It’s not like forage is dirt cheap, but depending on where you stocker cattle, grazing rates are at least stabilizing, according to various surveys and summaries.

According to USDA’s “Agricultural Land Values and Cash Rents” published in February, the average value of pastureland increased 5.8% in 2008 to $1,090/acre (Table 1). Though still growing, it pales in comparison to the 29.7% increase from 2005 to 2006, or the 17.5% increase from 2004 to 2005.

Likewise, USDA statistics indicate cash rent for pasture increased 5% last year to a national average of $10.50/acre. That’s 30¢/acre less than in 2005.

Put in terms of private grazing rates per Animal Unit Month (AUM), Mike Fritz, editor and publisher of Farmland Investor Letter®, says rates across the western U.S. inched up just 1.4% over the past year to $14.70/AUM as of Jan. 1. That's down sharply from the prior year's 5% pace and the smallest annual increase since 2006, according to the latest USDA January Cattle Survey.

Fritz says more downward pressure on lease rates is expected as the impact of the global economic slump crimps consumer demand for meat and ranchers respond to weakening operating margins by making deeper herd cuts.

“USDA's survey reflects state averages. Local rental rates vary widely based on such factors as forage quality, proximity to roads, the availability of stock water, size of the acreage, lease term and landowner services,” Fritz explains. “Charges for counting, checking health and water, providing salt and minerals, and maintaining fences vary with each situation.”

Find more details and insight from Fritz in the April issue of BEEF at beefmagazine.com. Fritz’s subscription newsletter can be found at www.farmlandinvestorletter.com.

Table 1
Average Pasture Value/Acre by Region

Region 2008 Average Value/Acre
Northeast
(MD, NJ, NY PA, New England)
$3,480
Lake States
(MI, MN, WI)
$1,840
Corn Belt
(IL, IN, IA, MO, OH),
$2,090
Northern Plains
(KS, NE, ND, SD)
$516
Appalachian
(KY, NC, TN, VA, WV)
$3,620
Southeast
(AL, FL, GA, SC)
$5,040
Delta States
(AR, LA, MS)
$2,160
Southern Plains
(OK, TX)
$1,340
Mountain
(AZ, CO, ID, MT, NV, NM, UT, WY)
$617
Pacific
(CA, OR, WA)
$1,900
48 States $1,090
Source: USDA Agricultural Land Values and Cash Rents, February 2009