There are a variety of approaches to consider when it comes to running your livestock on someone else’s property under an agistment agreement.

Some commonly used agistment methods include:

1. Charging a weekly fee per head
2. Calculating a weekly fee based on DSE (Dry Sheep Equivalent)
3. Sharing a percentage of the profits.
4. Using a percentage of weight gain as the basis for payment

These methods offer flexibility and allow for different considerations depending on the specifics of your situation.

When calculating agistment costs, it is crucial to have a well-developed budget. This not only helps with internal business processes but also facilitates negotiations. Without a budget, you may find yourself unprepared to discuss rates and other terms, resulting in potential financial losses. An agistment calculator can provide valuable insights and options. It allows you to assess the viability of different approaches to determine a suitable value for the agistment based on desired returns and the associated costs throughout the agistment period.

Factors to consider when calculating agistment include the following:

• Livestock classification
• Initial weight of livestock upon entering the agistment
• Target weight upon exiting the agistment
• Anticipated average daily weight gain
• $/kg value at the start and end of the agreement
• Expected revenue generated
• Transportation expenses for bringing the livestock to and from the property (fuel, tires, repairs, your time)
• Additional costs such as visiting fees, inspection fees, health expenses, feed expenses, insurance, and legal fees

Methods to calculate an agistment rate

Charging a weekly fee per head

One of the commonly used methods for calculating agistment cost is using a weekly feed per head of livestock. The rate of agistment is influenced by several factors:

• The type and weight of the livestock being agisted, such as cows, steers, ewes, or wethers.
• The value of the livestock, which tends to fluctuate with the livestock markets over time.
• The seasonal conditions, as agistment rates are affected by supply and demand. In dry seasons, agistment rates are higher, while in good seasons, they are lower.
• The type of feed provided for the agisted stock. Native pastures have a lower value compared to an annual crop.
• The duration of the agistment period.

Calculating a weekly fee based on DSE

The $/DSE method is very similar to the fee per head method, with the key distinction being the consideration of livestock type and weight based on the recognised industry standard, Dry Sheep Equivalent (DSE). This approach eliminates any ambiguity regarding livestock type and focuses on the feed requirements of different stock classes relative to a 50 kg wether at the maintenance energy level (equivalent to 1 DSE).

The agistment rate is influenced by the following parameters:

• The DSE of the livestock being agisted, such as cows, steers, ewes, or wethers.
• The parameters outlined in Method 1.

Sharing a percentage of the profits

A profit share agreement involves both parties sharing any potential gains and losses resulting from stock performance. Such an arrangement can mitigate risks in case profit falls short of expectations due to lower income or higher costs. However, if profit exceeds expectations, it is then distributed with the landholder. The method of determining the percentage of profit share takes into account the following:

• Trading profit, which includes the opening stock value, sales, purchases, and closing stock value.
• Depending on the specific profit share agreement, it may be necessary to account for any costs associated with maintaining the livestock on the agisted property. However, in some cases, the agreement may not cover these costs, and this is typically reflected in the negotiated share percentage.
• The Gross Margin is calculated by subtracting any negotiated costs from the Trading Profit.
• The percentage of the gross margin to be paid to the landowner as profit share then needs to be negotiated.

Using a percentage of Weight Gain as the basis for payment

This option can be valuable for stock classes with a specific goal of weight gain. It involves correlating the cost of agistment with the value (weight) gained by the animals, which reflects the quality and type of feed they receive. The percentage of weight gain method considers the following factors:

• The class and weight of the stock going on agistment, and the weight of the stock coming off. This determines the weight gained and the corresponding value ($/kg).
• The seasonal conditions, which impact agistment rates. Dry seasons typically result in higher rates, while good seasons lead to lower rates.
• Determining or negotiating the percentages of the gain to be paid to the landowner and retained by you.
• The duration of the agistment period.
• The type of feed the stock will be agisted on, as it directly influences weight gain.