Guidelines for determining pasture rental rates
By Marlene Werry
- Beef Specialist, Port Perry
Leasing of pasture land serves an important economic purpose in Ontario. It permits producers with limited capital to acquire the use of additional pasture without making a large capital outlay. At the same time, the landlord with available pasture, obtains income from its utilization without becoming involved in the cattle business. Determining a fair and reasonable rental rate that will benefit both the landlord and the tenant is difficult. The quality of pasture land varies widely. A rental rate established by a farmer for improved pasture with a good grass-legume mixture, likely is not appropriate for a neighbour who has unimproved pasture covered in brush, weeds and trees. Ultimately rental rates will depend on the current farm costs and prices, the productivity of the land and the supply and demand for pasture in the community. Generally pasture rents are quoted on per head per month or per season basis , per pound of gain, or per acre. When pasture is rented on a per head basis, rates are more meaningful if they are expressed in terms of animal units. For example: a 1000 lb. animal would represent one animal unit (AU), therefore a 750lb steer would be .75 AU and a moderate framed cow and calf 1.3 AU. Rent charged on a per acre basis should reflect productivity. Productivity is affected by soil productivity, grass/legume mixture in the stand, amount and kind of weeds, source and quality of water, condition of fences, previous fertility practices. Rates are also affected by the length of lease as well as the services offered by the land owner such as salt, mineral, fly & parasite control and breeding. Rates vary a great deal across the province. They may range from $.28 to $.45 per lb. of gain, $50 to $120 per cow/calf pair for the season and $12 to $20 per steer/heifer per month.
Landlords and tenants need to develop a leasing agreement which is economically sound and equitable to both parties. A good agreement addresses questions of management and use of the leased assets. It should be clear and understood by both parties. Any written agreement should be done in duplicate, dated and signed by both parties. Agreements should also consider such essentials as service offered, health, payment and death loss. A sample farm lease agreement for pasture land is available from your local OMAFRA office.