Beef cow herds have always been a popular enterprise for small and medium sized farms in...

  

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Beef cow herds have always been a popular enterprise for small and medium sized farms in the Midwest. Since owning cattle involves a relatively high capital investment, many cow-calf enterprises are carried out jointly by two or more people. One party may own the breeding herd while another party supplies the labor to take care of them. Facilities, feed, health costs and other resources can be shared in a variety of ways - there are no hard and fast rules to follow. The three basic principle must be aware are: 1. that the calves or the income from the sale of the calves should be shared in the same proportion as 2. the total costs of production must be stable or could be reduced; 3. the business prospect, at least 10% per year, but cost estimated at about 5-10% Table 1. Cow-Calf Budget (calves sold after weaning). Cost per cow unit Cost item Pasture land (2.5 acres @ $35) Pasture fertility, weed control Com (4 bu. @ $5.00) Supplement and minerals Mixed hay (2 tons) seed annual fertility, pesticides labor machinery land Stalk grazing (4 acres @ $3) Health Utilities Machinery, fuel, repairs Marketing, miscellaneous Interest on feed, other costs Interest, depreciation, insurance machinery and equipment fences and corrals livestock Labor (8 hours @ $14) Management (10% of costs) Total Percentage contributions $87.50 50.00 20.00 5.00 11.00 70.00 26.00 63.00 50.00 12.00 25.00 5.00 10.00 20.00 13.50 20.00 45.00 115.00 112.00 76.00 $836.00 Example 1 Owner Operator $87.50 25.00 10.00 2.50 5.50 35.00 50.00 12.00 12.50 5.00 10.00 7.50 45.00 57.50 25.00 10.00 2.50 5.50 35.00 26.00 63.00 12.50 10.00 10.00 6.00 20.00 57.50 112.00 38.00 38.00 $403.00 $433.00 48% 52% Example 2 Owner Operator $87.50 11.00 50.00 12.00 5.00 5.50 45.00 115.00 $331.00 40% $50.00 20.00 5.00 70.00 26.00 63.00 25.00 10.00 20.00 8.00 20.00 112.00 76.00 $505.00 60% Example 1-2 is the name of company but change to protect their privacy and secrecy Do you agree or not agree about this agreement plann. Evaluate and tell the shareholder why (agree or not) Under joint agreements the question also arises as to how income should be shared. How much each party get his portion Note: To evaluate the joint agreement based on the three approach. You can use comparing with average of two, or proportion of cost, or percentage of contribution. Beef cow herds have always been a popular enterprise for small and medium sized farms in the Midwest. Since owning cattle involves a relatively high capital investment, many cow-calf enterprises are carried out jointly by two or more people. One party may own the breeding herd while another party supplies the labor to take care of them. Facilities, feed, health costs and other resources can be shared in a variety of ways - there are no hard and fast rules to follow. The three basic principle must be aware are: 1. that the calves or the income from the sale of the calves should be shared in the same proportion as 2. the total costs of production must be stable or could be reduced; 3. the business prospect, at least 10% per year, but cost estimated at about 5-10% Table 1. Cow-Calf Budget (calves sold after weaning). Cost per cow unit Cost item Pasture land (2.5 acres @ $35) Pasture fertility, weed control Com (4 bu. @ $5.00) Supplement and minerals Mixed hay (2 tons) seed annual fertility, pesticides labor machinery land Stalk grazing (4 acres @ $3) Health Utilities Machinery, fuel, repairs Marketing, miscellaneous Interest on feed, other costs Interest, depreciation, insurance machinery and equipment fences and corrals livestock Labor (8 hours @ $14) Management (10% of costs) Total Percentage contributions $87.50 50.00 20.00 5.00 11.00 70.00 26.00 63.00 50.00 12.00 25.00 5.00 10.00 20.00 13.50 20.00 45.00 115.00 112.00 76.00 $836.00 Example 1 Owner Operator $87.50 25.00 10.00 2.50 5.50 35.00 50.00 12.00 12.50 5.00 10.00 7.50 45.00 57.50 25.00 10.00 2.50 5.50 35.00 26.00 63.00 12.50 10.00 10.00 6.00 20.00 57.50 112.00 38.00 38.00 $403.00 $433.00 48% 52% Example 2 Owner Operator $87.50 11.00 50.00 12.00 5.00 5.50 45.00 115.00 $331.00 40% $50.00 20.00 5.00 70.00 26.00 63.00 25.00 10.00 20.00 8.00 20.00 112.00 76.00 $505.00 60% Example 1-2 is the name of company but change to protect their privacy and secrecy Do you agree or not agree about this agreement plann. Evaluate and tell the shareholder why (agree or not) Under joint agreements the question also arises as to how income should be shared. How much each party get his portion Note: To evaluate the joint agreement based on the three approach. You can use comparing with average of two, or proportion of cost, or percentage of contribution.

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As one can see in example 1 almost the owner and operator controbutes the same amou... View the full answer