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Extension > Local Extension Offices > Morrison > County Agriculture Educator > Articles > Finding a Fair Pasture Rent Agreement

Finding a Fair Pasture Rent Agreement

University of Minnesota Extension, Stearns County News
January 4, 2017        
           
Source:  Emily Wilmes, Extension Educator-Livestock
University of Minnesota Extension
Stearns, Benton & Morrison Counties

Finding a Fair Pasture Rent Agreement

By Emily Wilmes, University of Minnesota Extension

ST. CLOUD, Minn. (01/04/17) — With the start of a new year, now is the time to work on getting arrangements in place for the 2017 grazing season. A common question is, “What should I be paying or charging for pasture rent?”    Many producers depend on pasture for a large portion of their livestock feed, so cost of rent needs to be considered carefully.  Reaching a rental agreement that both parties consider “fair” is vital to the success of both sides, and to the agreement itself.

A tricky thing when answering questions about rent is that there is no hard-and-fast number to give, which 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 their out-of-pocket expenses.  The renter should calculate what they could afford to pay for rent. All the guidelines and estimates given 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. 

When the responsibilities have be outlined, 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 a reference.  If you aren’t sure where to start, AgLease 101 is a great resource.  You can find it at www.AgLease101.org.  There, you can find information, worksheets for both the landlord and livestock owner to determine their cost estimates and share of gain, and a sample 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 hearing all this, you’re still wondering, “What is a good pasture rental rate?!” As I already 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.  The following information is from the 2016 Farm Resource Guide, compiled by Extension Educator Dave Bau.  Current ranges for pasture rent are:
$12.00-$90.00 per acre;
$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. 

Cow unit figures can be adjusted for cattle of various ages and other livestock by multiplying 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. 

County-specific data from the National Agricultural Statistics Service shows 2016 average pasture land rent was $51.00 per acre in Stearns County,  $19.50 per acre in Benton County, and $14.00 per acre in Morrison County.  Keep in mind these are averages and there are several factors that will influence the final agreed-upon price.  Pasture rent can be a tricky topic, but it doesn’t have to be if the landlord and livestock owner communicate well and reach an agreement they both find fair.

Contacts

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