Fair Value for Rented Pasture

[Stocker Steve]

A neighbor came over and asked if I was interested in renting all or part of his home place for $65 per acre. He quit milking cows last year, and rented his herd and facility to someone who is not renewing. One of the reasons the renter has cash flow problems was he seeded a large portion of the farm to Italian rye grass and orchard grass mix this past spring. It looked great this fall so the owner is happy, but neither grass is very winter hardy in this area...

I am interested in the place but don't want to pay up front for dead sod. Any tips on a fair approach for everyone?

 

[cfpinz]

$65 seems a bit high but I know nothing about your region. Average in this area for strictly pasture is around $20/acre, adjusted accordingly. Your extension service should be able to provide a list of common prices for your area, that's a good place to start.

 

[Bandsaw]

How would renting on a per head per month basis work? It is not common in this area, but seems to me to be a fair way to rent pasture. This link may help explain the idea a little. http://www.extension.iastate.edu/agdm/w ... c2-23.html

 

[dun]

How would renting on a per head per month basis work? It is not common in this area, but seems to me to be a fair way to rent pasture. This link may help explain the idea a little. http://www.extension.iastate.edu/agdm/w ... c2-23.html

That's the way we rent it out. Open cows 8.50 per head per month

 

[BamaCowboy]

Around her pasture rents for $14.50 per ac

 

[Aaron]

How many acres? I am not far from you and rent 160 acres of bush pasture & pasture for about $3/acre. If it's not winter hardy, then your going to have to sacrifice your stocking rate to keep it going. Depends on more info, but I wouldn't give more than $20 an acre...an that would have to be top quality grass and legumes....anything more and I can't see how you can pencil it. :cowboy:

 

[Stocker Steve]

We are in a marginal row crop area. Pasture used to be $15 to $20 an acre and plow ground was $40 to 45.

Higher grain prices have driven plow ground up to $60 to $75. The sad fact is we haven't had a good grain crop for 3 years so most crop farmers are just losing more money due to the higher input prices. The only crop farmers who seem to be making a profit are buying revenue insurance or have irrigation.

 

[mnmtranching]

Steve, $65 is way to much for pasture. Unless it's all black ground bottom land that holds moisture in July and August. I had 80 acres of Orchard grass about 4 years age, open winter and lost 100% nothing but weeds. I know good fences, water and facilities add value. I pay $12 per acre with good fencing, corral and electricity, 1/3 is open woods.

 

[Alberta farmer]

Not sure what land is worth in any of the areas you guys mention? Or if the owner can do anything else with the land?
In my area of central Alberta it is very unlikely you could buy any land for under $2500/acre. Good farm land closer to the city is considerably more.
Most pasture land around here is rented by AUM and the going rate is around $1/day to $1.25/day. Not much under a $1 though.
Crop land is around $60/$80 acre. If it takes 3 acres of pasture to feed a cow/calf for 5 months the farmer is getting only $50/acre...besides having the fence/water upkeep? Better to plow it down and rent it out for crops?
I have some crop land that I rent to my cousin on a crop share basis. I get one third of the crop and I pay one third of the chemical expenses(fertilizer and spray). It has usually worked out much better than cash rent. The only land we pasture is land not suitable for cropping.

 

[wstevenl]

The guy that rents our crop land told me that 20 years ago he rented pasture for 45-60 per acre and although we still do 1/3 share, we get the equivalent of 130/acre on our crop ground. Some people are getting 200.

 

[Aaron]

Not sure what land is worth in any of the areas you guys mention? Or if the owner can do anything else with the land?
In my area of central Alberta it is very unlikely you could buy any land for under $2500/acre. Good farm land closer to the city is considerably more.
Most pasture land around here is rented by AUM and the going rate is around $1/day to $1.25/day. Not much under a $1 though.
Crop land is around $60/$80 acre. If it takes 3 acres of pasture to feed a cow/calf for 5 months the farmer is getting only $50/acre...besides having the fence/water upkeep? Better to plow it down and rent it out for crops?
I have some crop land that I rent to my cousin on a crop share basis. I get one third of the crop and I pay one third of the chemical expenses(fertilizer and spray). It has usually worked out much better than cash rent. The only land we pasture is land not suitable for cropping.

You can buy bush or timber pasture around here for $100 to $200 an acre. Real good producing cleared pasture might run $300, but it would have to be exceptional. Top quality black soil crop land would go about $500 an acre. There are some people around here that think the can ask more than these values...but they sit on the land for 10+ years (stubborn) and then drop it to 'real' values to get out. Next door neighbours are looking to sell their place. I welcome you to come buy it. $335,000. 325 acres. You get a great house. Good barn. All his equipment. If you think about land alone, it works out to $1030.00 an acre. Plus you get everything else.
Here's a link. Their place is at the bottom with the Herf cows. Not sure if the cows go with the place. :cowboy: http://www.rrfdc2.dynamic-site-builder. ... ale-21.pdf

 

[Alberta farmer]

Aaron: I didn't think there was any land left in Canada that was as cheap as $100-$300/acre? Sounds like you guys stand a good chance of making some money in agriculture?
I live fairly close to a booming city(Red Deer) so the land prices are high. The land is black soil but fairly hilly with a lot of pot holes. Practically all the farms are owned by old time families and I suppose it is more of a way of life thing than a profitable business? A lot of these families have "oil and gas revenue"...often a lot more than farm reciepts!
I am in my early fifties and have no desire to go on any "farming adventures" but could certainly understand a young mans desire to do so. Unfortunately most of the young men around here would rather work in the oil patch and make the big bucks! A lot of these boys like to buy some land to run some cows or horses for a hobby though. My nephew has bought 3 quarters for over a $million and runs 200 cows...that is his hobby! His bread and butter is an oil field consulting business.

