Pasture Leases

Consider Possible Drought When Writing a Lease this Year

Victoria G Myers
By  Victoria G. Myers , Progressive Farmer Senior Editor
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In its latest survey of pasture cash rents, the USDA showed some areas as high as $44 per acre; with some lows in the single digits. (DTN/Progressive Farmer photo by Jim Patrico)

Landowners, and tenants, are risking a lot if they enter into a pasture lease that doesn't include adjustments for drought this year.

Bruce Anderson, University of Nebraska Extension forage specialists, says drought can easily lower pasture production below expectations. And while it may not be top of mind with snow still blanketing many grazing areas, he says the risk of not planning ahead can be high.

"Landowners risk having the pasture become overgrazed," he says. "That results in future weed problems, reduced long-term production and lowered value."

The tenant, he says, risks the health and performance of their livestock due to not only a lower quantity of forage, but a lower quality forage. That leads to the necessity of supplementing, or in some extreme cases liquidating head.

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Anderson notes it's important to decide before the lease is signed when in the event of a drought an adjustment in rent should occur, and who makes that determination. Also discuss who gets any insurance or government payments that may result.

Also, he says, be sure to list the length of the grazing period, with beginning and ending dates. Specify stocking rates, making adjustments for cow size (in other words stock to the pound, not the head).

As for how much a lease should be, that arrangement varies greatly by forage, part of the country and land value. There are many ways to set a lease rate, but most consider average land values and carrying capacity, as well as forage value. Some rents are set at pound of gain. For example, unimproved bluegrass producing 1 to 1.5 tons per acre, would be estimated to provide for 3 animal unit months (AUM) per acre; but warm season grasses producing 4 to 5 tons per acre, would provide 4 AUMs per acre. AUMs vary by animal, with an AUM being the amount of forage required to support a 1,000 pound cow with a calf up to 4 months of age for one month.*

The latest USDA's annual land value survey reports a small up trend for most pasture values, with an average acre price of $1,350 across the country. By region trends show the following:(1) Northeast, 0.9% increase; (2) Lake, 1.5% increase; (3) Corn Belt, 1.7% decrease; (4) Northern Plains, 2% increase; (5) Appalachian, 0.6% increase; (6) Southeast, 0.3% increase; (7) Delta, 2.9% increase; (8) Southern Plains, 2.5% increase; (9) Mountain, 1.3% increase; (10) Pacific, 0.6% increase.

Cash rents for pasture are also tracked by the USDA through surveys. For 2017, nationwide, the agency reported an average per acre rate of $12.50. That is down from the 2016 average of $13.

By state those 2017 rents were reported as follows: Alabama $23; Arizona $2.30; Arkansas $18; California $12; Colorado $5.60; Florida $15.50; Georgia $29; Hawaii $12; Idaho $12; Illinois $38; Indiana $39; Iowa $54; Kansas $19; Kentucky $25; Louisiana $17; Maryland $40; Massachusetts $27; Michigan $28; Minnesota $30; Mississippi $18; Missouri $31; Montana $6.30; Nebraska $24.50; New Jersey $36; New Mexico $3.20; New York $23; North Carolina $26; North Dakota $17; Ohio $25; Oklahoma $13; Oregon $11; Pennsylvania $44; South Carolina $19; South Dakota $25; Tennessee $20; Texas $6.60; Utah $4.80; Vermont $24.50; Virginia $20; Washington $8; West Virginia $12.50; Wisconsin $40; Wyoming $4.80.

*AUM data from Iowa State University's "Computing a Pasture Rental Rate"

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Victoria Myers

Victoria G Myers
Connect with Victoria: