OT - Leasing Land

Thinking about leasing some property within 1/2 mile of our place for making square bales of hay. 7-10 acres max.

Fields are there, but neglected and basically a patch of weeds. My responsibility would be total rejuvenation of the fields, lime, fertilizer,
herbicides, seeding, etc - and then taking off the hay. The owner would basically get a field that will not grow into a wilderness in exchange for
me making hay on it.

Nothing is free so what would be fair compensation per acre and terms/time of the lease you would recommend.

Thanks!
Bill

Lease rates depend a lot on local conditions. One method is to do the math, figure out your profit, and half of that goes to the owner, in advance, each year. I would not do less than five years with the owner paying you the remaining years' payments if he wants to cancel. You can't make any money if you don't have several years to work on and if he sells he can afford to buy out the lease. Another method is first year is free, then you give him a third of the gross receipts from sales every year. He comes out better if you are a decent farmer.

I did a deal like that with a local guy- farmer got the first 2 years free, then landowner gets a third of the crop thereafter, either the hay, or the farmer sells the hay for him and gives him the money.

Much different than Andy M around me as for hay ground the owner gets a free mowing and that is about it. If you do a plow, lime, reseed You will need a lease for x many years. With all the costs I don't see how you can pay much but guess it depends on local customs. I have seen deals like 50/50 and owner pays some exspence or does some work like mow and rake.

The compensation varies locally here. If the fields are small, irregular, or have steep spots then it is cover the taxes or if the landlord is desperate then just maintenance of the fields. Fields that can accomodate large equipment, are well drained for alfalfa, and have other potential uses then maybe double or more the taxes depending on the expected yield. There are large dairies that put out alfalfa with the expectation in a good growing season where moisture is plentiful that they will get in excess of 5 tons of hay on a dry basis.

That's kinda been the deal around here. A guy drove in the yard and offered that same thing to me about five years or so ago. Two years free,then pay whatever I thought was fair. I picked up a small piece this spring where a guy cleaned it up,worked it for three years free then quit farming. I gave the guy $40 an acre this year. When I asked him this spring what he wanted for it,he said "don't worry about it,the other guy never paid me anything. I just don't want it growing back up".

I get all the hay land like you described and better for free.Small acreage and poor land aren't worth much.In Virginia if your county has land use taxation then the landowner will get a large real estate tax break having a farmer harvest a crop off the land.

Often times a crop share arrangement works for this.

75% of the bales go to the renter, 25% go to the landowner. The landowner can sell his portion,or just cash it out to the renter on the average hay price. This is where the land owner isn't much interested, and just wants the taxes covered.

Another way to do it is 50-50, the land owner gets 50% of the hay, but the land owner is responsible for most of the lime and fertility on the land. The land owner is motivated to lime and fertilize the land, so as to get more hay. The renter gets less hay, but doesn't have the fertilizer costs out of pocket.

Perhaps you can come up with a cash rent idea from these general crop share arrangements, if both of you want it to be a simple cash deal.

With a cash deal, you have to consider you have poor hay for 2-3 years, then the value will really go up. Be careful the land owner doesn't use you for the first few years and then rent for bigger bucks to someone else, stealing away the hard work and extra fertility you did. If a cash rent, you would want to work up a 4 year agreement so what you put into the field the first 2 years, you have a chance to collect on for at least the last 2 years of the lease.

Paul

Are you asking compensation for you or for him? Sounds like you would be doing a lot of work and laying out a lot of $ for a little hay.

LOL

I don't remember where I read the story anymore,but that reminds me of one. It was a dry year and feed was short. An old guy came around and asked the guy's dad if he was interested in cutting that one field? He said ya,he'd give him $400 for it. The owner told him "GO AHEAD!".
He said it was the roughest field he'd even been in in his life. They dumped several wagon loads of hay over,had a few flat tires,beat up some equipment,but they finally got it all cut and baled.
He was talking to another neighbor a few days later and told him he'd given the guy $400 for it. The neighbor said "You paid him?!". "He paid me $200 to mow it off with the brush hog last year. It was so rough,I told him I'd never go back in there again.".

I mow perhaps 2 acres of my neighbors pasture. He doesn't run cattle for decades, fence got too bad, and this 2 acres is cut off from his property by ditch and broken fence. I think the county sent him a letter about controlling the thistles in it. See wasn't me complaining about it, I have my own issues..... Anyhow after 6 years of making hay the thisles actually are disappearing, don't see many.

I offered to cut another 3 acres next to it this fall, it hasn't been cut in a decade or more. I said it would not be worth anything, but get some weeds and such knocked down for them.

Wow, that 3 acres was rough. Didnt tip anything, but the mower spring the safety latch several times on gopher mounds, and was real hard feeding my hay basket, several busted bales as the baler and wagon lost altitude to each other. Had to drive slow raking.

Wish that was smoother ground, it would end up nice hay. But, would take some real dirt work and replanting to get there, not worth it for my deal nor for him....

Paul

I worked out a deal with my neighbor over 2 acre parcel that has a power line through it, makes it hard to spray and combine. I plant and fertilize. He cuts, rakes,& bales. I get 1/3 of the average price for all the hay. Next year will be the first, we'll see how it works out. Either way we'll be OK.