Evaluate Pasture Rental Rates Before Renewing Contract

With the current status of agricultural markets, you may be wondering if you are overpaying or receiving the appropriate income for rental grazing resources.

“This can be a difficult question to answer because prices vary from region to region due to market supply and demand,” says Miranda Meehan, the North Dakota State University Extension Service livestock environmental stewardship specialist. “In addition, several factors influence rental rates.”

Rental rates can vary depending on:

• Forage quantity and quality
• Forage species and composition – rangeland, improved pasture, annual cover crop, crop residue
• Condition of fencing
• Water quality and availability
• Management practices required by landowner
• Presence of a grazing system on rangeland and improved pastures
• Fertility practices on improved pastures
• Supply and demand

“Before you renew your existing rental contract, you may want to evaluate pasture rental rates,” NDSU Extension rangeland management specialist Kevin Sedivec advises.

Many options are available to calculate rental rates. Here are the options that best fit this region:

• Rental rate by acre – based on the value of land
• Rental rate by animal unit month – rent per head of livestock per month
• Pasture quality factors – uses current market value for hay and pasture quality factors and is recommended for annual forages such as cover crops and crop residue

“When negotiating rental rates, it is important to outline the responsibilities of the tenant and the landowner,” Meehan says. “Unless it is specified in the contract, the tenant is responsible for activities related to livestock management and the landowner is responsible for activities related to land production.”

Source: North Dakota State University