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Finance

This section of the NFU integrated dairy-beef contract business guide considers finance, such as underwritten finished prices/rearing fees and who bears the cost of fallen stock. Keep reading for a full list of considerations.

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  1. How will payment work? Will all costs/charges made by the integrator be transparent at the outset of the agreement?
    1. Is there an underwritten finished price/rearing fee?
      1. Note: An underwritten finished price/rearing fee refers to a guaranteed lower price for those particular animals at the end of the designated period on farm (whether that be rearing and moving to the next producer in the chain, or for a finished animal with a guaranteed deadweight price at the abattoir). Essentially, it鈥檚 a safety netfor farmers that if trade drops they鈥檒l still get the underwritten price for the animal produced. Integrators/processors can pay over this, but it鈥檚 a guarantee to fall back on.
    2. Will payments be based on a certain criterion e.g. minimum daily liveweight gain, certain deadweight, or EUROP grid classifications
    3. If payment is done via weight, is this done according to farm scales weight, carcass weight, or via a public weighbridge? Will there be any assumed gut weight removals?
    4. Will you be paid as one large sum or are there interim payments?
    5. When will these payments be made? If you are paid in one large sum, will you be paid a certain number of days after calves have moved off your farm? How many interim payments would there be? Will these arrangements work for your business?
    6. How is payment to be made?
    7. Are payment calculations transparent?
    8. Who will pay for what supplies e.g. feed/medicines/bedding/etc?
    9. Will the integrator charge an admin fee per animal? If yes, when and how much?
    10. If using a finance scheme, who will pay interest charges and when?
  2. Is the integrator financially sound? What will happen if they default on payment terms/contract?
  3. How are the calves purchased by the integrator and when in the production cycle?
  4. Who will bear the cost of mortality and disposal of fallen stock? Is it different depending on timescales e.g. if a calf dies within the first 48 hours of being on farm?
  5. Who will take financial responsibility of cattle not meeting exit specification?
  6. Who will be subject to payment deductions from a processor post slaughter if animals are not in specification?

Disclaimer

Please note that the information provided on these webpages and documents is guidance only and does not constitute specific legal or professional advice for your individual business.

While every reasonable effort has been made to ensure the accuracy at the date of publication of the information and the content provided in these webpages and documents, no representation is made as to their correctness or completeness. 皇家华人does not accept liability arising from any inaccuracies, be the errors or omissions, contained within these webpages and documents.

If you require specific advice or assistance with your contracts, or negotiations, then you may wish to contact NFU CallFirst 辞苍听0370 845 8458, who can also refer you to an NFU Panel Firm of solicitors and the NFU鈥檚 contract checking service.

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