Considerations For Custom
Raising Dairy Heifers
Table of Contents
- Considerations For the Custom Feeder and
- Agreement Considerations
- Types of Agreements
- Agreement Essentials
The goal of this Factsheet is to outline the business
aspects of developing custom heifer grower arrangements for the
dairy industry. Custom agreements for heifer raising can have major
benefits for both the owner and the custom feeder.
Ontario dairy producers usually manage their dairy
replacements by groups:
- birth to weaning (0 to 3 months)
- transition (3 to 6 months)
- growing (6 to 12 months)
- breeding to pre-fresh (12 to 23 months).
Each producer can decide which phases of heifer
growth may best be accomplished by the custom feeder.
Considerations For The Custom Feeder and
There are several advantages and disadvantages
for both the owner and custom feeder to consider when making the
decision to specialize the business of raising replacements. Both
will need to determine the impact heifer raising will have on their
- decreased labour requirements
- resources used by heifers will be available for milking cows,
i.e. feed, storage, labour, facilities
- allows herd expansion with less capital investment
- increased milking time devoted to milking herd management
- business opportunity
- use and marketing of forage and grain crops
- reduced costs and labour through economy of scale
- opportunity to manage heifers in groups by age and/or size
- lose outlet for lower quality feeds & manger sweepings
- limits management control
- producer/custom feeder conflicts
- increased exposure to disease
- increased cost and risk in transportation
- good handling facilities required
- increased repair requirements of facilities
- may play host to heifer owners
- producer/custom feeder conflicts
- increased exposure to diseases
A written agreement should be used for the protection
of both the owner and the custom feeder. The main benefit of an
agreement is to identify the responsibilities of the owner and custom
The agreement between the owner and feeder should
be clear and understood by both parties. Risk and benefit should
be assessed before entering into an agreement.
Agreements should also specify growth guidelines
(weight, height, and age at end of contract), and indicate fee and
payment arrangements. Any written agreement should be done in duplicate,
dated and signed by both parties. The checklist on the following
page contains a list of items that could be included in a written
heifer agreement between the owner and the feeder.
Types of Agreements
An agreement is a way to document the different
expectations that owners and feeders might have. There are several
types of agreements that can be drawn up.
- Set fee contract agreement. The title to the
animals remains with the owner and the custom feeder is hired
to provide the labour, feed, housing and other items for a specified
period for a specified price.
- Daily charge per head per day. This type of
agreement is common. It has the advantage of allowing monthly
billing for cash-flow planning of both parties.
- Gain-based agreements. This type of agreement
is more common with beef producers but has merits for dairy heifer
owners. Under this arrangement, the owner would pay the feeder
per pound of gain up to the optimum weight specified in the agreement.
- Feed plus yardage agreement. Under this type
of contract, the owner would pay for feed, plus a pre-set yardage
fee to cover labour, overhead and operating costs of the feeder.
Once the type of agreement is decided upon, potential
items (as identified in the checklist) should be considered:
- AI services
- sire selection
- heat detection aids
- pregnancy checking
- heat detection
- protein supplement
- feed additive
- hoof trimming
- emergency health care
- parasite control
- post mortem costs
- barn repairs
- manure handling
- death loss
- fly control
- growth monitoring
A written agreement can contain any information
desired by the feeder and owner, but a clear understanding of the
business factors must be well understood before either sign the
- Payment. There are probably as many different
kinds of payment plans as there are people in business; make sure
it is clear!
- Performance Standards. Spell out the expectations
for age, weight, body condition and other standards. Specify how
heifers that do not end up pregnant will be handled. For Recommended
Growth Standards, refer to OMAFRA Factsheet "Growth Management
of Dairy Heifers", Order No. 82-056.
- Health. The feeder should provide the owner
with details about health care plan designed by the veterinarian.
Details about dehorning, breeding, and treatment should be included.
Transportation issues should be clearly understood.
- Death Loss. There will always be some death
losses no matter who is raising the animals. Some agreements assess
a per cent loss to the owner and the feeder accepts responsibility
for losses above the agreed level. In some agreements in the event
of the death of a heifer, the owner absorbs the loss of heifer
and the feeder absorbs his costs.
- Nutrition. The feeder should have predetermined
rations to meet the performance expectations. "Considerations
For The Custom Feeder And Owner" lists the estimated
quantities of feed required for each management group but nutritional
requirements per day change throughout that time frame. The feeder
and owner need to agree about what to do with non-performing animals.
- Insurance. Both parties need to determine whose
insurance company will cover losses due to a catastrophe. Include
a legal description of where the animals will be kept during the
growing period (township, lot, concession, civic number) for insurance
- Goods & Services Tax. While the cost of
feed supplied at custom feedlots is zero-rated, other services
such as yardage and veterinary supplies and services are subject
to GST. If feed is not invoiced separately, custom feeders are
expected to calculate GST on at least 10 percent of the total
invoice; this applies whether invoices are based on feed plus
yardage or on a cost per gain basis. Cattle owners will be able
to recover GST as an input tax credit if they are registered for
- Security. Custom feeders should consider registering
their claim under the Personal Property Security Act. Forms are
available at Province of Ontario Land Registry Offices. Completed
forms may be submitted for registry at any of the Land Registry
Table 1. Quantities Useful in Developing a Heifer
Raising Budget (Adapted from Ref. 2)
| Budget Items
|| Management Group
| 0-3 months
|| 3-6 months
|| 6-12 months
|| 12-24 months
|| Your Farm
Milk replacer or
| 37 kg
|| 37 kg @ $______
| 155 kg
|| 155 kg @ $_____
| 120 kg
|| 120 kg @ $_____
|| 250 kg
|| 350 kg
|| 400 kg
|| 1000 kg @ $_____
Hay or Equiv.
| 10 kg
|| 150 kg
|| 1100 kg
|| 4240 kg
|| 5500 kg @ $_____
Total Feed Cost:
| 100 kg
|| 150 kg
|| 250 kg
|| 500 kg
|| 1000 kg@$_____
Vet. and Med.
| 0.25 hr
|| 0.25 hr
|| .5 hr
|| 1 hr
|| 2 hr @ $______
| 8 hr
|| 4 hr
|| 5 hr
|| 8 hr
|| 25 hr
Proportional Cost of Heifer Raising:
Budgeting Assumptions: Weaning at 4 weeks of age;
Birth weight is 45 kg; Utilities include telephone, hydro, fuel;
Calving at 24 months; Calving weight is 575 kg.
- Alimentation de la gJ nisse de remplacement: Objectif
vL lage B 24 mois. Mongeon, M., CPAG., Symposium
des bovins laitiers, pp.23-49, ISBN 2-551-13150-2 1994
- Before You Hire Your Heifers Raised. Hoffman, C. Pat.
Hoard's, p.533, 1992.
- Contract Heifer Raising. USDA Leaflet N115.193, (1993).
- Dairy Heifer Budgeting Guide. Manitoba Agriculture
Pub. 410-15, 1986.
- Income potential & guidelines for the custom dairy heifer
grower. Endsley, J. Atkeson, G.W., Nott, S., Michigan State
U. Ag. Economics Staff paper 96-89, 1996.
- L'J levage des gJ nisses: La modJ ration a bien
meilleur cout. Pellerin, D. Agri-Gestion Laval, 1993.
- Taures laitiP res. CREQA.MAPAQ. 1989