in Applied Economics

of this land was granted through the Enabling Act for the support of common schools. Statutory objectives of the Trust created under this act are: (1) to secure the largest mea- sure of legitimate and reasonable advantage to the trust without imparing long-term productivity; (2) to fully compensate the trust for all interests disposed of; and (3) to secure a sustained income to the trust. The hypothesis presented is that statutory objectives of the Trust are not effectively being met, that grazing fees on state land are too low, and that the grazing fee formula should be modified. It was the author's intent to examine the current administrative program in light of the objectives set forth, to identify existing barriers to their achievement and to present alternatives. The base grazing fee at the time the study was initiated (1976) was $1.30 per animal-unit-month and is $1.48 per AUM for 1977. Results of the study produced the following factors to be considered in pricing state grazing lands; (1) approximately 85 percent of Montana's leased grazing land supply is made up of public and state land; (2) only 8 percent of state grazing leases are competitive (1976)- the competitive system faces many barriers including the effects of good neighbor relations, preference rights, competitive bid hearings, limited access, and the influence of "big operators " and grazing districts and associations; (3) 1976 AUM prices are significantly higher for competitive state leases ($3.52 ave.), the private sector ($7.40)