Farm Land Cash Rent Agreement
A Flex lease is a way to share the risks and benefits of a plant production system. Often, the formula can promise a basic cash rental price, which is often paid in advance, with a possible bonus during the harvest, based on the gross value (price of yield time) of the rent of the crop. Flex tenants can get much higher rents, perhaps better than some of the highest rents in the area. In the case of a baillist, the tenant is only required to pay the rate of the basic fund. This option has become very popular in much of Michigan in recent years, with commodity prices increasing much more than most expected. The use of this type of agreement has given the landowner high premiums. The comfort level of risk acceptance has an impact on the flex rental decision, with some landlords favouring guaranteed cash rents. The purpose of this publication is to help landowners and tenants enter into fair tenancy agreements. Some agreements pay the custom trader a bonus for achieving certain planting date or yield goals.
Others provide that instead of a cash payment, the farmer receives a percentage of the crop, usually between 20 and 25 per cent. This is sometimes called “net stock leasing.” When the custom operator assumes responsibility for the purchase and supply of plant inputs, the cash payment or share of the crop is generally higher. Publication FM 1823 (AgDM A3-15), Custom Farming: an Alternative to Leasing has more details. The four most common types of leases in Iowa are fixed-rate leases, flexible churning, plant shares leases and custom agriculture contracts. The terms and conditions of these leases are described below. Cost-sharing A frequent issue is the owner`s responsibility to share the costs of weeding herbicides, which may be a partial or total substitute for cultivation or other methods of tillage. Most owners agree to cover half the cost of these materials under a plant share lease. Some believe that where there are no till practices or minimum flooring, they do not have to pay 50% of the total cost of herbicides.