FEATURE Measuring Pastureland Value: Insights for Cow-Calf Producers Tim Hammond
real estate broker and business owner, I have had the privilege of learning from seasoned experts in the industry. These individuals possess a profound understanding of the livestock industry’s intricacies, which allows them to make informed decisions with ease.
Tim Hammond, PAg Founder, Chief Executive Officer and Broker Hammond Realty Tim is Hammond Realty's founder, chief executive officer and broker. He focuses his energy and efforts on operations, supporting Hammond Realty's ag experts and business development. Tim grew up on a third-generation grain farm southwest of Biggar, Saskatchewan, where his family continues to farm today. Tim has a Bachelor of Science in Agriculture from University of Saskatchewan with a major in economics and a minor in soils, and 11 years of experience working with Farm Credit Canada. Tim is a long-time member of the Saskatchewan Institute of Agrologists and holds his Professional Agrologist designation. Agriculture is in his blood. In the world of livestock farming, the ability to understand and analyze industry metrics is a valuable skill. As a farmland
Inspired by their knowledge, I have embarked on a journey to quantify the value of pastureland based on its productivity. While many discussions revolve around pastureland sales in terms of dollars per acre or multiples of assessment, these metrics fail to capture the true essence of productive capacity or value. Three Key Metrics for Cow-Calf Producers 1. Pasture Carrying Capacity One of the most common questions from prospective buyers inquiring about pasture listings is: “How many cow-calf pairs can it support?” This query makes perfect sense, as it provides insight into potential revenue generation from the pastureland and its scope for improvement. In Saskatchewan, the grazing period is typically 150 to 180 days, but in other areas of the country, it can be longer. Carrying capacity is not a fixed number, but varies depending on several factors. Soil quality, vegetation type, climate and management practices all play a role in determining how many cow-calf pairs a pasture can support. Soil fertility and moisture levels directly affect forage growth, while rotational grazing and weed control can significantly enhance carrying capacity. Understanding these variables and optimizing them can lead to sustainable increases in productivity.
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It is a good business practice to keep detailed and accurate grazing records. A potential buyer will trust what you state is the carrying capacity, but will want to verify it. If your pasture can carry above what the area average is, providing proof will help justify to the buyer that a premium is warranted. 2. The $10,000 per Cow-Calf Pair Benchmark Similar to evaluating grain farmland, pastureland can be assessed based on its productive capacity. A crucial metric in this evaluation is the dollar amount per cow-calf pair that livestock producers are willing to invest in pastureland, considering its sustainable grazing capacity. Currently, the Saskatchewan pastureland market hovers between $9,000 and $11,000 per pair, with a general guideline of $10,000 per pair for well-sized, economically-viable pastures. For example, if a section of native pasture will support grazing 50 cow-calf pairs annually in a sustainable manner, the value of that section of pasture will be in the range of $500,000 (i.e., 50 cow-calf pairs multiplied by $10,000 per cow-calf pair = $500,000 or $125,000 per quarter). Over the past seven to eight years, we have observed this benchmark increase from $5,000 to $10,000. Essentially, pastureland has doubled in value over that time frame. Unlike grain farmland where profits have surged, demand has skyrocketed, and the amount of available land for sale has plunged, the demand and supply of pastureland in Saskatchewan has been much more balanced. The rapid rise in grain farmland prices has likely boosted the desirability of continued on page 26
NOVEMBER 2023