Flexible Lease Agreements Offer Alternatives

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  • Flexible cash rental lease is potentially fairer to both the landlord and the farm operator
  • Best way to establish base rental rate is to have a rental rate per acre that is agreeable to both landlord and farm operator
  • Flexible lease agreements, as well as all land rental contracts, should be finalized with a written agreement

The biggest challenge with flexible cash rental leases is determining the base rent per acre, the maximum (and possible minimum) cash rent per acre and the method to determine the flexible rent payments. The best way to establish the base rental rate is to have a rental rate per acre that is agreeable to both the landlord and farm operator. Most land-grant universities and some farm-management associations publish annual average land rental rates on a yearly basis, which could be used as a resource for arriving at an equitable base rental rate. It is important for producers to have a maximum cash rental amount, in order to assist them with crop budgeting, grain marketing strategies and crop insurance decisions. Typically maximum rental rates are $50-100 above the base rate.

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