As we progress into the summer months, many producers will lease pasture as a common management practice. Dry conditions in most of the West may force others to start evaluating different grazing options. Regardless, one common question is: “What should I pay for a pasture lease?” Many factors contribute to a lease’s value. Unfortunately, differences in pasture lease rate are rarely as large as differences in quality. However, accounting for key variances in land productivity, infrastructure and forage value can help when critically evaluating a pasture lease.
Since identifying the right lease is critical to our bottom line, here are a couple of considerations to help set us up for success.
1. Consider valuing infrastructure: Evaluating infrastructure improvement potential and existing condition is step one. These characteristics can often make or break the deal. Water access that allows for enhanced grazing distribution is a bonus. Make certain creeks and ponds do not go dry during the summer. Map out how many ponds or tanks are needed to properly graze the lease.
No or poor fences and handling facilities will add labor and investment. Improvements are likely necessary or the lease would not be available. The value placed on existing infrastructure will depend on the resources available to improve them.
2. Consider estimating forage potential: Not all pastures are similar. Estimate current and potential carrying capacity. Forage production depends on the kinds of grasses present. Evaluate forage and soil quality at several locations around the pasture. Pay attention to the grasses, legumes and forb species present.
A soil test can help to better evaluate the pastures’ potential. If previous management has been poor, pastures might have more weeds than desired. Additionally, some Western pastures can be too rough, rocky and brushy to graze effectively. All of these land features will help to estimate the number of cattle the lease will support.
3. Consider comparing options on price-per-ton basis: Determining a fair lease rate and comparing options is difficult. Consider the quality and value of the forage resource. Comparing the value of grazable forage to alternative feed sources (i.e., harvested forage) is one approach.
This works best when forage sources are of similar nutrient value. Grazed tons of forage can be directly compared to the cost of buying hay or to alternative leasing opportunities. Overcoming the challenges associated with finding the right pasture lease requires doing some homework. However, a pasture lease that aligns with ranch goals can lead to increased productivity and flexibility.
