Economic Overview

fedlandownaRanching has been a staple in western life dating back to the days of pioneer settlement and even before.  That is convenient considering that around 45 million of Nevada’s roughly 71 million acres are public rangelands (Bureau of Land Management).  The Taylor Grazing Act of 1934 intended to regulate the use of these lands citing overgrazing and soil deterioration as potential threats to overall quality of public property and future.  Sections 3 and 15 authorize the Department of the Interior to issue permits and lease federal lands.  Their is a requirement concerning a base of operations for the rancher.  Said base may or may not be adjacent to the public land depending on the intended channel of use with preference given to adjacent landholders.  The base must also be sufficient in producing forage that can support livestock.

Fees charged for permit or leases are based off of Animal Unit Months (AUMs).  An AUM is a standardized unit of measurement of the amount of forage necessary for the complete sustenance of one animal unit (one cow and her calf, one horse, or five sheep or goats) for a period of 1 month.  The Public Rangelands Improvement Act (PRIA) established a formula to calculate the fee charged for public land use.

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The formula is determined as follows the calculated fee (CF) is determined by the 1966 base difference between ranching costs on private lands and public lands discounting grazing fees multiplied by the sum of the Forage Value Index (FVI) and the Beef Cattle Price Index (BCPI) minus the Prices Paid Index (PPI) of the previous year over 100.  The FVI is based on grazing rates charged per head month on privately owned, non-irrigated land in eleven western states.  The BCPI is based on weighted average annual selling price for beef cattle in 11 western states.  The PPI is based on several categories of livestock production costs (Center for Biological Diversity).  The formula initially included only the FVI but was modified in 1978 to accommodate potential short-term market fluctuations (Torell et al.).  Torell et al. critique the implementation of the PRIA fee formula stating that it has failed to keep up with increasing private rates.  In 1986, President Reagan issued Executive Order 12548 extending indefinitely the continuation of the PRIA formula fee with a minimum fee of $1.35.  To clarify, if the calculated fee falls below $1.35, then the legal minimum fee shall be charged.  Since the establishment of the minimum cost, the price to forage on public land was $1.35 16 times (Center for Biological Diversity).

There is acknowledgement that some public lands are of inferior quality in terms of production capabilities.  These lands are also lacking in necessary amenities such as water, fencing, and other inputs that would invariably increase operation costs.  There is also the added burden of having to share this land potentially creating undue strains on the ranchers (Grazing Fees).

Sources:

Bureau of Land Management

Costs and Consequences The Real Price of Livestock Grazing on America’s Public Lands by The Center for Biological Diversity

An Evaluation of The PRIA Grazing Fee Formula by L. Allen Torell, Neil R. Rimbey, E. Tom Bartlett, Larry W. Van Tassell, and John A. Tanaka

Grazing Fees: Overview and Issues CRS Report for Congress

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