Every year I field questions from landowners and renters about pasture leases. It’s often an inquiry about the UNL land value survey and what this year’s going price is. At this point, I always have to ask a clarifying question, do you want the per-acre or per-pair rate? Both accurately put a value on a pasture, but in my opinion, only one goes above and beyond this to provide additional benefit to the landowner and renter, a per-pair rate.
First, from a technical point of view, having both parties agree on a number of head that should be on a pasture keeps the possibility for mismanagement and accusations of mismanagement to a minimum. A lease arranged on a per-acre basis puts a value on the land, then leaves management up to the renter unless written in somewhere else in the agreement. In a crop lease, this works because trying to figure out what the value of ground on a per corn plant basis would be impossible. Counting cows per pasture is a lot more manageable than counting corn stalks per field. This sets expectations clearly for both sides, so a renter is unlikely to overgraze by having too many animals, and the landowner cannot claim mismanagement by the renter. They agreed to the number of head to the get go.
Which leads to the underlying reason I prefer per-pair leases, a lease agreement is an exercise in communication. Deciding on price is just the first step. Who sprays the weeds and where does that cost come from? How is fence maintained? If a landowner wants to save ground for deer or pheasant cover later in the fall, how is that managed? If a renter feels it’s been a wet year and the lease could be extended a few weeks, how is that decided? Both parties involved have expectations of the other person in the lease, both in terms of monetary issues and management. Having regular, open discussions about these goals and expectations are what makes for a good lease agreement.
By its very nature, a per-pair lease, forces at least one of these discussions to occur and opens the door for all the rest. Is this always going to result in an open discussion about the landowner’s goals for the property and the leasee’s expectations? No. But the opportunity is there. When landscape goals can be shared by both the leasee and the landowner, moving forward to meet those is much easier than when one party is in the dark and has no clue about why or how decisions are being made.
Leasing a pasture on a per-pair basis takes a bit more work upfront. Both parties need to have a realistic expectation of what the land can hold and be ready for discussion and negotiation. However, the benefits of shared expectations, lower possibility of mismanagement, and more open communication are well worth the effort.
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On a practical note, if you do have questions about land values and rental rates for crop and pasture ground, each summer Nebraska Extension publishes the Farm Real Estate Market Highlights that summarize survey data from businesses and experts involved in ag land and rentals across the state. You can find this report at agecon.unl.edu/realestate or by contacting your local extension office.
For help with ag leases, a great resource with information and lease examples is aglease101.org. This resource was created by a number of ag econ faculty from land grant institutions nationwide and does a great job of providing information and examples for those needing help setting up or adjusting a lease. This does not take the place of professional legal counsel, but can help get you started in the right direction.
-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 .