The value of pasture land is largely determined by its productivity. It's important to know the value of pasture land to decide whether to use it for grazing or to rent it out.
Determining Pasture Rental Value by the Acre Method
Historically, much pasture land has been rented according to the acre method, where a set value is placed on the land for the grazing season and rent is charged by the amount of land leased. To estimate the rental value, multiply the land's sale value per acre by six to seven per cent.
Determining Pasture Rental Value by the AUM Method
Using the Animal Unit Month (AUM) method of valuing pasture land, the owner determines how many animals can productively graze on the land per month and sets the rental rate accordingly. To calculate pasture rental value by the AUM method, multiply the animal units by the AUM price, using a chart to determine an individual animal's AUM value.
Other Factors Affecting the Value of Pasture Land
Pasture value may also be affected by the scarcity of or demand for pasture in the area, as well as by an alternative use to which that particular land could be put. For instance, if the pasture could be planted with row crops or hay, the value of the land would be affected by the value land typically used for these crops. The availability of water and the quality of the pasture also affect the value.