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JoeO(CMO) 
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Joined: 11 Sep 2009
Location: Cent Missouri
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 Topic: Land Lease
Posted: 03 May 2011 at 9:34pm |
Does anyone lease their land or are leasing land using the flexible plan?
Or is it more popular to cash rent at a flat rate, what about increases?
Edited by JoeO(CMO) - 04 May 2011 at 6:02am
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Dale H. ECIL
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Joined: 11 Sep 2009
Location: Paris, Il
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Posted: 03 May 2011 at 9:51pm |
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Around here cash rent is most popular. I cash rented most of my farm, I still play with 20 acres, 10 years ago to a good neighbor for a going rate. I have never ask him for a raise but on his own he has raised the rent 3 times!!
Also around here some land owners have an auction for the cash rent. Last winter a 600 acre farm was auctioned off for $411.00 an acre cash rent.
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Allis Chalmers Museum, Paris, Il.http:// www.allischalmersmuseum.com 217-275-3428
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acben20
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Joined: 13 Sep 2009
Location: waseca
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Posted: 03 May 2011 at 10:07pm |
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all i have to say is go find a young person that wants to get in to farming and give him the chance to farm. around here its hard to start farming.
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monitordoc
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Joined: 15 Feb 2010
Location: Minnesota
Points: 187
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Posted: 03 May 2011 at 10:19pm |
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We have cash renter our farm for several years. it's most important to find a trusted operator, so many will "mine" the soil and then move on.
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WD,D17-S4,180,D21
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Kyle(MN)
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Joined: 03 Oct 2010
Location: Minnesota
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Posted: 03 May 2011 at 10:32pm |
I manage a few acres for absentee landowners, and have one farm on a flex lease. There are a myriad of different ways to do it, but this is how I have this one set up:
1) Base rent due in the spring, which is probably 1/2 to 2/3 of what a reasonable market rent might be. It's probably on the low end of the range of market rents in the area.
2) We pick target yields for the crops , which is probably a low average, i.e. we'd all be disappointed if that yield wasn't hit. The yield is roughly at a break-even point (although at today's commodity prices, my target yields might be a bit high).
3) After the target yield is hit, we split the bushels 50/50 (in theory, that is), with the price being the posted county price average for the year. I use the PCP because its localized and can easily be verified and tracked through the FSA website. So for example for soybeans, if we had a target of 30, and the actual is 40, and the average PCP for the year is $12, there would be an additional $60/ acre due in the fall (40-30=10 x 50%= 5x$12=$60). I also cap the total rent at a number that would probably be at the very high end of rents in the area.
What you do, how you do it, and how/ if you verify information depends on how good of a relationship you have with your tenant.
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427435
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Joined: 18 Nov 2010
Location: SE Minnesota
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Posted: 03 May 2011 at 10:34pm |
 Kyle(MN) wrote:
I manage a few acres for absentee landowners, and have one farm on a flex lease. There are a myriad of different ways to do it, but this is how I have this one set up:
1) Base rent due in the spring, which is probably 1/2 to 2/3 of what a reasonable market rent might be. It's probably on the low end of the range of market rents in the area.
2) We pick target yields for the crops , which is probably a low average, i.e. we'd all be disappointed if that yield wasn't hit. The yield is roughly at a break-even point (although at today's commodity prices, my target yields might be a bit high).
3) After the target yield is hit, we split the bushels 50/50 (in theory, that is), with the price being the posted county price average for the year. I use the PCP because its localized and can easily be verified and tracked through the FSA website. So for example for soybeans, if we had a target of 30, and the actual is 40, and the average PCP for the year is $12, there would be an additional $60/ acre due in the fall (40-30=10 x 50%= 5x$12=$60). I also cap the total rent at a number that would probably be at the very high end of rents in the area.
What you do, how you do it, and how/ if you verify information depends on how good of a relationship you have with your tenant. |
How do you determine the actual yield?
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Mark
B10 Allis, 917 Allis, 7116 Simplicity, 7790 Simplicity Diesel,
GTH-L Simplicity
Ignorance is curable-----stupidity is not.
