Pasture Rental Rate Considerations

Before the first robin arrives in southwest Wisconsin, I know spring is approaching when the calls about “what’s pasture renting for” questions start coming in.   According to the USDA-National Ag Statistics Survey, the simple answer is that the average was $44/acre dollars for Iowa County in 2016.  We can look up that value for every Wisconsin county.  While this is a technically correct answer, it paints an incomplete picture.  Not every acre rents at this rate.   If some pasture rents for $10/acre this implies other pasture rents for $78, and the average is still $44.  There can be a wide variation in pasture rental rates.

The two greatest factors of pasture lease value are productivity of the pasture and local demand.  Some pasture may produce 4 tons of forage in a season or only 1 ton.  Would you pay the same rate for that variation in production?  Probably not.  Some land is more wooded some is more open.  Other factors that come into play include:  fence security, water access, loading/unloading facilities, how many acres are available.  These factors all impact the “value”.

The most common lease method is per acre per season.  This is simple, but may not capture the full forage value.

An alternative method common in western states is leasing by the Animal Unit Month or AUM.  One animal unit is defined as a 1000 lb. beef cow with a daily dry matter forage requirement of 26 lb./day.  An animal unit month (AUM) is the amount of forage consumed by one animal unit for one month which is equal to 780 lbs. of dry matter forage.

Why the AUM method?  There is significant variation forage production as well as beef cattle weights in Wisconsin.  The only 1000 lb. beef cow in Wisconsin is in a 1950’s text book.  There are a few at 1200 lbs. but more and more beef cattle are 1500+ lb./cow. A 1500 lb. animal consumes more than a 1000 lb. critter.   We take the pasture AUM rate x 1.5(1500 lbs./1000 lb. AU) to calculate the rate for the larger cows, or maybe .75 AU (750 lbs./1000 lb. AU) if we’re grazing light yearling cattle.  It makes for an equitable adjustment according to what the livestock actually consume based on size.

What should the rate be?  From a buyer perspective, the question is what are your alternative costs to feed this animal without this additional pasture?  You have the cost of the stored feeds and yardage (labor, equipment to feed it, manure handling expense, etc.).  If this is $2/head/day we’re at $60/1500 lb. cow/month.  From an AUM standpoint, the further under $40/AUM we can get is money in our pocket.

We also need to factor in the cost of getting cattle to the grazing site and home again, plus costs associated with checking the cattle, which needs to come off the top.  Distance to pasture, carrying capacity, and frequency of checking livestock all become overhead costs that need to be factored into the value of a pasture.  As an example, assume a pasture is 30 miles from home and can support 50 cows for 180 days.  The cattle are checked once a week, with transportation costs at the beginning and end of the season.  This works out to $63/head for the 6 month season or roughly $10/head/month.  This amount ($10) would be deducted from maximum I could afford to pay ($40/AUM) leaving with us $30/AUM month as a top end.  Over this and you would be financially better off keeping them home.  If we can negotiate with the landowner and drop this to $25 or $20/AUM, the picture looks better.  Working forward again with our 1500 lb. cow, at $20/AUM x 1.5 AU = $30 head/month.

As farmers consider rental values this season, the first step is determining the carrying capacity or an estimate of the amount of forage a given pasture will produce.  Then it’s time to figure out the cost of getting livestock there and back, determine what it’s worth to you, and then sign a lease, but that’s a topic for another day.

Written by Gene Schriefer, UW Extension Agriculture Agent in Iowa County, and recently appeared in Wisconsin Agriculturist.

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