The new formula is based on cattle market prices and input costs and will see lease rates on public land increase Jan. 1
Grazing lease rents on Alberta public lands are going up Jan. 1.
After 25 years of wrangling over rental rates, the new formula is based on cattle market prices and input costs, among other factors.
The province has been divided into two zones with a boundary based on the transition to the boreal region, said Mike Alexander of Alberta Environment and Parks.
The rates are based upon the profitability of operating a grazing disposition while taking into account factors like input costs.
Profitability is calculated using the previous year’s market prices available from Canfax and operating costs as determined by surveys (adjusted for inflation) modelled after a yearling grasser operation.
“We do recognize there are huge differences in how operations work but the reality is this model is based on real market data and costs reported,” he said at the Alberta Beef Producers annual meeting held Dec. 2-4 in Calgary.
There is a minimum rate and charges will be phased in to give people time to adjust. Minimum rates will be charged when profits are low.
In 2020, the southern zone rate will be $2.30 per animal unit month (AUM). In northern Alberta the rate is $1.30 per AUM.
Assignment fees have moved from a per AUM charge to a province-wide, flat-rate fee of $3,150. This is consistent with all other public land assignment fees charged by Alberta Environment and Parks.
In addition, a new program to support grazing education and improvements to rangeland has been established. When 30 percent of rental revenue is greater than $2.9 million, money will be moved to the new program. Next year there will only be about $30,000 in the fund but that should grow, especially during high profit years, said Alexander.
In addition, leaseholders will meet with an agrologist who collects data to confirm carrying capacity, ensure good management and make the disposition recommendation. A face-to-face meeting with the disposition holder will be scheduled to discuss management strategies on the lease.
Recently, a backlog on paperwork has occurred where 1,700 leases are waiting to be renewed. The plan is to have the backlog cleared by grazing season.
The government is launching a pilot program in January to find a new approach for renewals to eliminate the backlog.
“The ultimate goal is to get to something that is automated and electronic,” Alexander said.