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ESTABLISHING
A FAIR RENTAL PRICE
FOR PASTURES
Marvin Hall
Department of Agronomy
Penn State
Renting pasture provides
numerous benefits for both the
owner and renter if a fair price can
be established.
Unfortunately, establishing a
fair price is not always a simple
proposition. Many factors, includ
ing pasture supply and demand,
the pasture location and quality,
affect the rental price that is fair to
both parties.
There are as many pasture rent
al agreements as there are rented
pastures, and if both the owner
and renter are happy, then they
have established a fair rental price.
However, if you are new to the
pasture renting scene, then there
are a couple methods that can
assist you in establishing a fair
rental price. Three of these
methods are oudined below.
Cash Rent Per Acre
A fair rental (vice on a per-acre
basis should reflect pasture pro
ductivity with low producing pas
tures receiving less rent per acre
than a highly productive pasture.
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Since relatively few pasture own
ers know how productive (tons per
acre or animal carrying capacity)
their pastures are, then a guessti
mate of pasture productivity is
necessary.
A guesstimate of pasture pro
ductivity should consider such
things as types of grass and
legume in the pasture, natural soil
productivity, type and amount of
weeds in the pasture, previous fer
tility practices, conditions of
fences, and proximity to water
source.
Generally, when a pasture is
rented by the acre, the pasture
owner should have everything
(fences, shelters, and water supp
ly) in working order. Once lives
tock are moved onto the pasture,
the renter becomes responsible for
maintenance and labor, while the
owner supplies the material for
repairs.
However, each agreement is
most likely tailor-made to meet
the needs of both the owner and
renter. For example, the renter
may pay less per acre, but agree to
furnish fertilizer or fencing
material.
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Rent As Share Of Grain
With this type of agreement the
owner and renter agree to divide
the production and a price risk.
The owner’s contributions include
land taxes, interest on pasture
investment, and depreciation and
repairs on fences and water sys
tems. The renter contributes the
livestock, interest on livestock,
and labor. Division of other
expenses, such as supplemental
feed and veterinarian expenses,
are worked out in the rental
agreement
As an example of how the Rent
As Share of Grain method could
work, lets use a 400rpound steer.
When the steer is placed on pas
ture in the spring it might have a
value of $3BO (400 pounds x
$.93/pound). At the end of a three
month period, the steer may be
worth $466 (525 pounds x $.85).
The increase in value of the steer
during the three months it was on
pasture would be $B6 ($466-$380)
which would be shared between
the pasture owner and renter as
they had agreed upon earlier.
Ave. Price
for Good
X Hay/Ton
Grazing
Animal
Units
1,1 AU X $5O/Ton X
In this example, the renter pays
the pasture owner $14.03 each
month (or fraction of a month) for
each 1,100-pound cow grazing on
the pasture. Therefore, if the rent
er had 10 cows on the pasture, the
rental fee would be $140.30 per
month.
Rent Per Head per Month
This method of establishing a
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fair price is more complex than the
previous two methos and in the
final analysis must meet the needs
of both the pasture owner and
renter to be fair. With this method,
the rental price is based on the ani
mals units (AU, 1,000 pounds of
livestock) on the pasture, the pas
ture production potential, pasture
quality (Table 1). and the value of
hay of similar quality. As an
example, lets use a 1,100-pound
cow on good pasture.
Table 1, Pasture production/
quality factor used to calculate a
pasture rental value.
Pasture Description
Excellent grass/legume pasture
Good Pasture
Fair Pasture
Poor Pasture
‘Factors have been modified for Pennsylvania from Indiana
values.
pasture
factor
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Rate Per
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Month
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Any fair rental agreement is one
in which all parties understand
and agree to the terms and condi
tions. Once such an agreement is
reached, it is important that it be
written out so that both parties can
refer to it and determine theit
rights and responsibilities.
References
Ruth Hambleton, proceeding of
1993 Forage Conference, Univer
sity of Illinois.
Pasture Leases. EC-623,
Purdue University Cooperative
Extension Service.
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