Farm Lease Rate Calculator NZ
Farm leases get quoted three different ways and the three are not interchangeable, which makes comparing two offers harder than it should be. Dollars a hectare is the usual advertisement. Dollars a stock unit is what people reach for when the country varies in quality, because it prices what the land will actually run rather than how much of it there is. And a return on land value is how an owner tends to see the same arrangement, as a yield on an asset. This converts between all three from one set of numbers, so a lease quoted one way can be set beside a lease quoted another. The per stock unit figure is the one that usually settles an argument. A hectare is not a unit of production: steep hill country and flat river terrace both measure a hectare and carry entirely different numbers of stock, so a lease that looks dear per hectare can be the cheaper of two on the basis of what it will run, and the reverse happens just as often. No market rates are supplied here. Lease rates vary enormously by district, land class, term, and who is responsible for fertiliser, fencing and rates, and a national average would mislead almost everybody.
The rent alone. Who pays rates, fertiliser, fencing and repairs is negotiated separately and can move the real cost of a lease substantially.
How it works
The area is converted to hectares first, so an acreage or a square metre figure gives the same answer as a hectare one. Per hectare is the annual payment divided by that area, and per stock unit is the annual payment divided by the stock units the country carries. The return on land value is the annual payment as a percentage of the value you enter. Stocking rate is stock units divided by hectares, which is the number that connects the first two figures: multiply the rate by the per stock unit price and you get back to the per hectare price.
What the rent does not include
A lease is a bundle of responsibilities as well as a payment, and the same headline rent means different things depending on who carries rates, fertiliser, fencing, water and repairs. A lease where the owner maintains fertility is a different proposition from one where the lessee does, often by more than the gap between two competing rents. So the figures here compare the rent, not the deal, and the terms underneath deserve at least as much attention as the number.
Worked example
One hundred and twenty hectares at $66,000 a year is $550.00 a hectare. If that country carries 1,100 stock units, the stocking rate is 9.2 stock units a hectare and the lease is $60.00 a stock unit. Against a land value of $2,400,000 the rent represents a 2.75 percent return to the owner. A second block quoted at $480.00 a hectare looks cheaper until you find it carries 7 stock units a hectare, which puts it at $68.57 a stock unit and makes it the dearer of the two for anyone buying grazing rather than area.
Related calculators
- Stock Units: working out what the block actually carries.
- Acres to Hectares: if the area is quoted in acres.
- Lifestyle Block Stocking: the same question on a small block.
- Velvet and Venison Income: what the country can earn.