I shared some thoughts about contract grazing a few days back and have been doing quite a bit of thinking and asking questions about the many scenarios concerning partnerships.
Partnering with cattle is nothing new and there have been and are some very impressive success stories. On the other hand, lending institutions have ended up with lots of ranches and this fact indicates that those agreements didn’t work out just right.
I’ve got an old friend and occasional client that has been trading, farming, and ranching since the mid-50s. That’s something like six decades. He has raised six children and paid for almost 1,000 acres and now owns 350 beef cows. His wife is the only partner he has stayed attached to for any length of time. He says that it has been possible because she has pulled her weight. He said he has had other partners but it never worked out.
They might be rare but good bankers are out there, and best view their partnership in the beef business as a short term deal. Former bank president and lender Mark Hazard of West Point, Mississippi, says he worked all his producer loans to where the cattleman would own all his cattle in four to five years.
One of the problems with partners in the cattle business -- especially the cow/calf business -- is closure or the lack of it. Another problem is the lack of a good contract and some decent records.
Twenty years ago I owned $50,000 dollars worth of cows and calves. My partner owned the grass and the hay. I did 95% of the cattle management and he fed hay, which became a joke especially after he row cropped the best part of the farm. He notified me on January 2 that I had 30 days to move my cattle and pay him for half of the calves.
I did all the work and sold the cattle in an eight-inch snow storm with five people and an auctioneer at the weekly sale at a big barn. My partner was there and got his money. I haven’t partnered much since in the cattle business and don’t have a lot of interest.
Ink on paper and handshakes are seldom worth much more than the men and women standing behind them. Time, research, and due diligence done on the front end is likely a good investment, and either “No" or "I don’t think I’m interested” are answers to partnership to be used regularly.