on/Page 2B
111982
features
Battalion/Page 3B
April 1, 1982
New business accelerating
Dairy herd leasing up
United Press International
NEW YORK — Dairy herd
leasing has one thing going*for it
no other financing business has:
the collateral reproduces itself
every year.
“Every producing milch cow
drops a calf each year, and that’s
vastly more than enough to re-
E lace the cows that must be cul-
:d,” says Dennis Steinberg,
president of Livestock Financial
Corp., a new dairy herd leasing
company based in Aurora, Colo.
“This is so much the case that
we require only the heifer calves
as additional collateral for the
money,” Steinberg added. “We
let the dairy farmer sell the steer
calves off for veal.”
Dairy herd leasing is a new
and small business. Only about
30,000 of the 11 million dairy
cows in the country are leased,
and up to now, banks have shied
away from the business.
Steinberg said insurance
companies are starting to show
some interest. His own firm has
obtained its financial aid from a
small public stock offering and
from funds provided by its pa
rent firm, Westwind Financial
Corp. of Aurora, an equipment
leasing firm.
LFC presently has 425 Hol
stein cows valued at $1,200 to
$ 1,500 leased to dairy farmers in
Colorado, Nebraska, Iowa, Ken
tucky, Oregon, Washington and
California. Agricultural Asset
Management Co. of Salem,
N.Y., headed by Doug Jolly, is
the biggest firm in the business.
Dairy herd leasing got an ear
ly black eye when one firm, a
subsidiary of a large conglomer
ate, engaged in some shady she
nanigans, Steinberg said.
He said companies in the
business now follow conserva
tive policies. For example, his
firm has accepted only a tiny
part of nearly $ 10 million in ap-
f plications for leases from estao-
ished dairy farmers. “We think
the shakeout in dairy farming is
going to continue and we want
only good farmers,” he said.
“Actually, in the long run, a
good dairyman can buy his herd
more cheaply through direct
bank financing than he can get it
by leasing. It would be dishonest
not to admit this. But in the pre
sent financial climate, it pays the
good farmer to pay more and
lease from us.”
Steinberg gave the following
reasons for this:
— The farmer can get a larger
and better quality herd faster by
leasing than by direct buying.
— The leasing company pro
vides the help of experts in
choosing gootl cattle. The far
mer makes his own choice,
however. The leasing company
cannot force any cows on him.
— The heifer calves are addi
tional collateral only tempor
arily; eventually they become
the clear property of the far
mers.
— The leasing company pro
vides full insurance protection
for the herd against theft and
death by accident or disease.
— By leasing, the farmer can
get 100 percent financing of
cows bought to expand the herd.
In direct bank financing, he can
get only 80 percent and often
less.
— Rental payments are a di
rect deduction from earned in
come for tax purposes.
— Repayment is likely to be
made with cheaper dollars than
the dollars borrowed.
SALE ENDS SAT.
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