Range and pastureland likely to retain value despite cattle prices in Wyoming
As of Nov. 9, pasture and rangeland condition in Wyoming was reported as 55 percent good and seven percent excellent. University of Wyoming Extension Educator Dallas Mount predicts that land lease values will continue to remain strong.
“Even with the recent drop in the cattle market, I think pasture prices are going to remain competitive for some time into the future,” he mentions.
Generally, land value prices do not respond immediately to changes in commodity prices. Current pasture lease rates range from $20 per cow month to $60 per cow month in eastern parts of the state.
“It depends on the region of the country that we’re in. For example, the cost to carry a cow is very similar from Nebraska to Wyoming. Our major cost is wintertime feed, and Nebraska’s major cost is summertime feed,” he explains.
Various regions may have different demand for pasture or alternative feed options that impact prices.
“It gets a little complicated, but there are a lot of considerations when entering into a lease agreement,” Mount mentions.
Producers can consult multiple resources to investigate lease values, including the aglease101.com website.
“That website has fact sheets about how to set up a lease, sample contracts and where to go for pricing data,” he explains.
Mount warns producers to be cautious when consulting reports that list average data relating to range and pastureland values, saying that averages do not necessarily reflect accurate market prices.
“Some of the leases being reported are internal family lease agreements. If I’m going to lease from my dad, I’m probably not going to pay market rate,” he comments.
Lease terms also vary between agreements, with some contracts written for annual payments and others written for payments by cow month.
“That is a major consideration because there are a lot of risk factors,” Mount explains.
Drought risk, for example, is one factor for producers to consider. If a drought occurs and a pasture is no longer suitable for grazing, a producer using a cow month contract can likely terminate payments and use of the pasture.
“If I leased a pasture for ‘X’ amount of dollars for the year and we get a drought, I’m still going to be expected to pay for that pasture lease,” he continues.
Government risk protection plans also evaluate lease terms before administering payments.
“If I lease pasture by a flat cash lease, then generally I get to be the beneficiary of the benefits, and if there is a disaster payment, it comes to me as the lessee, not the landowner,” he explains.
A cow month agreement on the other hand would result in the landowner receiving the benefits of a disaster payment since they have the greater financial risk in the contract.
“Oftentimes pasture lease agreements stop about this time of year. However, there can be options where some people have winter grass and will pay to have animals on stockpiled feed,” Mount mentions.
Producers may also pay for facility leases in the winter to use corrals, barns, hay storage areas and places for cows to be kept and fed.
As for range and pastureland to be used in the upcoming spring, Mount suggests, “Make sure there is water available and fences are in decent shape. I would make sure producers advertise widely and get to know the people they are working with.”
Many times, landowners don’t go any further than neighbors or family members when they are looking for lessees.
“It’s a really competitive market out there for leases. I hear everyday that somebody wants to lease land, but there isn’t anything available. Leases are certainly out there but they are not advertised very widely,” remarks Mount.
Anyone interested in learning more about pasture and rangeland value is invited to attend the workshop presented by Dallas Mount at this year’s Progressive Rancher Forum at the Wyoming Stock Growers Association Winter Roundup in Casper, Nov. 30-Dec 2.
Natasha Wheeler is editor of the Wyoming Livestock Roundup and can be contacted at email@example.com.