Oklahoma Pasture Rental Rates: 2020-21

Rental agreements and rates are influenced by the landowner’s costs, the tenant’s expected earnings, previous rates charged, competition for the land, government programs, tax laws and the non-agricultural economy. The results of a statewide farmland leasing survey conducted in 2020 are reported here. Respondents were recipients of a survey mailing by the Oklahoma Agricultural Statistics Service. Approximately 635 surveys were returned with usable data. The cooperation and assistance of the landowners and agricultural producers who responded to this survey are greatly appreciated. Figure 1 shows regions of the state used in reporting survey results: northwest, southwest, north-central and east.

 

On average, rental agreements for native pasture had been in effect for 12 years, 10 years for Bermudagrass, and nine years for fescue and other pasture (Table 1). Median values are provided as an additional measure of the central tendency of the survey response distribution. The median is the value at the midpoint of the survey responses. Survey results document some regional differences in years held. Figures 1a and 1b show the distribution of statewide responses for average number of years the lease was held with the same party for native and Bermudagrass pasture leases. Stocking rates and the length of the grazing season also are shown in Table 1 for cows with spring calves and cows with fall calves.

 

 

Figure 1. Regions used in reporting farmland leasing survey results.

 

Most tenants and landlords in Oklahoma appear to be satisfied with their lease agreements. About 64% of the respondents classified their leasing agreements as good or excellent from the standpoint of fairness with an additional 20% classifying their agreements as adequate. These levels of satisfaction have remained steady over the past several years.

 

Pasture Rental Rates

Common methods of renting pasture include:

1. rate per acre,
2. fixed rate per hundredweight per month,
3. flat rate per pound of gain or
4. share of gain or profit.

 

In addition to factors previously mentioned the landowner’s costs, the livestock owner’s expected earnings and previous rates charged, etc. the kind and quality of pasture, fences, location and water also influence the pasture rental rate. Negotiations determine the type of agreement and the relative weight given to different factors.

 

Rental rates for native, Bermudagrass, fescue and other pasture are provided in Table 2. With regard to native pasture, the state average rental rate of $15.42 per acre has held steady when compared to the 2018 survey-based rate of $15.33. Native pasture rental rates were lowest in northwest Oklahoma at $12.13 per acre and highest in north-central Oklahoma at $18.71 per acre. Figure 2a shows the distribution of per acre rates reported for native pasture in Oklahoma.

 

The state average rental rate for Bermudagrass pasture was $20.22 per acre, down almost $3 from $23.15 reported in the previous survey. Figure 2b shows the distribution of per acre rates reported for Bermudagrass pasture in Oklahoma. Unfortunately, pasture rental rates for stockers on winter annual grazing agreements (e.g., small grains) are not available due to an insufficient number of reports.

 

Pasture lease agreements may assign responsibility for checking livestock, providing salt and minerals or supplemental feed or pasture and repairing fence to the tenant or landlord or both. Table 3 summarizes the distribution of survey responses for native and introduced pasture (listed as other pasture in previous current reports). Typical agreements between parties for annual small grain pasture grazing are not available due to an insufficient number of reports. Generally, the livestock owner was responsible for most of the terms of the pasture lease, although there are opportunities for sharing by both parties.

 

Other Lease Terms

Many lease agreements specify terms and conditions beyond the rental rate, which affect the value of the lease and the “real” rental rate. Tenants may or may not be allowed to hunt, harvest pecans, cut timber, use buildings or other improvements and lease out hunting privileges. Lime application costs or similar costs for improvements in which the benefits are returned over a number of years may be shared by the landlord and tenant, or if the tenant pays for them initially, repaid by the landlord at a fixed rate per year. Tenants may be required to maintain fences, spray or clip weeds annually, provide liability insurance, share oil field damages, maintain terraces and leave strips of grain in the field for game. Landlords may provide a well and water, fencing material or land for a mobile home. Tenants may ask for several months notice if the landlord wishes to terminate the lease agreement. In some cases, leases contain an option to buy with rental payments applied to the purchase price.

 

Historical and Regional Perspective

Table 4 provides historical data on pasture rental rates for Oklahoma, Kansas, Missouri and Texas for 2011-2020 as reported by the USDA National Agricultural Statistics Service (NASS). County level pasture rental rate data is available.

 

The next annual USDA Cash Rent Survey will be available with the 2021 release in September 2021.

 

Comments

“Fair” rents must be negotiated between tenant and landlord. Regional or state average rental rates may be used as a beginning point for discussion and negotiation of rental rates. However, differences in land quality and improvements, and restrictions on land use can greatly impact the value of potential leases. Likewise, differences in family living expenses and hired labor costs can be substantial for different operations, affecting the maximum rental bids.

 

New legal restrictions and liability factors may call for changes in future farm lease agreements. Some farm management firms include language requiring that the tenant will be responsible for following label restrictions in the use of pesticides, for remaining in compliance with the farm’s conservation plan and for disposing of wastes in a manner approved by the Environmental Protection Agency, etc. Some leases already stipulate precisely what fertilizers, pesticides and seed may be used on the property. Both landlords and tenants must be aware of changing environmental laws and regulations to avoid potentially costly liabilities.

 

Related Publications and Other Resources

To help educate landlords and tenants with equitable lease agreements and current best management practices, visit the Oklahoma State University (OSU) Ag Land Lease website. A joint effort between OSU’s Plant and Soil Sciences and Agricultural Economics Departments, the website contains a wide assortment of farm management spreadsheet tools, lease information and forms, rental rate and land value resources, legal and tax considerations plus the latest production practices in Oklahoma.

 

The AgLease101.org website hosts several North Central Farm Management Extension Committee (NCFMEC) publications on leasing including these titles:

• Crop Share Rental Arrangements For Your Farm, NCFMEC-2
• Fixed and Flexible Cash Rental Arrangements For Your Farm, NCFMEC-1
• Pasture Rental Arrangements, NCFMEC-3

 

In addition to publications, worksheets and free downloadable sample lease forms are available on the site.

 

Recent Oklahoma school land lease auction information is also available through the Real Estate Management Division of Commissioners of the Land Office.

- Insufficient observations
(D) Median values that reflect less than 11 observations or single observations are excluded.

 

Figure 1a. Relative Frequency for Rental Statistics for Native Pasture, 2020-2021.

 

 Figure 1b. Relative Frequency for Rental Statistics for Bermudagrass, 2020-2021.

- Insufficient observations
(D) Median values that reflect less than 11 observations or single observations are excluded.

 

Figure 2a. Relative Frequency of Responses for Native Pasture Rental Rates.

Figure 2b. Relative Frequency of Responses for Bermuda Pasture Rental Rates. 

 

* Totals may not add to 100 due to rounding.

 

Source: USDA/NASS, Quick Stats, https://quickstats.nass.usda.gov.