Calculating Minimum Grazing Lease Rates for Hawai'i

Abstract

The establishment of a minimum grazing lease rate in Hawai‘i is important for several reasons. First, it provides a means to adjust lease rate values according to fluctuations in livestock markets, or the rancher’s ability to pay, and agricultural land use values. Second, it provides a statewide standard that can easily be applied by state, federal, and private land management entities, and this will help to eliminate the large discrepancies that currently exist in statewide lease rates. Third, a minimum grazing lease rate provides a means for ranchers and land management entities to objectively determine the value of the land unit for grazing and the value of grazing for that land unit. Ranchers have a greater incentive to pay a higher lease rate if more services are provided or if the quality of the grazing unit is higher. On the other hand, land management entities must make decisions about the overall management of the land unit. They are more likely to choose grazing as a land management practice if the price or the services they receive provides a greater benefit than other alternative means of management. Calculation examples and a worksheet are provided.