2026 Grazing Lease Rates Explained

What’s Changing and Why

Over the past three years, grazing lease rental rates have climbed sharply. While record calf prices certainly played a role, much of the increase was driven by problems baked into the rental rate formula itself.

The formula was doing exactly what it was designed to do — but in today’s market, it was reacting too quickly and pushing rates to levels that many leaseholders felt didn’t reflect reality on the ground.

Recognizing this, the minister stepped in for the past two years and used ministerial orders to dial rates back, providing some much-needed relief. In the spring, the minister committed to a full review of how grazing lease rents are calculated.

To support that process, AGLA commissioned an independent review of the formula in spring,
conducted by the Department Head of Economics at the University of Lethbridge. That report proved to be extremely valuable. It confirmed many of the concerns leaseholders had been raising and gave everyone a solid, credible starting point for discussing improvements.

The Government of Alberta contracted Serecon Inc. to formally review the rental rate formula and rebuild
the calculator using updated assumptions. A committee was struck to advise on the process, with one
representative each from AGLA, NAGA, WSAG, and ABP, alongside government representatives. The
committee met throughout the summer and wrapped up its work in October, allowing time for the minister to review the recommendations and set the 2026 rental rates by mid-November.

From the start, beef industry representatives were clear: the formula didn’t need a complete overhaul. What it needed were targeted fixes that addressed volatility while keeping the system based on profitability and defensible for trade purposes. Serecon did an excellent job breaking down the existing formula, laying out the data, and presenting realistic options. The final recommendations
focus on smoothing out extreme swings while staying true to the original intent of the policy.

On January 5, Minister Loewen approved four key updates to the model. These changes modernize the
formula while preserving its core goal: providing a fair return to the province that reflects market conditions. Without these changes, 2026 rental rates would have jumped to $17.89 per AUM in the South and $14.80 per AUM in the North—numbers that would have been extremely difficult for most operations to absorb.

The approved changes include:

• Adopting adopting the Alberta Farm Input Price Index to better reflect real production costs,
• Moving to a five-year weighted average for steer prices and returns on capital to balance stability and responsiveness, and
• Updating the tier system so increases happen more gradually as profitability rises.

Minimum rents were also updated to reflect inflation and current land valuation policy, setting new minimums of $5.00 per AUM in the South and $3.50 per AUM in the North.

With these updates, rental rates should be more predictable, easier to explain, and better aligned with
actual economic conditions. Serecon also ran historical back-testing and sensitivity analyses to show how the formula will respond when calf prices rise — and when they fall.

What this means for leaseholders

The updated rental rate formula is designed to smooth out extreme swings, better reflect real
production costs, and make rates more predictable. When cattle prices rise, rents will increase more
gradually — and when markets turn down, rental rates will also come down, providing fairer and more
stable pricing over time.

Under the updated formula, 2026 rental rates will be $9.94 per AUM in the South Zone and $6.97 per AUM in the North Zone. Calf prices have increased over the past year, which explains why rates are higher than in 2025. When the market inevitably turns — as it always does — the formula guarantees that rental rates will come down as well.

Leaseholders with questions are encouraged to contact Lindsye at the AGLA office. Department representatives will be available to answer questions at the AGLA AGM on February 25 at the Red Deer Resort and Casino starting at 1:00 pm.