Alberta gov’t, grazing committee work on fair leasing rate formula

EDMONTON — Work continues on setting rental rates for Alberta’s public grazing leases.

“We hope we have a framework that producers across the province can support,” Alberta Beef Producers manager Rich Smith said at the organization’s spring meeting in Edmonton June 13.

“The government is looking to producers to lead the drive to produce this framework. They don’t want this framework to be imposed on the industry by government.”

More information will be presented at fall producer meetings, said John Buckley, a member of the grazing associations’ committee working with government to create a fair rate.

“Additional communication with all the affected stakeholders will occur when the rental rates have been calculated for the first year and new formuli are put in place, likely in Jan. 1, 2018,” he said.

Implementing the new rates requires an amendment to the public lands act regulations. The legislative process is under way, and all leaseholders will receive a letter explaining changes in rates and fees, which could be settled by January 2018.

Rents have been frozen since 1994 and have been under review since 2013. The rates were outdated and did not conform with international trade rules. The latest proposal is a flexible market based formula determined by stocking rates and profitability.

The latest idea proposes to divide the province in half with a boundary based on the transition to the boreal region.

The rates would be phased in over five years. Zone 1 would charge a minimum of $2.30 per animal unit month and Zone 2 would be a minimum of $1.30 per AUM.

When beef prices rise to the point where the industry can earn a profit, 10 percent of that projected income from the lease is added to the base as a variable rent.

Surveys of 280 individuals and 28 associations asked about the costs incurred in having a lease. Costs include fence building, range improvement, corrals, fire protection, water development, property taxes, supplemental fees and costs working with other users on the land base.

Government has agreed to resurvey costs periodically to ensure that the formula is reasonable.

“The objective was this should be revenue neutral to government but fair to both government and the leaseholders,” said Buckley.

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