How Much Should You Pay to Lease Pasture?
The most difficult part of pasture leasing may be figuring out a rate that works for both parties. We can’t make it a breeze, but with this series of articles, we’ll give you some tools so you’ll have an idea where to start.
The reason it’s hard to figure out what a pasture lease is worth is there are so many factors contributing to it’s value in any given year. Some pastures have better quality forage than other pastures, some are already fenced and have water, and others will require investments of time and money to make them usable. And then there are the dry years when demand for pasture goes up because everyone needs additional pasture to graze and farmers are willing to pay a premium for whatever pasture is available. Adding to the difficulty are different ways you can calculate how to pay for a lease including yearly leases, a monthly fee paid per head, animal unit, or cow-calf pair, or variable rates that depend on pounds of gain.
One way to get a start on figuring out what a pasture my be worth is to check in with the National Agricultural Statistics Service. One of the things this agency does is keep track of what folks are paying in different parts of the country in different years. While this information
is only historic, it’s a step in the right direction. I’ve searched their site and found the most up to date information they have so that you can use it.
Let’s start with two maps. The first shows the pasture rents paid in 2010. Though that’s 5 years ago, it gives you some idea of where things have been. The second map shows you what pasture was valued at in 2014. Since landowners look at the a return on their investment in the land, this map gives you an idea of an appropriate lease rate. You can click on either one to zoom in.
You can also go to NASS’s quick stats for this topic. Click on the picture below to see the break down by state of rent paid for cropland, and pasture. You’ll find stats for 2014 at the top, and as you scroll down, you’ll find the rents paid for previous years.
Next I’ll share some of the math behind figuring different rates. My goal is to get it in an Xcel spreadsheet for you so all you have to do is plug in some figures and the computer will do the figuring for you. Stay tuned!
Here’s the second part in the series.