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Post-drought pasture leasing tips

Farmland leasing and negotiating land rental rates can sometimes rival walking a tightrope. Get too far out of balance one way or another, and sometimes a deal can completely fall apart.

But, that's not just true with land for cultivation. Especially in a year following drought, the structure of and prices involved in pasture leases can be a moving target, especially when the feed value of the grassland may not be known until well into the grazing season.

Reaching a fair deal for both parties takes a lot of flexibility and communication in a year like this. Even then, it's not easy, says University of Nebraska Extension educator Allan Vyhnalek.

"It is easy to see how this is difficult for both parties. Everyone understands that leaving the cattle on the pasture too long reduces the long-term health of the pasture," he says. "The pasture will basically take a lot longer to recover if it has been severely overgrazed."

So, how do you account for the major potential variability in pasture conditions heading into spring? Vyhnalek recommends writing in whatever condition you can to make sure you are paying for what you are getting out of rented pasture.

"The landlord and tenant should be visiting now about when grazing will start. If there's adequate rain and grass starts normally, this is a moot point; however, if it doesn’t rain, or if the grass is slow starting due to overgrazing in 2012, delaying the start of grazing would be a reasoned approach," Vyhnalek says. "The rent owed should also be adjusted accordingly."

BUt, it works both ways. Renters should take extra care this year to avoid overgrazing, especially considering doing so could have even greater ramifications this year.

"If re-growth is slow this year, stocking rates also should be adjusted to fit the moisture available and the growing conditions. Pricing leases on an Animal Unit Charge (AUM), and not by the acre, may be a reasoned approach to handle this change in stocking rates," Vyhnalek says. "In most situations, water for livestock is not an issue, but a clause should be added to include provisions for livestock water in case the water source goes dry."

Other considerations for both landowner and tenant -- for which all involved parties should "reach an equitable agreement," include:

  • Weed problems
  • Hail damage
  • Fire damage
  • Adequate water supplies

"As you can tell, there aren’t many concrete suggestions to solve these situations. The key point of providing this information is intended to encourage the tenant and landlord to start discussions early and plan ahead for 2013 in case the drought continues," Vyhnalek says. "I have always maintained that with any lease, communication is the key.  Discuss how the pasture is to be managed and what both parties expect. The tenant should keep the landlord informed about pasture conditions and the landlord should communicate expectations for the pasture. The bottom line is: 'Hope for the best, but plan for the worst.'"

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