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Dave in il
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Location: Manville Il
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Posted: 03 May 2011 at 10:36pm |
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If you want cash rent then a flexible lease is the fair way way to go. You get a base rate the tenant can cover with crop insurance and lock in a profit, and if yields or prices are better than expected you get a "bonus" payment. Please consider giving young or smaller producers first chance at renting your ground.
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Kyle(MN)
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Location: Minnesota
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Posted: 03 May 2011 at 11:11pm |
How do you determine the actual yield? [/QUOTE]
I get copies of scale tickets or an assembly sheet. I have the right to verify it with what they report on their crop insurance production report. I see the farm, and them, quite a bit thru the summer, and I know what's going on in the area, so I have a good idea what the yield should be by the time harvest comes around. But there is certainly a high level of trust involved. On some of my other farms, I wouldn't even think of having this arrangement- it's cash up front in March.
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Dave in il
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Posted: 04 May 2011 at 8:39am |
Kyle(MN) wrote:
How do you determine the actual yield?
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I get copies of scale tickets or an assembly sheet. I have the right to verify it with what they report on their crop insurance production report. I see the farm, and them, quite a bit thru the summer, and I know what's going on in the area, so I have a good idea what the yield should be by the time harvest comes around. But there is certainly a high level of trust involved. On some of my other farms, I wouldn't even think of having this arrangement- it's cash up front in March. [/QUOTE]
I assume the "Cash up front" tenant pays the highest cash rent or why don't you boot him off the farm and replace him with a more trust worthy one. There are alot of excellent farmers available why put up with a shady one for a few extra bucks an acre?
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CTuckerNWIL
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Posted: 04 May 2011 at 8:57am |
[/QUOTE]
I assume the "Cash up front" tenant pays the highest cash rent or why don't you boot him off the farm and replace him with a more trust worthy one. There are alot of excellent farmers available why put up with a shady one for a few extra bucks an acre? [/QUOTE] Maybe the land owner has something to say about who rents the farm. I know of a situation where several people own the property and 1 or 2 don't worry about change while others want to rent to a different farmer. It's kind of touchy situation when different family members are involved.
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KenBWisc
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Location: Fall Creek, WI
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Posted: 04 May 2011 at 10:38am |
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What is most common isn't always the best. Flexible Cash Rent allows the sahring of risk along with the wealth!
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'34 WC #629, '49 G, '49 B, '49 WD, '62 D-19, '38 All Crop 60 and still hunting!
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Gerald J.
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Location: Hamilton Co, IA
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Posted: 04 May 2011 at 11:18pm |
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My land is on a crop share lease. I pay half the seed, fertilizer, and herbicides and I get half the crop that I have to merchandise. My tenant does all the work including planning and delivers the crop to the elevator at harvest. Some years I may not do as well, but lately I've been doing quite well. And I'm not charging the tenant so much he shorts the fertilizer to break even. And he talks to me about his plans.
Gerald J.
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mtanut
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Posted: 05 May 2011 at 4:30am |
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Only advice I have is have your lawyer look over any agreement before you sign anything.
Edited by mtanut - 13 May 2011 at 6:38am
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I have a 185 Allis, 6060 Allis, Model K gleaner, SMTA ferg 35, ferg 20 (paps first tractor, Allis B (wife's)John Deere 240 skid loader and a bunch of the usual farm stuff.
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wkpoor
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Posted: 05 May 2011 at 7:03am |
Dale H. ECIL wrote:
Around here cash rent is most popular. I cash rented most of my farm, I still play with 20 acres, 10 years ago to a good neighbor for a going rate. I have never ask him for a raise but on his own he has raised the rent 3 times!!
Also around here some land owners have an auction for the cash rent. Last winter a 600 acre farm was auctioned off for $411.00 an acre cash rent.
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Farmers that raise their own rate are just trying to keep you happy so they keep the land to farm. 75-100.00 is th rate here. Someone near me paid 200.00 and the guy who paid it was threatened. What your telling me is even at 200.00 there is profit.
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