Overview of Grazing Leases
A grazing lease is an agreement in which a landowner allows a tenant to graze livestock on the landowner’s property. For parties involved in these types of agreements, it is important to specify terms of the lease, which address the landowner and the grazer’s rights and responsibilities.
Any type of contract should have basic terms in the contract, including identification of the parties, the length of the agreement, payment terms and payment methods. In addition to these basic terms, grazing leases should include the following lease terms:
Description of the land: The agreement should state the boundaries of the land so that the tenant can know exactly where he can graze his animals.
Animals grazing the land: Each type of livestock will require a specific amount of land to graze on, therefore the landowner may want to limit the lease to a specific type of animal or limit the total number of animals based on the nature of the land. The lease should also state who will be responsible for care of livestock, including responsibility for vaccinations and veterinary care.
Services provided by landowner: The agreement should state what, if any, services the landowner will provide for the length of the agreement, including whether or not he will be making any improvements or building structures to keep livestock on specific part of land, whether the landowner will be providing fertilization, seeding, and weed control for the land, and whether the landowner will be supplying water for the livestock.
Water Supply: In addition to who will be responsible for supplying water for the livestock, the lease should indicate who will be responsible for the quality of the water, repairs for damage to water pump, and what happens if the water supply goes dry.
Lease Rate: Aside from listing how much the rent will be for the grazing lease and for what term, the landowner should determine how he will establish the lease rate and how it will be expressed. Lease rate can be determined based on local market rates, determining the expected returns, or by comparing how much an alternative feed would cost. Lease rates can be expressed via acre, whole tract, per animal unit mouth (“AUM”), per head or per pair, based on the amount of weight the animal gains during the grazing period, or a variable rate that allows the lease to vary annually based on livestock prices.
Other basic terms for parties to consider when entering into a grazing lease include: (1) maintenance of liability insurance, (2) security deposit by lease, (3) termination terms, (4) confidentiality clause, (5) dispute resolution, and (6) liability and indemnification.
Want more information on contracts for the food and agriculture industry? Check out my first book that I co-authored with Pat Dillon, an Iowa agriculture lawyer titled “Field Manual: Legal Guide for New York Farmers and Food Entrepreneurs” available on CreateSpace, Amazon, Kindle and iBooks. You can find out more about this book here. Furthermore, you can check out this extensive outline on common agriculture contracts on my JD Supra page prepared for this Lawline.com presentation.
Disclaimer:"This blog is for informational purposes only and is not intended to create an attorney-client relationship. It is recommended that you speak to an attorney licensed in your jurisdiction before relying on the information in this blog."