Considerations For Custom Raising
Dairy Heifers
Table of Contents
- Introduction
- Considerations For the Custom Feeder and Owner
- Agreement Considerations
- Types of Agreements
- Agreement Essentials
- References
- Other Relevant OMAFRA Publications
Introduction
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 Owner
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 business goals.
Advantages
Owner
- 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
Custom Feeder
- 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
Disadvantages
Owner
- 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
Custom Feeder
- good handling facilities required
- increased repair requirements of facilities
- may play host to heifer owners
- producer/custom feeder conflicts
- increased exposure to diseases
Agreement Considerations
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 feeder.
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:
Breeding
- AI services
- semen
- sire selection
- heat detection aids
- pregnancy checking
- heat detection
Feed
- forage
- grain
- protein supplement
- mineral
- salt
- feed additive
- pasture
Veterinary
- deworming
- dehorning
- hoof trimming
- emergency health care
- medications
- parasite control
- post mortem costs
- vaccinations
General
- bedding
- identification
- insurance
- power/fuel
- barn repairs
- maintenance
- manure handling
- labour
- death loss
- fly control
- trucking
- growth monitoring
- water
Agreement Essentials
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 bottom line.
- 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 records.
- 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 GST.
- 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 Offices
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
|
Total
|
Your Farm
|
|
Milk replacer
or
|
37 kg
|
---
|
---
|
---
|
37 kg @ $______
|
$_______
|
|
Whole Milk
|
155 kg
|
---
|
---
|
---
|
155 kg@ $_____
|
$_______
|
|
Calf starter
|
120 kg
|
---
|
---
|
---
|
120 kg@ $_____
|
$_______
|
|
Grain mix
|
---
|
250 kg
|
350 kg
|
400 kg
|
1000 kg@$_____
|
$_______
|
|
Hay or Equiv.
|
10 kg
|
150 kg
|
1100 kg
|
4240 kg
|
5500 kg@$_____
|
$_______
|
|
Pasture
|
---
|
---
|
---
|
---
|
---
|
$_______
|
|
Total Feed Cost:
|
$_______
|
|
Bedding (straw)
|
100 kg
|
150 kg
|
250 kg
|
500 kg
|
1000 kg@$_____
|
$_______
|
|
Vet. and Med.
|
$8.00
|
$4.00
|
$4.00
|
$8.00
|
$24.00
|
$_______
|
|
Breeding
|
---
|
---
|
---
|
$40.00
|
$40.00
|
$_______
|
|
Utilities
|
$4.00
|
$4.00
|
$8.00
|
$15.00
|
$31.00
|
$_______
|
|
Insurance:
livestock
buildings
|
$0.50
$1.90
|
$1.00
$0.60
|
$2.00
$1.20
|
$4.00
$2.40
|
$7.50
$6.10
|
$_______
$_______
|
|
Repairs
|
$9.60
|
$3.00
|
$6.00
|
$12.00
|
$30.60
|
$_______
|
|
Tractor Scraping
|
0.25 hr
|
0.25 hr
|
.5 hr
|
1 hr
|
2 hr @ $______
|
$_______
|
|
Miscellaneous
|
$5.00
|
$2.00
|
$4.00
|
$8.00
|
$19.00
|
$_______
|
|
Mortality
|
3%
|
1.0%
|
0.5%
|
0.5%
|
5.0%
|
$_______
|
|
Estimated labour
|
8 hr
|
4 hr
|
5 hr
|
8 hr
|
25 hr
|
$_______
|
|
Proportional Cost Of Heifer Raising:
|
11%
|
8%
|
21%
|
60%
|
|
|
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.
References
- 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
Relevant OMAFRA Publications
- Charting Heifer Growth. Factsheet Order No. 82-064
- Growth Management of Dairy Heifers. Factsheet Order No. 82-056.
