Grazing lease rental rate review

Grazing lease rental rates and assignment fees in Alberta have been frozen since 1994 following concerns raised by both government and the beef industry about how grazing disposition rental rates and assignment fees were calculated. The fees were frozen until a review could be completed. In April 2009, beef industry stakeholders worked together and submitted a proposal to government to update the grazing lease rates. This report was shelved and never acted upon. Since then, WSGA has requested of government to revisit this proposal.

In late 2013 Alberta Environment and Parks made the decision to undertake a review of the grazing lease rental rate and assignment system with the intent to implement a new framework. A working group consisting of representatives from Western Stock Growers' Association, Alberta Grazing Leaseholders Association, the Alberta Beef Producers and the Northern Alberta Grazing Leaseholders Association met several times to consult with government on the creation of a new framework for rental rates and assignment fees. Two things came of this consultation; 1) a new third party lease cost survey would be initiated to better understand the current costs of running a lease and, 2) a new proposal for rental rates and assignment fees would be drawn up and submitted to government.

The lease cost survey was conducted by MNP in spring 2016. It was designed to determine the actual and in-kind costs of holding grazing leases, specifically to identify the "in-kind" part of the fees paid by the industry for grazing cattle on public lands. The final report was just submitted. Now that the lease cost study is complete, Alberta Environment and Parks will proceed with submitting the new proposal to government and get the ball rolling on these changes. It will not be a quick process given that there has to be legislative changes.

The basic components of the proposed new Royalty Rate are:

  • Elimination of assignment fees across the province. These range from $100/A in the south to $5/A in the north. Government agreed it was nothing but a tax.
  • Royalty based on a grasser model where the leaseholder buys a 650lb in the spring and sells an 950lb in the fall. The profit margin is calculated after deducting the agreed on costs as well as a 7% profit over and above the cost of production.
  • The province would be divided into two zones, the dividing line being Highway 16. There was acknowledgement that there could potentially be some additional costs operating in the north, so a bit lower rent was justified.

To view the full proposal, click on the link below.