Grazing Fees on Public Rangelands

Rangelands October 05, 2012|Print

Written by John Tanaka, University of Wyoming;

Adapted from: Torell, L.A., L.W. Van Tassell, N.R. Rimbey, E.T. Bartlett, T. Bagwell, P. Burgener, and J. Coen. 1993. The value of public land forage and the implications for grazing fee policy. New Mexico State University Agricultural Experiment Station Bulletin 767. 63 p.

Grazing fees on public lands have a long history. The first fees were charged by the U.S. Forest Service (USFS) soon after the National Forest System was established. The Bureau of Land Management (BLM) began charging fees soon after passage of the Taylor Grazing Act. For many years, each agency charged its own fees. With passage of the Federal Policy and Land Management Act of 1976, both agencies were charged with using a common fee. The Public Rangeland Improvement Act (PRIA) of 1978 resulted in a formula-based fee:

Fee = $1.23 ((FVI + BCPI - PPI)/100)

Where the fee is the federal grazing fee in any given year, $1.23 is the base forage value based on a 1966 study; FVI is the private grazing land lease rate; BCPI is the beef cattle price index, and PPI is the prices paid index. FVI, BCPI, and PPI are collected by the federal government and reported by the National Agricultural Statistics Service. The grazing fee has a minimum amount of $1.35/AUM set by executive order.

Controversy over the grazing fee has resulted in several studies over the years. The basic issue is whether the federal government is receiving fair market value for the forage it is selling to private ranchers. The most recent study was conducted by the Grazing Fee Task Group (GFTG) for the Bureau of Land Management in 1992-93. This task group conducted research on a variety of ways to value public land forage.

The GFTG found that the variability in costs and lease rates within a specific area to be as great as between areas. Their conclusion was that because the forage market is not a refined, price-discriminating market, there is no economic basis to regionalize grazing fees. They also found that the PRIA formula does not track forage values through time very well. Adding the BCPI and PPI to the PRIA formula has caused it to lag behind forage value. They concluded that using the FVI in the PRIA formula would be adequate.

The dilemma facing any study of the public lands grazing fee is that, while the federal government is not getting the full market value of the forage, the private rancher is paying the full cost. The rancher is doing this by paying the current fee, non-fee grazing costs, and investments in grazing permits. This has led to a policy dilemma in terms of the allocation of permit values. As grazing fees increase, in theory, permit values should go down, and wealth is transferred from the private rancher to the federal government. This initial wealth was given to private ranchers when permits were first allocated. Reallocating that wealth through policy changes has raised issues of fairness.

The GFTG made five recommendations concerning the grazing fee following its study. None of the recommendations have been adopted. Their recommendations are quoted below.

  1. The grazing fee should be administratively or legislatively determined within the range of $3-$5/AUM. This recommended range assumes past legal precedent will continue and no allowance or recognition will be given for the investment ranchers have in grazing permits. The current grazing fee, or even a lower fee, would be justified in all cases if even a minimal allowance were made for ranchers' grazing permit investments. Entitlement to grazing permit value remains a key issue of the grazing fee controversy.
  2. Any base grazing value should be applied throughout the West.
  3. Any base grazing value should be updated annually with the forage value index (FVI) calculated from the previous year.
  4. The BLM and USFS should investigate the potential of implementing a competitive bid system that would create a market for public land grazing.
  5. Additional studies to define the market value of public land grazing using market price comparisons are not justified.


Material developed from: Torell, L.A., L.W. Van Tassell, N.R. Rimbey, E.T. Bartlett, T. Bagwell, P. Burgener, and J. Coen. 1993. The value of public land forage and the implications for grazing fee policy. New Mexico State University Agricultural Experiment Station Bulletin 767. 63 p.