Alberta's grazing lease fees set to change for the first time since 1994

If you’re an Alberta rancher who uses public land to graze your livestock, Bill 16 should be on your radar in the coming months. Today, the Alberta government introduced the bill in an effort to modernize the rent and fees ranchers and cattle owners pay for the use of public lands. The current grazing fee structure hasn’t been changed since 1994.

“We welcome the government’s announcement to modernize Alberta’s grazing lease rental rate framework on public lands,” says Charlie Christie, chair, Alberta Beef Producers. “The new framework will reflect our current business environment and will align with other resource-based industries in Alberta, while also ensuring our province is fairly compensated for leasing public lands.”

If passed, current rental rates would move from a three-zone framework to a two-zone structure, north and south. The boundary of the two would be based on the transition to the boreal region which, according to the government, is an area that has higher capital costs.

The rental rate would be calculated by animal unit months (AUM). AUM is an industry standard measurement and refers to how much feed a thousand-pound cow with a calf at side, would eat in a month.

Industry stakeholders had asked for the fee change to be phased-in over 10 years, however the government plans to phase in the change over five years. The phase-in process ensures no sudden changes in cost to grazing disposition holders, the government says. (story continues below player)

The current minimum grazing rate of $2.30 for the south zone, and $1.30 for the north zone per AUM. would see an increase of 20 per cent in 2020, which would increase the AUM rate to $2.73, and $1.63 respectively. Rates would increase by 20 per cent year-after-year. If it were to be fully implemented in 2020, it would cost $4.46, and $2.94 in the south and north zones per AUM, respectively.

To note, as the rate is based off of the price of cattle, the province will collect a minimum of $2.5 million for general revenue. 

A change up to the assignment fee is also being proposed. Currently, the fee is based on total AUMs the producer has. Assuming a producer has 231 AUMs it could cost more than $23,000 for the current fee. The suggested change would be a province-wide flat fee of $3,150. This is consistent with how other assignment fees are conducted within Alberta.

“Ranchers play an important role in Alberta – they support our economy and are responsible for protecting some of the province’s important grasslands and wetlands,” says Jason Nixon, Minister of Environment and Parks. “It’s important that we work with ranchers to modernize our legislation so that the ranching industry can continue to grow and thrive for generations.”

According to the government, thirty per cent of the revenue from the grazing rental over and above $2.5 million will be moved to a dedicated revenue stream that will be used towards rangeland sustainability initiatives. The other 70 per cent will go into general revenue.

Also to note, when asked if goats would be included in grazing leases, Minister Nixon says they’re having open conversations with people who bring up the issue but as of right now, it’s not the intent of Bill 16 to include goats at this time. 

If the bill passed, it would come into effect January 1, 2020.

Trade with U.S. borders could be effected

The proposed changes could come with kickback from south of the border. According to the Alberta government, back in 1999 the U.S. Department of Commerce countervailing duty investigation identified grazing rental rates as significant contributor to the subsidization of the Canadian cattle industry.

The government says if a countervail investigation was launched today, there is a risk of a subsidy determination and duty being imposed on the Canadian cattle industry.

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