviates high input and startup costs, opening the door to a less capital-intensive and lower-risk option than purchasing cows, Jacob Hefley, University of Missouri Extension agricultural business specialist, said in a news release. “New producers can also potentially gain experience from the owners that they might not get otherwise,” Hefley said. Owners wanting to lease their herds often prefer less hands-on involvement but want to retain ownership of their cattle.



Leasing can allow producers to retain ownership of their herd’s genetics and maintain an income stream. Livestock leases can be structured in multiple ways, Hefley said. Cash cow leases offer the most control and responsibility for an operator.

Share leases have the cow owner and the operator sharing expenses, income, management decisions and risk. Income or possession of calves is split based on the owner and operator’s share of contributions to total production costs. Flexible cash leases are essentially a hybrid of a traditional cash lease and a share lease.

This lease structure includes both a fixed and a variable payment, combining the payment security of a cash lease with the risk-sharing benefits of a share lease. Beef cow leases can help in transferring ownership of a herd gradually. For the herd owner, this approach can offer potential benefits in tax reporting and help with a smoother succession.

For operations, acquiring ownership gradually through a lease can lessen financial pressures and allow operations to gain expertise..