Cash Rent Contracts

Christos · May 14, 2012

I have a question for you all who cash rent or allow your property to be rented to be farmed.

Is it typical for the lease contract not to have a specified price per acre?

Here is why I ask. I went and got a copy of the contract for my farm, it didn't specify the acreage nor the price of the rent.

I called my (family's) tenant and I was told it was based off the yield.

My area of Ohio the median is 100 bucks an acre. My fuzzy gov't math skills tell me that we're getting less than the median.

Any thoughts?

Christos

1970-1655 · May 14, 2012

Our home place was rented about 1990 for $90 per acre with number of acres specified. As the years went on, dad would clear out a fencerow or more acres from the side of a woods and they would farm it at same overall price because the land would not produce very well. Then they would whine about losing money so dad would reduce the rent per acre and still not charge for the additional acres. Dad died in 2005 and mom in 2006 so the attorney for the estate said we should have a written contract for the rent. We found the latest contract between renter and dad from 2000 and they were paying $48 per acre plus all the free acres. When we told them the advice we were given, it got worse than hitting a hornet's nest with a ball bat. They even acted like they did not see my brother and almost ran over him. (Less than 4" from his foot!) After that season, attorney wrote a letter inviting them to vacate the property.

Some farms around close are going for close to $200 per acre while others are $100-$125 area. Acreage is usually taken from Farm Services ariel photo maps and in writing. It is best to have everything in writing, even between best of friends.

Green Porsche · May 14, 2012

We're in Ohio and get $100 an acre.. We only rent out 7 acres, but...It beats doing the farming myself or even mowing !!

Mike (WA) · May 14, 2012

Might want to start shopping the rental rate around to others who are knowledgable about your property- tell your renters you're going to do it. Don't offer it to anybody without giving present renters first chance at your new price.

If done right, can be accomplished without hard feelings, so long as you keep present renters in the loop. Of course, that presupposes that they've been good to the land and to you, and that given your druthers, you'd want them back at the right price.

Tim(nj) · May 14, 2012

If the rent is based off yield, then you should request yield records for your farm at harvest. But . . . if it's based off yield, what is the agreed-upon share for the landlord? Any agreements I have are spelled out x-number of acres for x-number of dollars. There is an instance where I get lower rent because I mow back brush on non-farmable parts of the property and maintain the gravel road going into the farm. I have that spelled out in the contract, too.

dittmerku · May 14, 2012

Cash rent here in West Central Illinois always has # of acres, amount per acre, total amount due, and exact dates payment is due.

50/50 is different, and is based on the yield, like you stated.

SweetFeet · May 14, 2012

Your contract should definitely list:
1. the number of acres farmed
2. the price per acre (or specific details if renting on shares, etc.)
3. specify the year/years the contract covers
4. specify exactly when rent payment will be made (ours is paid in full each spring by May 1)
5. specify anything else... for example we say a.) no canning company crops (because they will mud-in a planting our muck-out a harvest and really make a mess of your land). b.) no hunting allowed (not against hunting AT ALL... just don't want "who knows who" wandering around on our land).

I don't know what rent should be in your area. That would be good to check with local land owners or renters to see what the going price is...or your local ag office. We keep our rent a bit on the leaner scale because we only have 72 tillable acres and most that farm around here are big farmers with huge equipment. Though our renter is a fabulous guy... takes care of our land like it was his own and he had a great crop last year and gave us large bonus. When he just paid rent on May first, he said he hopes for another good year so he can give us another large bonus. He is a great guy!

Christos · May 14, 2012

That's the thing it's not 50/50 according
to the contract.

Wile E · May 14, 2012

$100 per acre dont seem bad at all.
A buddy of mine rents out 15 acres and he is only getting $600 for the season. (cash on the barrel) as soon as the guy shows up with his tractor to till the soil in April.

GordoSD · May 14, 2012

There are many farms rented here for yield, more accurately "Shares". One reason is the same 160 acre farm may have anywhere from 100 to 160 acres tillable land variance because of seasonale flooding. That is: potholes. In the spring there may be a bunch and you can't plant the entire field. So the rent is usually an agreement stipulating who pays what input costs and what the share of the crop is.

