Friday, July 8, 2022

Cow caveat emptor

Gypsy Day on June 1 will see a lot of dairy cows move farms, but buyers should be vigilant in checking they are sound. At a Dairy Women’s Network (DWN) Dairy Day at Tokanui Agritec Centre in February attendees were given the clear message that they should check all animals are sound before they get to their farms. PGG Wrightsons livestock representative Jason Roberts said buyers should use their rights and reject any unsound animals before they get on the truck. “As soon as they step over the tailgate they’re deemed to be accepted, so you do need to inspect those animals first,” he said. “You don’t have a lot of comeback on a cow once it’s on the truck and going to your place. You’ve accepted that animal in its condition.” If any animals are recognised as being unsound before being transferred the vendor and buyer can have a written agreement to acknowledge that. The buyer can still accept them on the condition that the cows improve, otherwise the vendor has to buy them back.

Waikato dairy farmer Joanne Leigh said buyers needed to go a step further than just checking cows before they go on the truck; they should be checking on the herd regularly before the purchase date.

The follow-up process was equally as important as buying.

“Go and visit the herd every month,” she said.

Farmers should look at the animals’ body condition score (BCS) and see what they were being fed. They should make sure they looked alright and were healthy.

“If you’ve got any issues you need to address them straight away because this is going to be your future asset.You need to make sure they’re being well looked after.

“If you are dealing with an agent, you can ring them and say you’re concerned the cows are being underfed and they won’t meet the condition criteria.”

The Dairy Day also discussed best practice for buying and selling stock, covering everything from selecting cows to legal contracts, with attendees being urged to be well informed about their rights and obligations.

Before buying, decisions should be made on how many cows were to be purchased, what criteria they needed to meet, when the purchase should take place and whether finance was in place, Leigh said. 

“You can buy in September or October and determine the mating so you can set the calving date, or buy in December and determine the bull out date.  
“The earlier you look, the more stock will be available and of better quality.”

Criteria buyers needed to be clear on were the number of cows needed, size, breed, location, calving date, bull out date and ideal production worth (PW) and breeding worth (BW). They should also consider the farm system type the cows have been on and are going to.

“If you’re farming at a system 5, with lots of inputs coming in, you may want to look at animals that are coming from that system and already have the gut capacity.”

Consider conditions

Joanne Leigh helps identify the best cows in the herd.

Leigh urged women to think about the type of dairy the cows were used to, compared with what they were going into.

“Are they used to a herringbone or rotary? Are they used to being drenched in the dairy? Are they are going on to a wet farm? If they are then you might want lighter animals.

A deposit of 5-10% was usually required to be paid upfront (excluding GST) with the remainder to go through when the cows were delivered to their new farm.

When it came to finding the best cows to buy, there were several options including using a stock agent, looking at newspapers or online and through word of mouth. She said agents were a good option if buying or selling stock regularly as strong relationships could be built up as they learned more about the business and what its key drivers were.

Large numbers of listings in newspapers and online were a great way to gauge current market prices.  

If a stock agent wasn’t involved Leigh said farmers should still treat any stock purchase professionally.

“You still need to write up and sign an agreement. Too many deals go wrong.”

Buyers should be aware of how many herds they felt comfortable going to view in one day as some people could only handle looking at two herds/day while some could look at eight.

“Go and visit a number of herds,” she said. “Treat it as if you were buying a house – you might go look at six or seven houses. Go and see what’s on the market and then you can compare.”

Buyers should have all the herd records and take good notes and even photos so they can remember the herds when making a final decision.

“Have a good look at the herd records and herd test information,” Leigh said. “It’s a bit like solving a puzzle. Look at the herd records and compare the price.”

Price flexibility

Buyers should try to sound out how negotiable the vendor was on price, and if roles were reversed should say if they were negotiable.

“If you’re the seller, set your price realistically. Decide what your bottom line is and what you’ll accept and be upfront with people – say this is the lowest I’ll accept, because they’ll use that information to compare the herds.

“It’s no use setting your price too high and not saying you’re negotiable to a potential purchaser because you’ll miss out on the sale.”

Vendors also needed to be realistic about the number of cows they would actually sell and what price they could get for them.

Roberts said many farmers were surprised when they looked at the final numbers after selling stock. With 260 cows to sell they often calculated the price at $2000 each, thinking that would be their total return. But an average of 10% of a herd would be considered old cows at nine-year-olds plus, and up to another 10% could be empty. There will also be a handful of unsound cows such as three-titters or with bad udders. Of the cows left, the buyer is allowed to reject another 10%, which means the vendor could expect to sell less than they thought.

“You will lose about 25% to a third of your herd,” he said.

Farmers should also remember to book transport early as there was a lot of stock moving around the country in May and June, Leigh said.

And when the cows arrived on their new farm their new owners needed to ensure all herd records were transferred through the National Identification and Traceability (NAIT) scheme.

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