How Landowners Can Negotiate Equity With Cattle Ranchers

Landowners can negotiate equity in a cattle ranch instead of accepting only a simple lease. Start by estimating the annual rental value of the land based on what a profitable tree crop in the area could earn. Multiply that annual value by 40 and use the result as a guide for the equity stake to request in the ranch. For well-watered land, the valuation may be increased by up to 200 percent. Where suitable economic trees are unavailable, estimate what a farmer could earn from the land in one year, divide it by three, and use that figure as a benchmark. A properly registered ranch with broad ownership may have a better chance of succeeding. Setting up a ranch for about 1,000 cattle could cost as much as ₦500 million, excluding the cost of land.

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