It is strongly advisable to enter into a written contract if you are entering into a contract-rearing agreement, writes solicitor Karen Walsh.
Dear Karen,
I read your article last week about contract rearing ‘gone wrong’. This is something that I am interested in getting into myself as a young farmer, with limited resources. I want to make sure that I start things off on the right foundations so I would be interested to hear your advice before I do anything.
Dear Reader,
Thank you for your email. To begin it is best to define what contract rearing of replacement heifers is: It is an arrangement in which a dairy farmer enters into a contract with another farmer for the replacement stock to be reared on the other farm. The other farmer gets paid to rear the heifers for the dairy farmer.
It is strongly advisable to enter into a written contract if you are engaging in this kind of activity. The relevant legal document is a Contract Rearing of Heifers Agreement, which will outline how the rearer will agree to rear the heifers on their own land and return them to the dairy farmer at a specified time.
The most important consideration for the rearer is that their costs are covered and that they are adequately paid for their labour, while the dairy farmer’s objective is measured by reference to the weight of the heifers being reared elsewhere.
Target weights must be reached at housing after the first grazing season, and when approaching calving after the second grazing season. Regular weighing of heifers is generally undertaken in order that both parties can monitor the progress of the herd.
While many rearers and dairy farmers will be friendly and be neighbours, there is typically no written agreement in place with such relationships. However, it is not advisable to only have an oral agreement in place.
It is foolhardy to merely rely on good faith, as farming is still a business no matter how friendly the two parties are. A written contract ensures that both parties are in agreement and it affords protection to parties if any disputes arise as to what was agreed between the dairy farmer and the rearer.
What to include in your agreement
Some important terms that should be included in a Contract Rearing of Replacement Heifers Agreement are as follows:
- The Responsibilities and Obligations of both parties.
- Confirmation that the dairy farmer’s animals are free of TB and have been tested in the last 12 months. Evidence of this test should be sought by the rearer prior to entering into the agreement.
- Animals that are to be contract-reared should be kept separate from other animals kept by the rearer. It is wise to expressly state this in the contract.
- Usually, the dairy farmer supplies vaccines for the heifers, and the rearer administers them. The desired process should be discussed between the parties and set out in the written agreement for clarity and to avoid later disputes.
- Targets in relation to weight milestones should be specifically defined. At what stage heifers should be weighed and by whom should particularly be set out. It is extremely important to set this out in writing to be signed by both parties as the parties can then iron out any disagreements prior to entering the arrangement.
- Details of how often the dairy farmer will check the heifers should be agreed in writing as well as details of the arrival and planned removal of the heifers.
- Details of the position when targets are not met should be included in the contract as well as a clause relating to disputes. A provision for a facilitation, conciliation and arbitration clause should included which will oblige the parties to resolve disputes in a prescribed agreed manner. Arbitration usually avoids court proceedings which is the worst-case scenario and proves much more time and cost-effective.
- The contract should state how and with what frequency payment is to be made to the rearer. Regard should be had here to the rearing periods, as rearing calves to 12 weeks and keeping the animals over the winter are the most expensive periods while the grazing seasons are the least expensive. If the rearer is to receive a bonus for reaching target weights, this should be detailed in the agreement. In a flat rate contract, the payment to the rearer is based on a per head per day rate that is negotiated at the beginning of the contract. In a weight bonus contract, a base level payment is agreed upon with a bonus payable based on the animals reaching an agreed percentage of the target weights.
Seek Advice
However, each agreement will be different, and it is important to engage legal advice to ensure that both parties understand what is being agreed and the consequences of the contract.
If you are looking to get into this as a form of income, it would be important to put written agreements to help everything runs smoothly so as to ensure that you create a good reputation and that word of mouth spreads so you can possibly gain other business and repeat business.
The success of a contract-rearing enterprise can depend on the quality of the contract between the rearer and the dairy farmer.
Karen Walsh, from a farming background, is a solicitor practising at Walsh & Partners Solicitors, 17 South Mall, Cork, and 88 Main Street, Midleton, Co Cork, and also the author of ‘Farming and the Law’. Walsh & Partners also specialises in personal injury claims, conveyancing, probate, and family law.
