Formulas helpful when determining pasture value
A new grazing season is at our doorstep. Now is the time to be considering your pasture and rangeland values, whether you are grazing them yourself or leasing it out.
We can predict the amount of grass a cow will eat in a day (cattle graze 3 percent of their body weight each day) and from this starting point, determine the total pounds grazed and charge a rate for it. A reliable method of measuring the pounds of grass consumed is using animal unit months. The basis for an AUM starts with a single 1,000-pound cow. A single AUM is the amount of grass this 1,000-pound cow eats in one month. We know that cattle will eat 3 percent of their body weight, or in this case, 30 pounds per day. The AUM rate is then based on the value of this pile of grass the cow ate in one month, or 900 pounds (30 pounds of grass in 30 days). When grazing more than just a cow, you modify the AUM by the type of animal that you are grazing: a pair, a bull, a horse, sheep or even deer. This modifier is called an animal unit. For example, the AU conversion for a cow/calf pair is 1.3, so, a cow/calf pair will eat 1.3 AUMs in one month. This equates to 1.3 x 30 pounds of grass each day x 30 days = 1,170 pounds of grass.
Calculating the total AUMs grazed is a matter of multiplying the number of head, the AU conversion and the months grazed together. Here are some AU equivalents to help you calculate lease rates: 1,000-pound cow = 1.0 AU; cow with calf that is less than 4 months old = 1.0 AU; calf that is 4 months old until weaning = 0.3 AU; 750-pound yearling = 0.75 AU; 2,000-pound bull = 2.0 AU.
This is straightforward, but requires agreement on the AU conversion. The leading disadvantage is that cattle are generally larger today than they were in the 1960s when AUMs were developed. Knowing that as a percentage of body weight larger cattle eat more grass, an adjustment should be made for cow body weight on today’s scale. Calculating an example using the National Agricultural Statistics service report for grazing fees paid in Montana, the average rate in 2012 was $20.50 per AUM. For example, 25 1,400-pound cows with calves older than 4 months, 15 750-pound yearlings and one 2,000-pound bull for a 3-month grazing period can be calculated this way: 25 cows x 1.4 = 35 AUs of cows; 25 calves x 0.3 = 7.5 AUs of calves; 15 yearlings x 0.75 = 11.25 AUs of yearlings;
1 bull x 2.0 = 2 AUs of bull.
Added together, that equals 55.75 AUMs; 55.75 AUMs x 3 months grazing = 167.25 AUMs. If the lease rate uses the average $20.50 per AUM, the grazing fee totals $3,428.63 (20.50 x 167.25 = $3,428.63).
The MSU Lake County Extension Office encourages both parties, lessee and lessor, to have an agreement based on a clear understanding of what an animal unit represents and have an agreed upon price per Animal Unit Month incorporated in the grazing lease document.