Considerations on pasture rental costs

New demands for corn such as ethanol production and growing export markets have increased the price of corn, and the repercussion has been increased costs of virtually all other feedstuffs. Through both direct and indirect influences, this has also driven land prices and rental rates up, including range and pasture land. Thus, one of many rapidly escalating portions of rising annual cow costs is the cost to rent grass. SDSU Economists recently released a publication entitled “Agricultural Land Market Trends: 1991-2011”. Rangeland and pasture cash rental rates for 2011 ranged from $7.40 in southwest South Dakota to $69.45 per acre in southeast South Dakota. In contrast, when reported on a cost per animal unit month (AUM) basis, the range was much smaller ($19.10 to $44.50). These per acre rates reflect an 11.2% increase from the previous year.

One concern that these figures present is how to compare rental rates on a per acre basis to rates calculated on an AUM or per animal basis. This becomes an issue of knowing the stocking rate so that AUM or animal numbers per acre can be used to compute the acreage required to support the animals. Further complicating this is converting animal numbers to an AUM basis.

The definition of an animal unit (AU) is a 1000 lb cow with or without a suckling calf at her side. However, because most cows nowadays weigh substantially more than 1000 lb., we should not assume that a cow is equivalent to an AU. Bigger cows need more nutrients and therefore additional acreage should be rented for them if they are to receive adequate nutrition to perform well (or run fewer cows on a fixed acreage). A simple, straightforward, and accurate way to convert the AU equivalent (AUE) of cattle based on their size is to simply divide the weight of the actual cattle by 1000 lb. to calculate the AUE. Thus, if the average weight of your cows is 1350 lb, their AUE is 1.35. If you are grazing steers for the summer and their expected average weight during the summer will be 770 lb, their AUE will be 0.77.

The final term to consider is animal unit month (AUM). An AUM is the forage that one AU will consume in one month. A reasonable figure would be 750 lb. of dry matter, which is 25 lb. per day for 30 days. If you have an estimate of herbage produced, and assume that only part of it can be removed without damaging the plants (e.g. 25%), then the appropriate stocking rate in acres per AUM can be calculated that will allow adequate forage to support an AU. Based on the AUE, this can then be converted to acres per animal (or pair in the case of cow-calf pairs).