Our farm manager negotiates the lease terms for our clients, building a lease around our clients specific farm and priorities. Leases include custom farming, crop share, custom/crop share, bushel lease and cash rent.
Custom farming can provide the highest and best return on investment and maximizes control over the land. The land owner pays all crop inputs and custom-hired machinery costs and receives 100% of the crop and government payments. This alternative requires intensive on-site management and knowledge of farming practices provided by CFNB farm managers.
Crop Share Lease
Under this arrangement the land owner pays a share of the input costs and receives a share of the crop. Typically, the land owner shares in 50% of the cost of the seed, fertilizer, and chemicals, and then receives 50% of the crop and 50% of the government payments. With changing farming methods and increasing land values, this lease may not be as competitive as it once was. To address this issue, many leases are now being tailored to each farm situation, and new percentages, such as 60% land owner - 40% operator, are becoming common. A more common alternative is to adjust the percentage of input costs paid by the land owner.
The land owner receives 75% to 85% of the crop depending on the yield potential of the farm and pays 100% of the big 3 crop expenses - seed, fertilizer, and chemical. The land owner does not pay for machine hire. The farm operator receives 15% to 25% of the crop for their contribution of equipment and labor. The government payments are split by the same percentage.
This lease specifies a set number of bushels of a particular commodity to be delivered to a specified elevator by a certain date without cost to the land owner. The number of bushels is determined by negotiation, but in most cases is approximately 1/3 of normal production. No government payments are paid to the land owner with a bushel lease.
Cash rent leases provide a consistent and predictable income. The only expenses paid by the land owner are real estate taxes, farm liability and property insurance, land and building improvements, and repairs. Finding a tenant who is financially sound and uses good land stewardship practices are some of the considerations when cash renting a farm. No government payments are paid to the land owner with a cash rent lease.
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