Specific rental agreements important in pasture rent situations
Renting pasture for grazing livestock is a fairly common practice in Indiana but one a Purdue Extension forage specialist says landowners and producers need to carefully discuss.
When it comes to making rental agreements, there are several considerations for both parties beyond cost. "Just like with any rental agreement, individuals are encouraged to understand that there are responsibilities that the landowner has and that the renter has. And some of these are negotiable," Keith Johnson said. "It's important to have a conversation about what those negotiable points are and then move toward a more firm price."
In typical rental agreements, landowners are responsible for insurance and paying for fence repairs, real estate taxes and interest on investments, such as the mortgage. Livestock owners are responsible for performing livestock production activities; maintaining livestock; providing salt, minerals and fly control; checking water supplies; and veterinary expenses.
Negotiable items would include determining land-related activities, providing labor for fence repairs, maintaining pastures, controlling weeds and brush, liming and fertilizing, reseeding, renovating and determining stocking rate.
"We want to make sure we have an appropriate stock density so we're not overgrazing the pasture," Johnson said. "If we do, we find that we're going to degrade the quality of the forage and, thus the expectation of rent would decline, as well, which is not in the interest of either party.
"Low-yielding and poor-quality forage means fewer livestock can graze, and the expectation of gain is going to be less. And, of course, the landowner is left with a property that is not as valuable if it's not taken care of."
When it comes time to negotiate rent, there are four basic formulas, based on animal units, acres, projected yields or livestock gain.
Formulas for each are available in Purdue Extension's Forage Field Guide, available for $7 in the Education Store at https://mdc.itap.purdue.edu/item.asp?itemID=19670 .
Purdue Extension also offers a series of pasture lease publications. All four are available for free download and can be located by visiting the Education Store home page at https://mdc.itap.purdue.edu/default.asp and searching for "Pasture Lease."
The U.S. Department of Agriculture's National Agricultural Statistics Service provides a survey of all counties in the country with 20,000 or more acres of cropland plus pasture. The survey includes cash rents by county. To access that data, visit http://www.nass.usda.gov/Surveys/Guide_to_NASS_Surveys/Cash_Rents_by_County/index.asp