Basic Farm Land Rental Agreement

The harvest share is considered a flexible lease for arable land, under which the landowner and tenant distribute the income from crops grown on the farm in a predetermined ratio or percentage. A joint agreement on the shares would be 25% for the landowner and 75% for the tenant of the harvested grain crop if the landowner did not share the production costs. In some cases, a 1/3 is used for the landowner and 2/3 for the lease, but in this case, the landowner is supposed to pay 1/3 of the costs of seeds, fertilizers and chemicals for the production of the plants. Due to the increase in entry and overhead costs over the past ten years, tenants can no longer afford the historical shares, 1/3 since 1/3 goes to the landowner, 2/3 since 2/3 goes to the tenant at no cost. This differs from the fixed lease agreement in that the price paid to the landowner is based on income and not on a fixed amount. The amount of the dollar is influenced by harvests and prices. When yields and prices increase, the amount of rent increases and vice versa. Over the years, for various reasons, producers have leased arable land between them, also known as the “Swapping Ground”, using a large number of types of agreements. The nature of the agreement usually has a lot to do with a landowner`s involvement in crop production activities on their land. Some landowners do not want production or market risk or participate in production decisions.

Some want to own part of the crop. Some may wish to be able to market their share of the crop. (Example of corn: 1 times the average yield, or 150 bushels per hectare, gives a cash rent of $150 per hectare.) This relieves the landowner of the risk of marketing and production and links the rental price to the production capacity of each field, which is good for the tenant. A flex rental agreement is a way to share the risks and opportunities of a crop production system.. . . .

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