Revisiting Custom Grazing

Considering the cost of stockers, custom grazing may be an alternative to consider.

 

With stocker cattle bringing record prices and interest relatively high, there is less profit to be made by the cattle backgrounder in 2025. As already margin operators, backgrounding cattle in this day requires some form of risk management. The outlay of cash at the start of the grazing season is significantly greater than it was even in 2024, as 500-pound steers have been trading in the upper three-dollar range.

If backgrounding calves this summer doesn’t make economic sense, pasture owners may look for custom grazing opportunities as a way to manage forage and generate some income. As the grass is now growing, I have had a couple of questions regarding custom grazing operations and everyone wants to know: What is a fair rate?

There are several variables that will determine a custom grazing fee. Supply and demand may be the greatest of those variables. How many acres are available and how many producers are looking for additional acres or supplemental feed is another.

There are several ways we can determine pasture value and then add a management charge to the cattle when custom grazing.

Forage Quality and Hay Cost
To determine pasture rent we can look at hay value and pasture quality. Take the number of animal units times the average hay price out of the field per ton times pasture quality factor = rate per head per month. An animal unit is a standardized unit that represents the forage demand of a 1,000 pound beef cow with a calf.

A) Number of animals units B) Hay price per ton. C) Pasture Quality Factor.

A x B x C = Pasture charge per head per month

As an example, consider taking a 500 lbs. stocker calf to 700 lbs. grazing fair to good pasture when the hay price is $200 per ton. 0.60 animal units x $200/T x 0.15 quality factor= $18 per head per month fee before management charge.

Gain Based
Another method for establishing pasture rents is based on gain. In this system the tenant and landlord must establish base values for per head/per month, number of grazing months, expected gain, and cost of gain.

For example, lets figure grazing a calf from 500 to 700 lbs. from early April through October, where A) Pasture charge per head per month. B) Grazing Season—number of months. C) Reasonable expected gain during grazing period (pounds).

A x B = Seasonal Cost. Ex. $18 x 6 months =$108 per head

The cost of gain calculation is based upon an expected gain during the grazing season.

(A x B) / C = Cost of Gain. Ex. $108 / 200 lbs.=$ 0.54 per pound of gain

This figure is based on grazing alone. If grain or mineral is provided those costs and additional pounds gained will have to be figured in as well.

Management Costs
Thus far we have looked at a couple of ways to value forage in a custom grazing operation. What about the labor and management of rotational grazing, feeding supplemental grain, or doctoring sick animals?

The simplest way to come up with a management cost is to value your time appropriately. Current OSU enterprise budgets value labor at $19.50 per hour. As a first-time custom grazer, I would keep track of time and bill accordingly. If more experienced, a customer grazer may be able to factor management costs into a per head per day rate.

Summary
At the end of the day a custom grazer and the cattle owner will have to agree on a contract that meets the needs of both parties. Forage quality and the skill set of the custom grazer must be considered to determine goals and stocking rate. Both parties will also need to determine who is responsible for unexpected costs related to drought, purchasing supplemental feed, or death loss. With high cattle prices in 2025, marketing pasture and forage may be a way for some operators to generate additional revenue without having to own cattle.

Sources: Fisher, J. and Mangione, D. Establishing a Fair Pasture Rental Rate. 2006. The Ohio State University