Agricultural Lease Rates: A Guide to Estimating Income Potential For Landowners

If you are a farm or ranch owner but farming or ranching is not your trade, you are not alone. Landowner demographics in many parts of the west have shifted toward non-operators, particularly in recent decades. If you are a non-operating owner or prospective owner, evaluating your property's income potential requires an understanding of agricultural lease rates.

Average Land Rents

The information in the charts provides a baseline to use in evaluating your land's rental potential. The rates quoted are averages and production can vary greatly, not only regionally within the state, but also on properties right next door. When evaluating a specific property, you'll need to consider some of the other factors that affect rents.

Additional Influences on Rental Rates

Rental rates may vary from property to property. Soil quality and average precipitation are obvious factors for which information is typically available. Here are other factors that may be less measurable but often come into play.

Pasture Ground Issues

1. Supply and demand - Who's nearby and what their needs & capabilities are. The more options, the better.
2. Proximity - The closer your property is to the lessee's base of operations, the better. Familiarity, convenience and low transportation costs contribute to cost effectiveness.
3. Water resources - Both quality and disbursement of water resources directly impact grazing capacity.
4. Fence quality - Cows that are constantly out because of shoddy fence will make everyone crazy.
5. Weeds - These displace edible forage and are costly to manage.
6. Facilities - Availability of working facilities for cattle is a benefit to the operator.

Farm Ground Issues

1. Supply and demand - This is doubly important on farm ground because there are typically fewer options available.
2. Proximity - Doubly important on farm ground. Equipment mobilization is very expensive.
3. Field condition - Bouncing over gopher mounds is even less fun than chasing loose cows. Rough fields damage equipment and slow you down.
4. Age of stand - A new alfalfa stand is far more productive than an old stand which has largely given way to grasses.
5. Weeds - These reduce the crop value and can be spread by equipment or by feeding (if it's a hay crop).
6. Size of tillable acreage - Larger acreage justifies mobilization, but fewer operators have the equipment necessary to handle very large acreage.