Leasing pasture from neighbor?

[Swamp_Yankee]

I had posted this over at Backyard Chickens before I knew this place existed but glad I found it! We just purchased our 2 acres last October and are getting ready to start our flock, but we're thinking ahead to the possibility of a few small breed cows or maybe a couple of horses. Our neighbor to the north operates a 120 acre hay farm. One of his fields is immediately adjacent to us-its about 10 acres including some woods. We are thinking of approaching him with the idea of leasing the land from him for use as pasture, but we have no idea where to start as far as establishing what a fair price would be. Of the 9.8 acres, about 5 could be fenced as pasture. We are located in Hunterdon County, NJ. NASS data is a little spotty here, but this is what I came up with:

• Taxes on the land work out to $20/acre.
• Non-irrigated cropland rents for $60/acre in neighboring Warren County (no data for Hunterdon)
• For the wooded portion, I used the average cost of a hunting lease in New Jersey-$20/acre

If we were to lease from our neighbor, it would take these 5 acres out of production for him, and we would also be looking for a long term (10 years at least) lease since we would be investing a considerable amount to fence it. We'd want to make the lease as attractive as possible in order to secure the use of the land. So:

($20/acre taxes x 9.8 acres = $196) + ($60/acre pasture portion x 5 = $300) + ($20/acre x 4.8 = $96)
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$592 per year-does that seem reasonable? Below is a satellite photo which shows our property in blue and the proposed lease in yellow:

I would be curious to hear from folks who either rent pasture to or from others.

 

[farmerjan]

There are a whole lot of variables. The biggest one for him is how much hay does the ground produce and what is it's value. We have about 10 acres of which it is nearly all orchard grass. At $5.00 per square bale, we make over $1,000 off that on second cutting alone in hay sales. And that is figuring real low at only 200 square bales second cutting because it might be a dry year. Usually we make close to 300 square bales there, second cutting.

First cutting we mostly roll and feed ourselves. So you are talking about $100 hay per acre here with no problem. If this farmer is making much hay to sell, it is unlikely you will get it for under $1,000 a year and then when you add in fencing costs you are putting more into it than you can ever justify. And no lease written is ever iron-clad that can't be broken.

I would never fence a rented place except in exchange for part of the rent and for a long term lease. And if the property ever gets sold, the new owner may have to honor the lease for that year but not any longer. We often do some fencing in exchange for rent money, but that is usually putting up new fence where the old is so far past it's prime as to be falling down. We rent one place that is about 15 acres; fences are not the greatest, we do some repair every year. We pay $700 year and the grass gets very thin if we get dry. Can only run about 8 to 10 - 500 lb feeders on it or start out with about 8 cow/calf pairs and then take a few out by end of july unless we have had ALOT of rain.

I fully understanding you wanting some grazing. But you need to figure in the cost of the fencing. At about $3.50 PER FOOT for fencing costs, minimum....how many feet would you be fencing and what would the cost be. I honestly don't think you can get this for a price that you can justify.

 

[farmerjan]

Not trying to be discouraging. Worst you can do is approach him and ask and he tells you no. I am sure costs will vary, but if it is in productive hay land, then you are looking at a significant loss of revenue to him and the price would have to justify it. NOT counting the fencing costs.

 

[Swamp_Yankee]

Thanks for weighing in-the truth is we'd much rather make an offer to buy the 10 acres, but the farmland is preserved, and its basically impossible to get the state to agree to a subdivision after that, even with the resulting parcel staying in farmland preservation. Since we can't buy it no matter what the price, a long term lease is our next best option.

 

[Latestarter]

Greetings and welcome to BYH! So glad you joined us. Jan answered really well, and fencing IS very expensive so possibly the land owner would consider a first year "break" on the monthly rent for you doing the fencing. Hope you can find a workable solution to fit your needs as well as the owner's. There's a wealth of info, knowledge and experience shared in the multitude of threads. Browse around and see what interesting stuff you can find. By all means post away when the desire strikes you, especially if you have questions (provide as much detail/info as possible and pictures truly help)... With all the great folks here, generally someone will respond in no time at all. Please make yourself at home!

Please consider taking a minute to visit the new member's thread and introduce yourself so folks can welcome you properly. https://www.backyardherds.com/forums/new-member-introductions.17/ Also, PLEASE put at least your general location in your profile. It could be very important if/when you ask for or offer help or advice. You know, climate issues and such. I recommend at least your state as most folks won't be able to figure out where if you put anything more specific (county, town, street, etc) by itself. Old folks like me will never remember & look there first. To add it, mouse hover over Account top right and a drop down will appear. Click on Personal Details and scan down. You'll see the spot for Location. Then go to the bottom and save changes. Thanks! Hope you enjoy the site!

