Here is an example of a land lease agreement that was designed by lawyers and can be downloaded, modified and used for free. By accessing or downloading this farm lease, you acknowledge and agree that Farm & Food Care Ontario is not liable for any damages of any kind caused by your access to or use of the farm lease. Since 2018, the drop in crop prices has been offset by ad hoc federal aid in the form of market facilitation payments and the coronavirus food aid program, according to the University of Illinois Department of Agriculture and Consumer Economics. These payments have been a vital artery for farmers and account for up to 60% of net farm income in these years. So far, there has been no announcement of ad hoc payments coming for 2021. The deadline for notifying changes to arable land leases in some states, September 1 is approaching. For farmers, this means that there are a lot of squeaks of numbers, and in many cases, the math is not beautiful. 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. It`s a difficult situation, says Kyle Walker, farm manager for Peoples Company, a property and farm management company based in Clive, Iowa. “Farmers who have good relationships share a lot of information with them and have a much easier time talking to them to explain the situation. Without good information from the tenant, landowners receive mixed information from the media: how government programs pay a check to the peasants, that the weather is good, and that the peasants will have a good harvest,” she says. Most landowners will listen when you say you need to reduce the rent, if there is any information that explains why. Whenever the communication is unilateral, there is a possibility of misunderstanding. A flex lease is a way to share the risks and opportunities of a crop production system.
Often, the formula can promise a basic cash rental price, often paid in advance, with a possible bonus at harvest, depending on the gross value (yield price) of the harvest rent. Flex tenants can receive much higher rents, perhaps better than some of the highest cash rents in the area. In the event of a revenue disaster, the tenant is only required to pay the basic interest rate. This option has become very popular in much of Michigan in recent years, as commodity prices have risen much more than most forecasts. The use of this type of agreement offered the landowner high bonuses. The comfort level of risk-taking has an impact on the flex rental decision, with some landlords favouring a guaranteed and fixed cash rent.. . . .