Beckman examines ag land values and rental rates
UNL Extension
Land prices and rental rates are some of the highest expenses a producer must face annually. Every summer, UNL’s Center of Agricultural Profitability (CAP) releases The Nebraska Farm Real Estate Market survey. Those wanting to check it out themselves can find a pdf version at cap.unl.edu/land or can contact their local extension office, but here are some highlights: Across the state, the all-land average value for ag real estate in Nebraska increased by 14%. The Northeast region saw the second highest percent change at a 16% increase with the East region not far behind at 15%.
Current crop and livestock prices were cited as the main force guiding higher market values of land statewide.
Reflecting the increase in land value, cropland rental agreements for center pivot irrigated ground in the Northeast region increased 7% to $365 per acre on average; dryland increased 9% to an average of $265 per acre.
Just a reminder, these are averages across a large area of the state (1/8th approximately), so there is a lot of room for variation locally. For the East region, center pivot irrigated cropland rents increased 5% to $345 per acre on average, with dryland increasing 4% at $245 per acre on average.
Unlike crop ground leases, which begin on March 1st, pasture leases are typically for a fivemonth grazing season. Since the lease is only in effect for that time, the lease is terminated at the end of the grazing season. Written pasture rental agreements are strongly recommended over handshakes and verbal leases. Fall all leases, establishing fair rates are important although at times challenging. Variables such as grassland quality; pasture location; fence maintenance; water, management responsibilities; and individual relationships…all influence individual pasture rental rates.
Last, when it comes to pasture leases, rates can be calculated in two ways, per acre or per pair. Per acre leases more closely mirror cropland lease agreements, but I recommend always including a set stocking rate as part of the lease agreement if you choose to go this route.
While rare, leases without an agreed upon stocking rate leave the landowner open to overgrazing by the tenant since technically there is no set limit on the number of animals that can be run. Renting by the animal unit or pair forces this stocking rate conversation to occur as part of the rental negotiation.
According to this year’s survey, the average monthly rent paid to graze a cow-calf pair this season in the Northeast region is $67.35 per month per pair on average. Pasture rented on a per acre basis went for $72 per acre on average, up 4% from last year. In the East region grazing leases were on average $62.55 per month per pair while leases per acre were up 9% at 60$ per acre on average.
Projecting these rates over a five-month grazing period, it will cost an average of $312.75 to $336.75 dollars to graze a cow-calf pair for the summer. Again, remember that these are only averages.
Pastures are a major resource for farmers, ranchers and our Nebraska cattle industry; and pasture rental is a critical factor in the financial wellbeing of both landlords and tenants. Knowing what others are paying for rental rates may help provide a starting point to negotiate a fair rate for yours.
Ben Beckman is a beef systems Extension Educator serving the counties of Antelope, Cedar, Knox, Madison and Pierce. He is based out of the Cedar County Extension office in Hartington. You can reach him by phone: (402) 254-6821 or email: ben.beckman@unl.edu