Considerations for Pasture Leases
April 3, 2015
It is appropriate to review typical lease arrangements for pastures from time to time. With more education in the area of leases, the more it is realized that each "neighborhood" has a different set of rules for leasing. Provisions mentioned here are normal for the common lease.
The length of the pasture lease is typically five months, often starting May 15 and ending October 15. West of Highway 14, leases tend to start later, running from June 1 to November 1.
Setting Lease Terms
Lease terms either ask for rent to be paid by the acre or by the stocking rate which is the cow/calf pair. The per-acre lease is a flat amount per acre for the grazing season. The cow/calf pair rate is typically expressed either as an amount per month or an amount for the grazing season. The per-acre charge is more common in eastern Nebraska, while the cow/calf pair rate is more common in north central and western Nebraska, especially in the Sandhills.
Current per-acre rates in Nebraska vary by region and are shown in Table 1.
|Table 1. Typical pasture lease rates for Nebraska.|
|Region||NASS* Avg.||UNL Avg.||UNL Range||Avg|
|Per-acre monthly rate||Per cow-calf pair per month|
|*USDA National Agricultural Statistics Service (USDA NASS)|
These rates are from NASS and the 2015 UNL Ag Land Survey. The UNL survey results are preliminary; final results will be released in June. Also know that local rents may be higher or lower than what is reported here.
In some cases, I've run into situations where the lease is set up on a per head per day basis. This amount is simply calculated by taking a monthly rate and dividing by 30. Know that this payment method for pasture rents is not a legal lease as determined by the USDA, meaning that the Livestock Forage Disaster Program (LFP) would not be in effect for any pastures rented with this method. Contact your Farm Service Agency for more information about the LFP program requirements.
The landlord typically is responsible for fences with this rental rate. Another common arrangement is for the tenant to provide the labor for fence maintenance and the landlord to provide the materials. If the tenant provides the labor or materials, it is appropriate for the lease to be discounted by some amount to reflect the work being provided to the landlord.
The tenant usually provides the fertilizer and the noxious weed control. Volunteer tree control, most notably control of eastern red cedars, is a landlord responsibility and expense.
Expect the Unexpected. One of the most important parts of the lease is to make provisions for unexpected events such as the drought of 2012. The pastures ran out of grass early that year. What provision is there in the lease for such events as drought, hail, flooding, or fire? Both parties need to be protected in such cases. Or, what happens if the well goes bad, or the watering holes go dry? Who will bear the expense of these events?
There isn't a good database of common practices to work from to make solid recommendations about how the lease is modified to account for a drought for example. These situations should be discussed and a procedure should be outlined and included in the lease provisions. What the landlord and tenant agree to is always the best lease that you can have.
Get the Lease in Writing. Sample pasture lease forms are available on the UNL Department of Ag Economics website at http://agecon.unl.edu/realestate.