Email: info@walshandpartners.ie
- While every effort is taken to ensure the accuracy of the information contained in this article, Karen Walsh does not accept responsibility for errors or omissions howsoever arising. Readers should seek legal advice in relation to their particular circumstances at the earliest opportunity.
Readers can email their questions for this column to Karen at kwalsh@walshandpartners.ie with the subject line “Farming question”.
(Source – Irish Examiner – Farming – Karen Walsh – 05/12/2022)
Contract Rearing – What happens When TB Strikes?
Having adequate contingencies in place and in good time prevents unnecessary stress, writes agricultural accountant Kieran Coughlan.
Following on from last week’s column, beef farmers considering switching to contract-rearing will need to do some groundwork to understand how the arrangements can work and what contingencies need to be put in place in the event of a disease outbreak.
The new TB rules coming into effect from February 2023 have thankfully been rowed back, the initial proposals would have seen a new hurdle of effectively double TB testing being imposed.
Following negotiations, the impact of the new regulations will be confined to higher-risk animals only, including cows and males over 36 months of age.
Those new regulations will require an animal to be tested within six months of movement and will only be allowed moved to a herd which has also been tested within six months if falling into one of those riskier categories.
For contract-rearers and dairy farmers interested in contract-rearing, the shift in proposed regulations will mean that heifer rearing should fall outside the scope of the changes.
That being said, the existing regime of annual TB testing will of course continue to apply for both the dairy farmer and contract-rearer.
As part of the annual herd test for TB, problems at either the farmer level or the contract-rearer can result in heifers becoming stuck at one side or the other and not being able to move between the two herds.
The changes to the regulations may indirectly cause an impact where unconnected animals (such as cull cows) are tested outside of the normal annual herd test and should issues present with these animals the whole of the herd will become restricted.
The problem is most acute when reared heifers are ready to return to the dairy herd and movements are restricted because of a TB issue.
Indeed, the TB issue might not even be within either herd and may be present in a neighbouring farm as a result of which one of the parties to the contract- rearing arrangement finds themselves ‘locked’.
Of course, it’s easy to be wise after the event, but consideration should be given to engaging with dairy farmers or contract-rearers, as the case may be, who have a clean TB record for at least three or four years and preferably longer, similarly, you can make enquiries either from the other party or from the local veterinary practitioner as to the prevalence of TB in the area.
The Department of Agriculture has been accommodating in the past to allow a contract-rearer to return dairy heifers to the dairy farmer where either accommodation doesn’t exist or where milking facilities don’t exist, and heifers are approaching calving.
However, this facilitation may not be so forthcoming depending on the extent of the TB outbreak or the particular District Veterinary Office involved.
An enquiry in advance either to the DVO or through an agricultural advisor who should know what’s happening on the ground will help inform what the likely outcome would be for the dairy farmer or the contract-rearer in the event of an issue.
Similarly, where the dairy herd is restricted, and the contract-rearer is not, there may be less appetite from the DVO to allow clean animals to enter into a herd which is restricted.
The option, in this case, would be for the dairy farmer to elect to sell the heifers rather than bringing the same back into their restricted herd.
Where the dairy farmer is facilitated with the return of heifers from a restricted herd, the dairy farmer taking in such animals will in of themselves become restricted, and compensation will generally not be paid should these animals subsequently show up with TB issues.
Getting the herd test completed in good time and well in advance of any proposed movement date makes a lot of sense to prevent nasty surprises in advance of a proposed movement date.
For example, where both the farmer and the contract-rearer perform their annual herd test in August each year, that should give adequate time for any TB issue to be resolved through two subsequent rounds of testing if any issues turn up at the annual test.
Having adequate contingencies in place and in good time prevents unnecessary stress.
As mentioned, the option of selling clean heifers is one that should not be discounted particularly where the dairy farmer herd has a severe and prolonged TB outbreak, another option could include having a third-party dairy farmer lined up willing to take “clean” heifers for a temporary period until the dairy farmer herd comes clear, with that third party farmer being compensated with labour or indeed financially for stepping in to save the day.
The key to the success of contract-rearing lies in the name, having a contract in place, written and signed by both parties and which adequately deals with potential issues such as TB risks will result in a less stressful and more planned approach to what can be a win-win opportunity for both dairy farmers and would be contract-rearers.
(Source – Irish Examiner – Farming – Kieran Coughlan – 07/12/2022)