Pair-a-dice farm · May 14, 2012

In our neck of the woods there isn't any rule as long as the owner and tenant agree and have it in a contract. Pasture land typically is rented cash by the acre but I have rented pasture lump sum by the farm. Row crop land is typically on the shares. Most is 1/3 or 1/4 depending on the crop. Sometimes the land owner pays part of the fertilizer. Row crop land is also cash rented and price varies depending on irrigation, flooding, type of soil etc.

hoosierhog · May 14, 2012

Wow I wish could rent 100 per acer I got some small 2-4 fields for 150-180 but any fields over 8-10 acres and up 200-300 I've seen some contracts at 350. I know location is every thing but I'd think number of acres farmed and amount per acre should be listed can always call county extension agent he should keep track of going rates for rent

Ken Macfarlane · May 14, 2012

Is your land above median?
Is that price with share inputs?
Are the yields similar to neighbours?
TIled?

Around here renting farm land is rare as there is so much idle land, and its in poor shape requiring large $$$ from the first guy to rent it in years. All the land I use that isn't mine is free to keep up, and let me tell you some isn't worth it.

kyplowboy · May 14, 2012

If it's based only on the yield then sounds like your are renting it out on the shares and not cash renting.

"Here" most all share renting is done with the land owner getting 1/3 of the crop (sold at harvest or stored at owner's expense) with the land owner not out any inputs. There are still a few folks who rent on the halves with the land owner pay'n for half the seed, fert, and chemicals with tennant provide'n the other half.

There are some real drawn out and complicated cash rent deals around here where the land owner gets a "bonus" if the yield and prices get high enough.

Dave

Paul from MI · May 14, 2012

Best to be in writing, but my brother and I have rented our farm to a neighbor since 1995 on a handshake. Both of us have gotten a fair deal, but their family and ours have been neighbors and friends since 1912. Not always true and if I was to start over I'd have a contract, but this has been working for us.

Anonymous-0 · May 14, 2012

I was always under the impression that its not a legally binding contract unless the payment amount is specified. One of the friendly lawyers that frequents this site could probably set me straight. That being said my written contracts, needed to be filed with the tax accessors for the ag reduction, specify a payment of one dollar. The real contracts are all verbal.

Anonymous-0 · May 14, 2012

I cash lease some of my ground for $80/acre for an annual sum of $3200. Michael get it in the spring when he wants to start farming.I require 3 days notice. It is then his until the crop is harvested and then it becomes mine again. The cash rent is paid before he signs up with FSA. We have a signed contract but Michael's word is good enough for me. Bud

730 virgil · May 14, 2012

i'm thinkiing if your tenant is in farm program he has to have contact with you telling rent and acres rented

MarkB_MI · May 15, 2012

Hmm. If the rent is based on yield, it's not really a cash rent, is it?

Did you really mean "median" rent, or did you mean "mean" (average)? I would expect the median to be lower than the average, since a few very high rental rates would skew the average higher. I'm not sure where you got your data from, but you can go to the USDA NASS site at http://www.nass.usda.gov/Surveys/Guide_to_NASS_Surveys/Cash_Rents_by_County/index.asp and get the average cropland rental rate for your county.

My leases all specify:
1. Term of lease
2. Actual acreage
3. Rate per acre
4. Who gets the government farm program payments.

The lease should also stipulate that good farming practices are to be followed (e.g. noxious weeds and erosion controlled) and anything the tenant is responsible for maintaining (e.g. fences, roads, buildings).

I have heard of leases where the cash rent was automatically adjusted up or down based on a specific commodity price. But I've never heard of a cash rent being adjusted based on yield. The tenant is the one who has the most control over yield, and you have no way of knowing if he's being honest about how much he harvested.

paul · May 15, 2012

Whatever is agreeable to both sides.

Sounds like you have a crop-share type of rent, which is less common, but work well. Your family can share in better years, and the renter isn't strung out on poor years. These can be the 'most fair' type of rents over the long haul, to both sides. Your family may be considered 'actively farming' under a lease like this, and may be able to get tax deductions/benifits under this type of lease. See a tax person for actual advice on that tho.

If there is poor weather, or hail, or flooding or drought, you will get less income that year. If there is good weather, record crop yields, or record high grain prices, you will make out well. If things seem unfair somehow, might want to take the lease & sit down with an Extension agent from your area and get it explained to you, there are many many details and options on doing this crop-share in different ways. Perhaps you got shortchanged; on the other hand you might have had flooding or poor crop and just dodn't pan out this particular year.

--->Paul

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