 

[greybeard]

A 10 yr lease on a parcel that small would be unheard of here.
But small parcel (under 20 ac) lease pasture goes for anywhere from $10/ac to $35/ac and that's un-improved common bermuda or native bahia grass.
You can't really compare hunting price to pasture price..two completely different applications.
As Jan said, he's probably going to lose $$ on a lease that only pays $592/yr on account of the hay & There is no way to make $1000/yr pencil out on 10 ac of pasture for cows. Not even close, especially with this years depressed cattle prices.
(horses are a dead expense anyway, so all you could get out of them is whatever enjoyment you got)

But, make your offer...all he can do is say no.

 

[Baymule]

You have already got good advice. I have nothing to add except to say welcome to BYH.

 

[Swamp_Yankee]

A 10 yr lease on a parcel that small would be unheard of here. But small parcel (under 20 ac) lease pasture goes for anywhere from $10/ac to $35/ac and that's un-improved common bermuda or native bahia grass. You can't really compare hunting price to pasture price..two completely different applications. As Jan said, he's probably going to lose $$ on a lease that only pays $592/yr on account of the hay & There is no way to make $1000/yr pencil out on 10 ac of pasture for cows. Not even close, especially with this years depressed cattle prices. (horses are a dead expense anyway, so all you could get out of them is whatever enjoyment you got) But, make your offer...all he can do is say no.

I should add that we're not looking to make money here. This is strictly "hobby farming." My wife and I grew up in rural areas, doing 4H, showing at fairs, etc...but just small stuff like chickens and rabbits. We now have two girls of our own and are starting them with chickens this spring, but we had originally planned on buying more property in order to graduate them to larger animals like goats, sheep, and maybe cows or horses. The property we ended up with is only 1.85 acres. Again, we'd love to buy some of the adjacent acreage but its just not possible to due to the way the farmland preservation regulations work. The number I arrived at was just me trying to quantify the value of it in some way, but we would be willing to pay more. For instance, if he were to ask $1,200 a year let's say, that's $100 per month-we pay more than that for cable, phone, and internet access. The experience it would give our girls in animal husbandry would be priceless and lessons learned would last a lifetime. As for the cost of the fence, what about coming up with a depreciation schedule with some sort of buyout at the end of the lease?

 

[greybeard]

The experience it would give our girls in animal husbandry would be priceless and lessons learned would last a lifetime.

But at whose cost....that landowner's?

As for the cost of the fence, what about coming up with a depreciation schedule with some sort of buyout at the end of the lease?

Are you talking about him paying for the depreciated value of the fence at end of lease? That, is assuming he has a need or even a desire to have a fence to begin with. Generally, fences with hay fields are not always very compatible. Fences can limit options and accessibility, as well as maneuvering of cutting and baling equipment.

You may not be interested in making $ off this parcel, but I'm pretty sure the landowner is, and that's what has to pencil out.. Your offer is going to have to be at least attractive enough to make him a little (or a lot) more than what he's getting now. That parcel didn't turn into a hay field all by itself...he's probably got a lot of long term expense tied up in it if it's a good quality forage and may even have short term bank notes to cover his seasonal expenses of soil conditioning..pH and fertilize, herbicides etc and I can tell you, fertilize..especially nitrogen is not cheap.

It's also very possible, that this landowner is getting some kind of state or even USDA monetary benefit* from having this 10 acres under hay, and in all likelihood, the parcel would have to have a survey run on it to properly mark the boundary. Someone will have to pay for that and, at the end of the lease, the 10 acres would most likely have to be reconditioned to go back into good hay production. In 5 years, cattle will have trails cut into the soil..they always take the same trek back to water and feed and even when the grass is high, it doesn't grow in those trails because the soil is compacted and it's rough as hades when driving over them with any vehicle........and, they hold water, which of course, turns into mud.
Who will eat the cost of that?

*For instance, that wooded portion may be under something like CRP, and the landowner is getting $$ for it from USDA.

Remember..if he had an overwhelming desire to be running livestock on the parcel, they already would be.
You can do your homework and have a plan but in the end, you need to have a casual sit down conversation with this landowner, state your desires and ask "What would it take to make this work for both of us?"

 

[Swamp_Yankee]

You can do your homework and have a plan but in the end, you need to have a casual sit down conversation with this landowner, state your desires and ask "What would it take to make this work for both of us?"

Absolutely-I appreciate the insight!