Contract Production: Making Opportunities for Nebraska Livestock Producers

Farmers looking to diversify their operations to withstand increasing volatility in the marketplace might consider taking advantage of growing opportunities in contract livestock production.

That was the overarching message from a recent panel of current contract livestock producers and industry experts speaking to over 200 participants at informational events in Seward, David City and York, Nebraska.

"With continuing volatility in the ag sector, farm families need to evaluate opportunities to diversity their operations, reduce operating costs, increase equity and expand secure sources of revenue," said Alan Stephens, senior business development manager for The Maschhoffs, one of the largest family owned hog-farming networks in North America.

"By partnering with the right integrator, custom feeding of pigs offers a great option, with minimal risk, to bolster the long-term financial health of their farming operations," Stephens said.

During the informational meetings, producers could ask questions and get an overview of the possibilities from contracting companies, or "integrators," and from farmers already partnering on these types of contracts.

Farmers learned contract production can take various forms, some examples discussed by the panel included:

Farmer-partner contracts, where farmers own the land and buildings used for the livestock and are paid to care for the animals. This includes day-to-day care of the livestock, vaccinations, sorting, manure management and sometimes ordering feed. The contracting companies pay for veterinary services, feed, and the cost of hauling animals to and from the farm.

Contract systems where farmers own the land and buildings, but the integrators provide management of the barn and hire the workforce. Under these contracts, farmers are hands off, except for manure management, and are paid for leasing their buildings to the integrators.

Whatever the form, the goal is to provide opportunities for livestock operators to thrive financially by adding an increased and more secure revenue stream. These partnerships also grow equity through building of a new barn and reduce operating costs while improving soil quality and crop yields through effective use of manure. In the end, this increases the chance of bringing the next generation back home to the farm.

"Contract livestock production is an opportunity for younger farm family members to stay on the farm," said panelist Robert Turek, senior vice president of feed for Central Valley Ag Cooperative. "Increased livestock production is good for our communities too; it increases the tax base and improves grain prices. This is truly a win-win-win proposition."

Photo & Story source: A-FAN

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