The producers

Feed costs, including pasture lease, are the biggest expense in raising cattle. The problem facing many producers is that lease rates don't adjust as ...

There are benefits for both the landlord and the person renting the pasture, but they need to start that conversation to see the possibilities and what they want to agree upon that would be satisfactory to both parties,” he said. If people are flexing on the feeder cattle index, if there’s a 7 percent decline in that index, the producer would pay 7 percent less in grazing lease fee. The two parties can decide what the limits would be—with a floor and ceiling; the pasture rental rate can’t go above or below specific amounts. The tenant could use the USDA-RMA (Risk Management Agency) subsidized Livestock Risk Protection product on the day cattle are placed on grass to insure against a drop in price. The benefit for the landlord is that it helps ensure having a long-term renter who won’t go out of business. “We are essentially paying someone to take on that risk for us; it’s not that the risk has disappeared; someone else has assumed the risk,” he said. A classic example would be if you have a mortgage on a home, you would buy home insurance. Or you can reduce the number of cattle and still graze the typical length of time,” said Jansen. And if you graze longer than 150 days, you would increase the cash rent to reflect the proportion of time,” Jansen said. The lease needs to protect both parties, so you establish a range.” If the base cash rent per pair is $200, maybe you’d put the maximum at $230 and minimum at $170. “You might run the same number of cattle you typically do, but cut the time period. “A person needs a base expectation, though we may not know what is typical in terms of prices.