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Extension > Local Extension Offices > Benton > County Agriculture Educator > Articles > What’s a Fair Agreement for Pasture Rent?

What’s a Fair Agreement for Pasture Rent?

University of Minnesota Extension, Stearns County News
February 18, 2015        
           
Source:  Emily Wilmes, Extension Educator-Livestock
University of Minnesota Extension
Stearns, Benton & Morrison Counties


What’s a Fair Agreement for Pasture Rent?
By Emily Wilmes, University of Minnesota Extension

ST. CLOUD, Minn. (02/18/15) — A common question I get from farmers and landowners is, “What should I be paying or charging for land rent?”  I see two different forms of land rent: cropland rent and pasture rent.  We spend a lot of time on education for cropland, but what about pasture?  Many producers depend on pasture for a large portion of their livestock feed, so cost of rent needs to be considered carefully. 

A tricky thing when answering questions about rent is that there is no hard-and-fast number to give, which--I know--would be a lot easier.  There are several factors to consider when negotiating pasture rent.  These include pasture quality (including type of forage and/or legume), projected grazing value, pasture location, and pasture size.  When determining rent, it is also important to consider each party’s stance. 

The landowner wants to be able to cover the real estate taxes, cost of fence repairs, insurance, and interest on their investment. However, since pastureland typically sells for a higher price than its earnings can support, the landowner may be only able to cover his out-of-pocket expenses.  The renter should calculate what they could afford to pay for rent. All the guidelines and estimates I may give are just that--guidelines and estimates. The livestock owner needs to know what price they can profitably pay according to their projected budgets and returns.

Additionally, be sure to outline what responsibilities fall to each party.  Division of responsibilities between the landowner and the livestock owner need to be considered when negotiating rental price. In most cases, the renter is responsible for production activities such as checking the livestock, checking the water supply, and providing fly control, salt, and minerals.  For fence repair, it is typically the responsibility of the renter to repair fences with the landowner providing the necessary materials. Land-related activities such as weed and brush control and fertilizing and reseeding pastures, are negotiable and should be clearly outlined in the contract. 

With that said, ensure that both parties fully agree on and understand the terms, pricing, and payment system.  Put the entire agreement in a written contract, complete with signatures.  While contracts may seem cumbersome and time-consuming, they are best way to ensure agreements are upheld and established guidelines are followed.  If any problems arise, contracts provide something to refer back to.  If you aren’t sure where to start, AgLease 101 is a great resource.  You can find it at www.AgLease101.org

At the top of the page, go to the Document Library and select the “Pasture Rental Agreements for Your Farm” PDF.  It will take you to a document with information, worksheets for both the landlord and livestock owner to determine their cost estimates and share of gain, and--the best part--a fill-in-the-blank contract!  AgLease 101 helps take the guess work out of drawing up a contract, and allows you to customize their version to your specifications.   After filling it out, the only thing to do is sign, and AgLease 101 recommends having the document notarized as well. 

After hearing all this, I’m sure you’re still wondering, “But what IS a good pasture rental rate?!” As mentioned, these numbers are simply to be used as a guideline--you need to negotiate with your landlord or renter and come up with a number you both think is fair.  Keep in mind that these numbers are ranges and averages from the state of Minnesota.  Pasture values tend to follow corn and cattle prices, but Midwestern livestock producers may keep prices higher than the national average because of high demand for land. 

A final thought to consider is how rent is charged, which is another thing that will need to be decided.  Options include per acre per month, per cow unit per day, or per cow unit per month.  In this context, a “cow unit” is a 1,000 pound beef cow. 

2014 averages have yet to be released, so the ranges from 2013 are as follows:
$12.00-$90.00 per acre per month;
$0.20-$0.70 per cow unit per day; and
$8.00-$21.00 per cow unit per month.

The averages from those ranges are:
$35.00 per acre per month;
$0.40-$0.50 per cow unit per day; and
$12.00-$15.00 per cow unit per month. 

Some county-specific data from the Minnesota Agricultural Statistics Service shows 2013 average pasture land rent was $17.00 per acre for Benton and Morrison counties and $35.00 per acre for Stearns county.  Again, keep in mind these are just averages and there are several factors that will influence the final agreed-upon price.  For the per cow unit prices, they can be adjusted for other classes of livestock.  A general rule-of-thumb is to multiply by 30% for a calf aged 3-6 months, 50% for a calf aged 6-12 months, 75% for yearlings, 125% for a bull or horse, and 20% for a ewe. 

Pasture rent can be a tricky topic, but it doesn’t have to be if the landlord and livestock owner communicate well and reach a fair compromise.  If you have any questions about land rent, contact the Stearns County Extension Office at 320-255-6169, the Benton County Extension Office at 320-968-5077, or the Morrison County Extension Office at 320-632-0161.

Contacts

Emily Wilmes
Extension Educator, Ag Production Systems - Livestock
(320) 255-6169
krek0033@umn.edu
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