AgLease101.org

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

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

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Share total returns in the same proportion as parties contribute inputs

Figure 2. Effects of Land Quality and Farm Costs on Crop-share Rental Arrangements

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Operatingcost, $/ac

Yield, bu/ac

Land Quality/Value

COSTS

1/2 Landowner

1/2 Operator

1/4 Landowner

3/4 Operator

Most productive land Least productive land

2/3 Operator

1/3 Landowner

Fixed and Flexible Cash Rental Arrangements

• Fixed cash rent methods• Options to determine fixed cash rent– Bid– Auction– Professional farm manager

• Putting flexibility in cash rent agreements– Crop price– Yield– Input costs

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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

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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 and production costs

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Pasture Rental Arrangements • Possible ways to delineate stocking rate– By the head – By animal units (both parties should agree on what an

animal unit is) – 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…

• Annie’s Project• Women in ag conferences• Stand-alone meetings

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Mobile Optimized

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Social Media Integration

Questions?