Things to consider when discussing a pasture lease
Cattle grazing in pasture.
2/22/24
AMES, Iowa – The same Iowa law that pertains to crop land leases also applies to pasture leases. However, unlike crop leases that typically run from March 1 to the last day of February the following year, pasture leases may be written for a shorter time period. Iowa State University extension farm management specialist Charles Brown said this process still requires that all leases to be terminated by serving a written termination notice at the end of the lease, or the tenant will have the lease for the following year under the same terms as the old lease.
"The termination notice must be a separate document and cannot be part of the lease agreement," he said. "Also, verbal termination is not recognized in Iowa."
Brown reminded farmers that it's always best to have a written lease as this can eliminate arguments later and improve landlord/tenant communications.
"In the written lease it should spell out the responsibilities of the landlord and the tenant," he said. "Who is responsible for maintaining fences, weed control, providing water, paying for utilities, seed, fertilizer, lime, etc. Is mowing pasture for hay allowed? Who has the hunting rights? These should all be spelled out in the written lease."
Determining a fair lease amount for a pasture lease can be accomplished in several ways, he said. Although the most popular lease is still a dollar amount per acre, other lease arrangements are possible. Some other examples are: based on a percentage (2%-3%) of the fair market value of the farmland, an amount based on a per head per day, rental rate based on carrying capacity per AMU, and rental rate based on rate of gain. These and more are explained further in publication C2-23 on the Ag Decision Maker website.
Each May Iowa State publishes the results of an annual survey on cash rental rates (publication C2-10) with the pasture rental rates listed by crop reporting district. Below is a sample from the 2023 cash rental rate survey, by reporting district, from the Ag Decision Maker website. Read more about the 2023 survey and download a pdf of the results, including this entire table.
"With the improvement in cow/calf profits, I believe these rates may increase for 2024," Brown said. "Again, it is always best to have a signed written lease agreement and list all things that landlord and tenant agree to."
Other rental arrangements can be found on Ag Decision Maker, Iowa Beef Center, and Purdue University,
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The Iowa Beef Center at Iowa State University was established in 1996 with the goal of supporting the growth and vitality of the state’s beef cattle industry. It comprises faculty and staff from Iowa State University Extension and Outreach, College of Agriculture and Life Sciences and College of Veterinary Medicine, and works to develop and deliver the latest research-based information regarding the beef cattle industry. For more information about IBC, visit www.iowabeefcenter.org.
Contact:
Sherry Hoyer, Iowa Beef Center, 515-294-4496, shoyer@iastate.edu
