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Adjusting rental rates for flood-damaged forage and pastureland

It’s imperative the landlord and tenant discuss changes to the lease before the start of grazing season.

April 19, 2019

5 Min Read
barbed wired fence with cattle in background
ADJUSTMENTS NEEDED: In many cases, the tenant will provide most — if not all — of the “hard” work required to recover pasture or hay land affected by flooding.

By Allan Vyhnalek

Where there is significant damage from flooding to pastures, hay land or alfalfa, should the rental rate be adjusted for 2019? The answer lies in the characteristics of the situation. This article provides guidance on adjusting rental rates for flood-damaged forage and pastureland.

How bad is the damage?

Flood damage can be categorized into two distinct types. One is the “hard” work and the other is the “heavy” work.

The “hard” work usually includes quite a bit of hand labor and light work with equipment to remove branches, cornstalks, trash debris and other obstacles deposited on the field. In addition, some reseeding may be needed for either compete loss of plants, or for weak or partial stands.

In the case of pastures, other “hard” work may include fixing the livestock infrastructure (fence, water tank, windmill tower, etc.) In some cases, these fixes will be relatively easy. However, in many cases, a completely new infrastructure may need to be installed. If so, depending on what needs to be done, this could be categorized as “heavy” work.

Other “heavy” work may not need to be done at all, but if it does, this would involve heavy equipment such as bulldozers, scrapers or graders to take care of major problems. It might include one or all the following: moving topsoil; removal of sandbars; and fixing holes, gullies and ruts from flooding.

Whether it's “hard” work or “heavy” work, the party primarily responsible for completing it is the landlord. The landlord bears the responsibility for providing the tenant with the land ready to use.

However, desiring a positive long-term landlord-tenant relationship and knowing the work needs to be done in a timely fashion, many tenants probably will provide most — if not all — of the “hard” work.

When that happens, is it appropriate for the landlord to acknowledge that effort? Most would say yes.

Document, document, document!

No matter what the damage is, good documentation is needed — including before and after pictures logging the work done. Keep track of supplies used, hours of labor, equipment used, and log all expenses. Emergency Conservation Program (ECP) funds may be available in your area and having good documentation will be key. Contact the Farm Service Agency for rules and information about that program.

Remedy the situation

If there is a well on the pasture and it was flooded, it needs to be checked to make sure that the water is safe to use. Contact your local Extension office for water-testing kits. Check with the owner's insurance on the well to see if the damage to the well is covered.

If reseeding is needed, who bears that cost? Most people would suggest this is ultimately the landlord's cost. The landlord and tenant also should discuss the possibility of weed pressure on pasture ground where the native grass has been disturbed and is now nonexistent or stands are thin. Discuss who will be responsible for spraying.

Adjusting the rent?

Pastures. Pastures in Nebraska usually are rented by the month, or by the cow-calf pair. The typical pasture rental season is five months. The amount of damage to the flooded pasture likely will determine if the rental rate should be adjusted.

There is a real possibility that this year's grazing will be shortened. If that's the case, the rental rate may be adjusted based on the percent of the grazing season that was utilized. For instance, if the grazing season is four months instead of five months, the rental rate would be adjusted by 20%, or the amount of the grazing season not utilized.

If only part of the pasture is damaged, temporary cross fencing should be considered to keep grazing pressure off the part being renovated. The stocking rate also should be adjusted, and the rent would be adjusted to reflect the acres utilized.

Hay and alfalfa rent. As it turns out, most hay rent in Nebraska is done on a share basis. The adjustment for hay rent in this situation will be straightforward. The landlord's rent will be reflected directly by the amount of hay or alfalfa that is produced.

If the hay or alfalfa ground is rented on a per-acre (cash rent) method, one recommended procedure is to reduce the payment based on the reduction in actual production. In other words, if there is 20% less hay this year, the rent would be reduced by 20%.

Communicate early, often

It's imperative that the landlord and tenant talk about any remedies to the lease before the start of the grazing season. This discussion also needs to cover what should happen if pasture acres run out before the normal length of the lease is up.

Both landlord and tenant should be willing to start the communications — and the sooner the better. Good communication between landlord and tenant is probably the only sure way that both parties will be satisfied with the results of the lease.

If you are modifying your rental agreement for 2019, get it in writing. Stress may be high, but you will want to make sure both parties are fully aware of what they are agreeing to. This may be the year that both parties need to share the pain of the March flooding.

For information on adjusting leases for pasture and hay ground, contact the team of Nebraska Extension educators in agricultural economics:

Vyhnalek is a Nebraska Extension farm and ranch succession educator.

This report comes from UNL CropWatch, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.

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