Part 2 of Figuring Pasture Rental and Use Rates: Animal Units and Profit Sharing

We first covered this back in 2015. Here's the third part in the series with some updates suggested by On Pasture readers. If you've missed the first two, here they are: How Much to Pay for Leased Pasture - 2018 Doing the Math on Pasture Rental Rates Part 1 Animal Unit Months Figuring pasture use rates by Animal Unit (AUM) is more common in the western United States where it is the basis for public lands leased to ranchers for their stock. The nice thing about this method is that it makes it easy to plug numbers into a formula to give you a good idea of how many animals you can feed for how long. The formula factors in pasture quality, and the market price of hay so that you can come up with something fair to both parties. An Animal Unit Month (AUM) is the amount of forage required to sustain a 1,000 pound cow with her calf at her side for 30 days. That works out to about 26.1 pounds per day. Forage requirements for all the other classes of livestock are shown in relationship to that 1,000 pound cow and her calf. Here's the formula: Number of Animal Units x Average Hay Price Out of the Field Per Pon x Pasture Quality Factor = Rate Per Head Per Month (Note: This formula works well for irrigated pasture, but may over-estimate non-irrigated, arid range rental rates where there is less forage and very little inf

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One thought on “Part 2 of Figuring Pasture Rental and Use Rates: Animal Units and Profit Sharing

  1. There’s an old saying about all politics being local. I think the same thing applies to the value of pasture. The market in your particular area largely determines the value of your grass. Along with that, the additional skills and benefits you bring along with the grass has significant value too. Fencing, water, facilities and especially your husbandry skills all impact how much the cattle owner will pay a grazier.

    A friend of mine used to say that the problem with equal partnerships is that partnerships are never truly equal. I think that’s often the case in profit sharing arrangement like you describe above. In most cases, the cattle owner has a tremendous advantage in terms of knowledge and experience. I always advise great caution in these situations. If you are dealing with a person of modest character it is easy to get taken advantage of. For instance, if you are taking on a group of cattle that includes a significant percentage of high-risk, chronic, sick, high-stress cattle, the result could be high morbidity and mortality and tremendous workload for the grazier. Assuming the good calves do well (and maybe some of the bad ones do also) there is a huge deduction from the gain for dead calves, and very low production for the chronics. Many of these sick or dead calves were bought at a huge discount, so their loss doesn’t mean very much to the owner. But a dead 400 pound calf represents a loss of 400 pounds of gain to the grazier.

    Bottom line, doing business with honest professionals is probably the most important piece of the puzzle. Identifying who those people are, well, that’s tough. Like the rest of the world, the grazing business has its share of sociopaths.

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