 

[Bandsaw]

What are typical terms and rates for those renting pasture by the animal unit?

 

[Aaron]

Aaron: I didn't think there was any land left in Canada that was as cheap as $100-$300/acre? Sounds like you guys stand a good chance of making some money in agriculture?
I live fairly close to a booming city(Red Deer) so the land prices are high. The land is black soil but fairly hilly with a lot of pot holes. Practically all the farms are owned by old time families and I suppose it is more of a way of life thing than a profitable business? A lot of these families have "oil and gas revenue"...often a lot more than farm reciepts!
I am in my early fifties and have no desire to go on any "farming adventures" but could certainly understand a young mans desire to do so. Unfortunately most of the young men around here would rather work in the oil patch and make the big bucks! A lot of these boys like to buy some land to run some cows or horses for a hobby though. My nephew has bought 3 quarters for over a $million and runs 200 cows...that is his hobby! His bread and butter is an oil field consulting business.

Well, I know we can make a buck at it. There are a lot more around here that could too if they would quit buying fancy machinery well beyond what they need. A lot of the producers around here use new John Deere 4WD 120 hp+ tractors to put up their hay for 50 to 100 cows. They are the same ones who whine about no profitability, whereas we and a lot of our true farming neighbours use old Massey and JD 2WD tractors to do the same. A lot of the land in the area is bought up by hunters and for timber rights, not farmers...which is sad because it is about the cheapest in the country. Looks like mining rights might start taking off here as well, as we are sitting on some of the biggest gold and copper deposits in the world. I could never understand how anybody could buy land at $2000+ an acre and then tell me he makes a profit. :cowboy:

 

[Alberta farmer]

Aaron: Sounds like you are a pretty efficient operator and understand how to keep costs down/profit up.
I agree with you on the $2000 land...no way can it ever pay for itself, unless you look at it as an investment, which you will cash in somewhere down the road?
The land I live on is worth a fortune. My Dad bought it after the war for peanuts. Now in reality I would be smart to sell it but then what would I do? There is a lot more to life than the almighty buck...although it sure doesn't hurt to have a few!
The way I see it is if you enjoy what you do and can keep the wolf from the door, then you have the best solution to living your life? Personally I have no desire to own a Mercedes or vacation in exotic places. I do enjoy my cattle, my garden, and the wildlife on my farm. It floats my boat.

 

[IGotMyWings]

When I rented the pasture for my small bunch it was going to be $6.00/head. Since the well quit working, and I'm back to hauling water, it's currently rent free.

 

[Alberta farmer]

bandsaw: The going rate around here for pasture is $1-$1.25 per cow/calf a day Canadian...or about $.80- $1 in US dollars. The renter is usually responsible for maintaining the fence although the landlord might kick in for posts, wire etc.
I do rent a small 55 acre pasture from an old neighbor, cash rent $1800...it works out to about $.79/day/cow. He seems to be quite happy with this arrangement as I keep the fences up, the weeds sprayed out, and I actually pay him...the last guy screwed him two years in a row!
I didn't really want this pasture but figured it was better to rent it than chase some other guys scrub bull away from my cows, and put all his rank old cows back in every week!

 

[Nesikep]

Here, get this, we have to put up with our neighbors cattle because there is open range around our property.. and how much does the rancher pay to have his cows pestering us? $2.50 CDN per cow/calf pair.. PER MONTH!! if that isn't a subsidy I don't know what is... meanwhile, the forestry (in charge of range) had to pay for a drift fence around our place for the tune of 15,000... and we still have to deal with these critters and their owners

If I could keep our 20 cow herd anywhere else for a month I think 500-1000 would be a reasonable price to pay.. I'm not saying i'd make money at this price, but I never will, but if you think 10 bales of reasonable hay a day (there are calves) at 5 bucks a bale, minus the cost of actually baling it... this should be a price for the owner of the property... it works out to roughly .75-1.50 per cow per day... I would expect a nice pasture where I will see a 3lb/day gain on most calves

 

[Alberta farmer]

Nesikep: Not quite sure how that "open range" thing works in BC? I assume it is something like our "community pasture" system in Alberta? Basically how this works is the Alberta has large tracts of land that they fence, brush, plant grass etc. and then allow ranchers to apply for so many AUMs...usually in 25 head groups.
The Alberta government also leases land as grazing leases. This has become sort of a scandal as the grazing leases are considered real property and are bought and sold like the land is deeded. The leasee pays a per head fee every year but is also entitled to the surface lease for oil and gas exploration. The Alberta government recieves about $3 million a year in grazing fees and the leasees recieve about $100 million a year in surface rights leases! Obviously the Alberta taxpayer is subsidizing the leasees in a big way? If no cows were allowed on the grazing leases the Alberta taxpayer would be $97 million dollars richer. Premier Klein tried to change this system but almost got his lunch handed to him by the lease holders. He backed down real quick!
It seems to me that this is a very unfair system, when some people are paid to pasture their cows while others have to pay private landowners for pasture? The guy grazing his cows on public grazing leases has a pretty big advantage?
I have a neighbor who sends 25 cows to a community pasture every year. He has to pay trucking for about 300 miles and pay for a bull debenture....says it works out to about $21/month/AUM with the grazing fees. He says it would just be great if he got 25 cows/calves back every year but he is always short a couple of calves!

 

[Aaron]

The way I see it is if you enjoy what you do and can keep the wolf from the door, then you have the best solution to living your life? Personally I have no desire to own a Mercedes or vacation in exotic places. I do enjoy my cattle, my garden, and the wildlife on my farm. It floats my boat.

Couldn't agree more. :cowboy: