Renting Out Cover Crop Forages: How to Structure the Lease

Rental of Cover Crop Forages

With low commodity cash crop prices, most producers are searching for alternative sources of income. Millions of acres of grass have been converted to farmland over the past 8 years and there are fewer late summer and early fall pastures to be grazed. Utilizing summer planted cover crop mixes (after a summer harvest), producers and cattlemen can establish mutually beneficial arrangements.

When planting a forage cover crop to lease out, be sure to locate a market and make lease arrangements first. Several type of leases should be considered. The first option is an Animal Unit Month basis, in which the landowner assumes more risk of low forage production and the cattle owner assumes more risk of finding alter-native forage. The second option would be a Price Per Acre basis, but grazing dates and stocking rates should be mutually agreed upon. The third option is an On The Gain basis, where both parties agree to a price per pound of gain on market cattle. Taking forage tests for both quality and quantity of the forage may also help the parties agree on a fair and equitable arrangement.

There is no set price on leasing forages, and there are many things to consider when making an arrangement. Be sure to clearly spell out who is in charge of the following responsibilities: fencing, water, daily care, emergency feed, liability insurance, planting and/or termination of cover crops, irrigation, nutrient management, grazing dates, residue management, and stocking rate.