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Reaching a fair pasture rent deal

Jeff Caldwell 04/25/2012 @ 8:39am Multimedia Editor for Agriculture.com and Successful Farming magazine.

If you're on either side of a pasture rental agreement, there may be factors you're overlooking that could become part of negotiating a price, one specialist says.

Things like insurance, fence repairs, taxes and interest are typically paid by the landowner, while livestock production activities, fly control, water supply maintenance and veterinary work are all paid by the land renter and owner of the livestock. But, says Purdue University Extension forage specialist Keith Johnson, there is some gray area between those 2 groups that should factor into the rental agreement.

"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," Johnson says in a university report. "It's important to have a conversation about what those negotiable points are and then move toward a more firm price."

A few examples he gives of negotiable elements of a pasture rent deal are:

  • labor for fence repairs
  • maintaining pasture grasses
  • controlling weeds and brush
  • liming and fertilizing
  • reseeding and renovating

Another big variable is the stocking rate; it's one that can have major implications to not just a pasture's annual rent, but its longevity as a grazing source in the future.

"We want to make sure we have an appropriate stock density so we're not overgrazing the pasture," Johnson says. "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."

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