Our lease agreement package

Herd Equity Release is not a lender of last resort. The same lending criteria apply as for any other prudent lender.

The 4 key considerations when we evaluate a potential dairy herd Lessee are:
  1. Competence - must be able to demonstrate that he has the ability and track record to farm the dairy herd to its potential.
  2. Cashflow - has the necessary cashflow to adequately meet the lease payments.
  3. Credit History - has a good credit history backed up by rigorous credit checks and references.
  4. Collateral - the potential Lessee has more than adequate collateral to cover any existing loans. The dairy herd is released from any General Security and a Letter of Distrain is received from the mortgagee that they won’t claim the cows against mortgage arrears.

Other lease criteria include:

  • A current dairy herd size should be >250 cows
  • A minimum lease of 100 dairy cows
  • The Lessee must be:
    • a successful dairy farmer
    • respected in the industry
    • have a clean credit record
    • receive a favourable report from an independent farm advisor

The key terms of our Herd Equity Release lease agreement are:

  • Up to a five year term, renewable at the Lessee’s option.
  • The refinancing lease can vary in structure and amount according to the number of dairy calves reared by the Lessee.
  • The cows and replacements can be purchased by the Lessee at market value at the end of the lease term. We do not charge commission on the sale of dairy cows to a Lessee at the end of a refinancing lease contract.
  • Lease payments are payable monthly in advance by deduction from the monthly Dairy Company supply account.
  • All leased dairy cows must be insured at the Lessee’s cost at full value against specified deaths and theft. We have negotiated an extremely competitive insurance rate.
  • The Lessee must replace any deaths at the Lessee’s cost with dairy cows of similar breed, age, BW and value.
  • Cows which develop physiological defects must be replaced by the Lessee at the Lessee’s cost with a dairy cow of like breed, age, BW and value.
  • Herd Equity Release guarantees each cow is free of disease at the commencement of the refinancing lease contract.
  • All dairy calves remain the property of Herd Equity Release:
    • Replacement heifer calves representing up to 25% of the herd are reared by the Lessee. We will compensate the Lessee for rearing the 10% replacement heifer calves for the Low Index Culls.
    • Non-replacement calves are retained by Herd Equity Release and removed after a minimum of four days.
    • The bottom 10% of the milking cows will be sold in calf by Herd Equity Release each year to improve the genetic gain of the herd. These cows will be replaced by the replacement heifers retained by the Lessee.
    • The Lessee retains an option to contract rear any number of surplus calves. This will further reduce the cost of the lease.
    • Herd Equity Release, in conjunction with the Lessee, will specify the semen or bulls used to put the cows into calf.
    • All dairy cows will be inspected three times a year.
    • The Lessee is required to maintain appropriate herd records for each cow.
    • Dry cow therapy will be used on each milking quarter of each cow at the termination of the milking season.
    • The Lessee is required to utilise, the services of a reputable farm consultant to report on farm management.

 
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