AgLease101 Farm Leasing Educational Site
Download
Report
Transcript AgLease101 Farm Leasing Educational Site
Ag Lease 101:
A New Approach to Farm Lease
Education
2013 Extension Risk Management
Education National Conference
April 3-4, 2013
North Central Farm Management
Extension Committee
Farm lease publications developed in the 1950s
as regional bulletins
Cash leases
Crop-share leases
Irrigation leases
Pasture leases
Blank lease forms included
Distributed by North Central states and the
Midwest Plan Service
Revised in the 1990s, again in 2012.
Latest Revisions
Done and posted
Fixed and Flexible Cash leases,
Crop share leases
Pasture leases
In process
Farm building leases
Breeding livestock leases
Machinery and equipment leases
Proposed
How to be a good tenant
How to evaluate tenants
All publications…
Are focused on developing equitable lease
agreements
Discuss advantages and disadvantages of the
lease type to landowner and tenant
Include examples for calculating rent under
different methods
Describe methods for valuing contributions of
parties
Emphasize need for communication
Have been reviewed by ag lawyers
Fixed Cash Rent Methods
Cash rent market approach
Landowner’s cost or desired return
Landowner’s adjusted net-share rent
Operator’s net return to land
Percent of land value
Percent of gross revenue
Dollars per bushel of production
Fixed bushel rent
Other Options to Determine Fixed
Cash Rent
Bid
Auction
Professional farm manager
Putting Flexibility in Cash Rent
Agreements
Crop-share leases were the original flexible
rents
The scale of today’s operation makes share
rents impractical
Cash rents may be adjusted by market prices,
crop yields, production costs, or a
combination
Establishing a Crop-Share
Arrangement
Share yield-increasing variable expenses in the
same percentage as the crop
Adjust arrangement as technology changes
relative costs
Share total returns in the same proportion as
parties contribute resources
At the end of the lease, compensate operators
for portion of long-term investments made that
are not fully depreciated
Pasture Rental Arrangements
Possible ways to delineate stocking rate
By the head
By animal units
By pounds
Important to agree on the number, size, type of
animals and grazing period duration
Establishing land owner and livestock owner
contributions
Cash, share of gain, price risk adjustment
Great resources for a variety of
programs…
Women in ag conferences
Stand-alone farm lease meetings
Annie’s Project series
Farm real estate conferences
Webinars
Client requests
The Next Step…..
Additional publications and lease forms
More FAQs
Links to other farm leasing materials
Additional regional webinars for educators
Sample flexible leases
Survey of farm building rental rates
Questions?