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Progress being made on updates to grazing lease rental rates

Posted on June 13, 2017 by 40 Mile Commentator

By Jamie Rieger
Grazing lease rental rates and assignment fees in Alberta have been frozen for more than 20 years when the government put the freeze on after concerns were raised by government and industry on how these rates would be calculated. The review was to remain in place until a review could be complete.
Assignment fees, calculated using the ‘formula approach’ were also frozen. (In 2003, assignment fees were considered a tax and incorporated into the Public Lands Act.)
That was in 1994 and only now does there seem to be some movement towards a resolution.
The Alberta government and the Alberta Grazing Leaseholders Association (AGLA), along with partnering entities, have been working since 2013 to modernize the out-of-date rates structure.
In March of this year, the provincial government released its grazing disposition royalty proposal, which James Hargrave, chair of the AGLA presented at the recent Sustainable Canada AGM.
The proposed grazing lease rental rate model was developed by Alberta Environment and Parks, in consultation with the Alberta Leaseholder’s Association, Alberta Beef Producers, Western Stock Growers Association, and Northern Alberta Grazing Association.
In providing background information, Hargrave told the audience that it was in 1960 that a three-zone system (South, Central, and Northern Alberta) was formed with rates based primarily on distance to market.
“The government has been pushing to get something in place with modernizing the framework,” said Hargrave. “There are geographical differences and we need to eliminate the financial barriers.”
The model allows for the calculating of lease rents and included such things as market price, transportation, operating costs, and labour costs.
Market Alberta feeder cattle prices, as well as operating and investment costs associated with the grazing lease would be also be factored in.
The proposed framework evolves around a two-zone structure, rather than the current three zones.
“It has to have an avenue for quality control and the formula needs to be reasonable and based on current costs,” said Hargrave. “The old formula lacked transparency. It needs to be based on profitability and market conditions.”
In September, 2016, environment minister Shannon Phillips, agriculture minister, Oneil Carlier, and  Medicine Hat MLA Bob Wanner joined Hargrave and leaseholders Aaron Brower and Bill Newton for a tour of the Hargave ranch in SE Alberta to gain a better understanding the delicate balance between ranching, industrial activity and recreation and the vital role the leaseholder plays in managing the grazing leases.
“This needs to be stamped as a grassroots movement, and not as an NDP cash grab,” said Hargrave.
Hargrave concluded by saying they are hopeful the proposed document will get passed through Legislature during the fall session.

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