The current fee calculation for agricultural leases was implemented in 1988. The fee formula takes into account a wide variety of factors which include the previous year’s rates by western livestock ranchers, beef cattle prices, and the cost of livestock production.
When cattle prices decline and the cost associated with livestock production increases, the grazing fee will decrease in response to these market conditions. Also, when forage is in demand by ranchers, it will tend to increase the grazing fee index and result in a higher grazing fee. These price rates are used to determine the fee formula.
Adjustment factors adjust state trust land grazing fees up or down depending on value of forage and economic conditions in the western livestock industry. The adjustment factor adjusts fees relative to a 1978-1987 base period, and there is a one-year lag between when the data are collected by USDA and when they are reported. Indices used are for 11 western states.
According to 18.104.22.168 NMAC, the annual rental for grazing land is determined by this formula:
$0.0474 (Base Value) x Carrying Capacity (CC) x Acreage x Economic Variable Index (EVI)
The EVI is the ratio of the value of the State Land Office Adjustment Factor (SLOAF) for the current year to the SLOAF for the base year 1987, or 135 (i.e.; SLOAF ÷ 135)
The SLOAF is determined based on the following three indices described in the Public Rangelands Improvement Act (PRIA), and published annually by the National Agricultural Statistics Service (NASS) of the United States Department of Agriculture (USDA).
Forage Value Index (FVI): A derived index of the relative change in the previous year’s average monthly rate per head for pasturing cattle on privately owned land in the West.
Beef Cattle Price Index (BCPI): An index of the weighted average annual price for beef cattle, excluding calves, for a given western state area as compared with a specific base period equal to 100.
Prices Paid Index (PPI): An index that measures changes in the prices paid for goods and services used in crop and livestock production and family living.
Since the formula was implemented in 1988, it has seen many increases and decreases depending on livestock prices, costs and private lease rates.
CLICK HERE to see a comparison between agricultural leasing on State Trust Lands and Bureau of Land Management.
If you would like more information, please contact the State Land Office, Field Operations Division at (505) 827-5876 or (505) 827-5851
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