Custom dairy heifer grower industry characteristics and contract terms

This study examines a national survey of professional custom heifer growers. Sixty-five respondents from 23 states provided information on operation size and characteristics, management practices, and contract terms. Responding operation current heifer inventories ranged from 30 to 20,000 heifers and the average operation had more than 1200 heifers on-farm. The regional pattern of operation size was similar to the regional pattern of dairy farm size with heifer grower operations in the West and South regions being larger, on average, than those in the Midwest and Northeast regions. On average, 71% of total income was derived from the heifer-growing enterprise. Operations in the Northeast region derived the highest percentage of income from heifer growing while operations in the South region derived the least income from heifer growing activities. Many operations entered business to utilize excess facilities, labor, or feed. A majority of the operations had two to five dairy farm clients. Sixty-nine percent of respondents used some form of written contract. Just over 50% of the respondents indicated that a set daily charge per heifer per day was the primary type of contract payment. Although the most common charge was dollars 1.50 per heifer per day, average daily charge was dollars 1.52/heifer. Operations that took heifers from prior to weaning through to prefresh charged a weighted average daily charge of dollars 1.60 per heifer. Explaining price charges as a function of characteristics and contract terms revealed that size and number of clients were negatively related to price while specialization in heifer growing was positively related to price charged.