AgLease101.org. All publications… Are focused on developing equitable lease agreements Discuss...
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Transcript of AgLease101.org. All publications… Are focused on developing equitable lease agreements Discuss...
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
AgLease101.org 7
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
AgLease101.org 9
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
AgLease101.org 10
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
AgLease101.org 11
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
AgLease101.org 17
Social Media Integration
Questions?