Rental rates for range and pastureland are on the rise, due to increasing demands for corn, says Ken Olson, SDSU Extension Beef Specialist.
"Increasing demand for corn for ethanol production and growing export markets has increased the price of corn, and the repercussion has been increased costs of virtually all other feedstuffs. Through both direct and indirect influences, this has been an important factor driving land prices and rental rates up, including range and pastureland," Olson said. "This makes renting grass one of many rapidly escalating portions of rising annual cow costs."
Rangeland and pasture cash rental rates for 2012 ranged from $11.65 in southwest South Dakota to $61.95 per acre in east-central South Dakota, according to "Agricultural Land Market Trends: 1991-2012," a publication recently released by SDSU Economists, available in the Livestock Profit Tips community on iGrow (igrow.org/livestock/profit-tips).
In contrast, the same document showed when cash rents were reported on a cost per animal unit month (AUM) basis, the range was much smaller ($25.25 to $36.90).
"These per acre rates reflect an increase of more than 10 percent from the previous year," Olson said.
Olson says one concern these figures present is how to compare rental rates on a per acre basis, to rates calculated on an AUM or per animal basis.
"This becomes an issue of knowing the stocking rate so that AUM or animal numbers per acre can be used to compute the acreage required to support the animals," he said.
He adds that further complicating this is converting animal numbers to an AUM basis.
How to figure animal unit today
The definition of an animal unit (AU) is a 1,000 pound cow with or without a suckling calf at her side.
However, Olson notes that today this is not necessarily an accurate definition because most cows weigh substantially more than 1000 pound.
"We should not assume that a cow is equivalent to an AU. Bigger cows need more nutrients and therefore additional acreage should be rented for them if they are to receive adequate nutrition to perform well - or run fewer cows on a fixed acreage," Olson said.
He says that a simple, straightforward and accurate way to convert the AU equivalent (AUE) of cattle based on their size is to simply divide the weight of the actual cattle by 1000 pound to calculate the AUE.