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Leasing out Tillable

sep0667

sep0667

Land of the Whitetail
Question on renting out tillable ground. How do most of you go about renting out the tillable acres on your ground to a farmer? Do you have a legal contract written up by a lawyer, good ol'boys handshake etc? I have talked with a couple of people and have heard both. Just wondering what is recommended along with do's and don'ts. I have not contacted any tenants yet, I'm just trying to get a feel for the best course of action. Of course I want to get along with everyone involved etc. I have the contact info for the farmer that farmed it most recently and he wants to continue. I just want to be prepared for what to do/expect before contacting him. Would like to hear from some others that have experience with this.
 
100% have a written contract. TONS of reasons as to why.

Personally I use the one published by ISU with my own addendum.

My addendum covers ALC/PLC payments, crop reporting, CRP payments, and MOST importantly soil fertility. Do NOT let your soil get mined. Baseline soil test may be a good idea.

I've had good tenants and bad. Current good one I found locally driving around and observing who was doing things the right way and was timely. It's worked out great. Taking highest bid may not be in your best interest.
 
Agree on all the above. I don't know what the "ALC/PLC payments" are? Could consider adding no-till only. I would also throw in that you're keeping hunting rights, so there's no confusion.
 
From the farmers perspective, multi year contracts are preferred and many times more beneficial for both parties. The farmer is more likely to spend the money on soil amendments (Lime, Gypsum, etc) and build up P&K values as he will see the return during the term of the contract. Single year contracts tend to encourage the "rape all you can get out of the land and leave nothing" type of thinking.

I would also encourage you to talk to other landowners around you to about the potential tenants you're looking at. As IBH1983 mentioned, we've seen the good and the bad as well. Some take care of it like their own, others use and abuse.
 
Habitat1 said:
Agree on all the above. I don't know what the "ALC/PLC payments" are? Could consider adding no-till only. I would also throw in that you're keeping hunting rights, so there's no confusion.
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Payments from government. Only reason I add it to the addendum is to make it crystal clear.

I also have some language they must follow approved conservation plan (Much of my ground is HEL).
 
All good advice above. It took me 12 years before i developed and created a lease that i felt was fair and beneficial for my land. Yeah, I'm slow, but there's a lot to know and the information isn't always easy to come by.
Don't worry too much about wanting to get along with everybody, they are worried about themselves plenty, worry about yourself and your farm.
 
One thing to think about is my dad has one farm that we rent that the rent changes every year. The rent for the current year is whatever the average cash rent for our district for the year prior. Those numbers are published by iowa state every year. That way the rent prices always lag a year, but you never have to worry if you need to move the rent with the market. Fair for both parties. Also would be awesome to rent to a younger farmer trying to get started. And for sure put in the lease that no hunting rights go with the farm lease. If it is not written then it is presumed that the hunting rights go with the farming rights.
 
Are you hoping to leave a set amount of acres standing for wildlife? If so, get together with your farmer and talk about how that will happen and have it spelled out in your lease.
 
I create my own lease. Legal description, acres, rent per acre, amount of acres left in crop for food plot.

We also add that I keep recreational use of the property and this lease is for agricultural purposes only.

& CRP options in the lease, if contract is longer than a year. You may want to add some CRP if the rates are attractive.
 
Like others have stated, make sure you're getting a lease in writing; the "good ol boy" hand shake isn't going to benefit anyone. My lease contract was drafted up by a lawyer just to make sure and cover all the basis's to protect everyone involved. There are plenty of good generic leases out there as well if that's the route you want to go. I would also agree long term leases are what would make the most sense for you not living around your farm; you want a tenant in there that's going to take care of the land as well as improve fertility. Ringgold county can be tough, so make sure and do your homework on a tenant before you sign a contract. Lots of good farmers down here but also some fly by night guys who will mine your land in a heartbeat. Make sure you're requiring invoices of what was applied per acre. Make sure your collecting as much information about their operation as possible. A beautiful tract, can be ruined in a year, unfortunately I've seen it. Also make sure you find a person that is on the same page as you regarding hunting, deer and farming typically don't go hand and hand, so a lot of guys will bock when you tell them what you want. An agreement between you two needs to be made before anything is signed. Having this discussion earlier will benefit all involved much more so than waiting until harvest starts. As far as lease prices go, just be careful; it's a double edge sword. Guys who increase cash rent yearly, also need to decrease cash rent when grain prices fall. Most times this doesn't happen, so when prices fall, cuts have to be made and that typically falls under inputs that are going to toward your land.
 
I’m wondering. 1983, what should be worked out re govt payments? I assume the ARC/PLC payments are subsidies for loss, poor weather etc. that support the farmer who incurs the risk and pays for seed, fertilizer etc. The landowner is paid per acre for providing the land. How would govt payments to the farmer impact the owner? How does yield, or subsidy for lack of yield, impact rent. Thanks.
 
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Windlooker said:
I’m wondering. 1983, what should be worked out re govt payments? I assume the ARC/PLC payments are subsidies for loss, poor weather etc. that support the farmer who incurs the risk and pays for seed, fertilizer etc. The landowner is paid per acre for providing the land. How would govt payments to the farmer impact the owner? How does yield, or subsidy for lack of yield, impact rent. Thanks.
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Farmer should get the payments on acres they farm. I have duel operator on my farm (I am operator on CRP acres and some of the tillable that gets certified). It's common sense but I spell it out. I don't like Grey areas.
 
northcedar said:
Are you hoping to leave a set amount of acres standing for wildlife? If so, get together with your farmer and talk about how that will happen and have it spelled out in your lease.
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Exactly, this is an area that can be confusing and cause hard feelings. I've heard of a situation where the farmer tried to charge the land owner full opportunity costs on those acres. On the flip side, some land owners assume the farmer will just leave whatever they want standing at no charge.

First off, they should not be paying rent on those acres. At minimum you should be paying for their costs like seed, fertilizer, and chemical. Some tenants may want custom rates as well. Be sure this is all spelled out ahead of time.
 
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Sounds like you're a new owner so definitely get things in writing. Handshake deals are rare anymore. As a farmer I want to address one issue that is new to me. Requiring soil tests and then receipts for fertilizer may require some negotiation. Fertilizer prices have doubled, tripled, and then gone up some more. If you are going to require a certain level of fertilizer without regard to cost, then you may be entering the world of adjustable rent rates according to profit margins. It's doable but can be complicated in this day and age. As I look forward to renting out my land in a few years, I am more concerned with no-till, cover crops and rotation than the amount of fertilizer applied. Yes, some farmers try to mine nutrients, but most know that's shooting themselves in the foot. A multiple year lease does help with this issue. If you want standing crop left, the only fair way is not charging rent on those acres and paying custom rates for planting, spraying, and also pay for inputs on those acres. This year the costs per acre will shock you!
 
turkeyriver said:
Sounds like you're a new owner so definitely get things in writing. Handshake deals are rare anymore. As a farmer I want to address one issue that is new to me. Requiring soil tests and then receipts for fertilizer may require some negotiation. Fertilizer prices have doubled, tripled, and then gone up some more. If you are going to require a certain level of fertilizer without regard to cost, then you may be entering the world of adjustable rent rates according to profit margins. It's doable but can be complicated in this day and age. As I look forward to renting out my land in a few years, I am more concerned with no-till, cover crops and rotation than the amount of fertilizer applied. Yes, some farmers try to mine nutrients, but most know that's shooting themselves in the foot. A multiple year lease does help with this issue. If you want standing crop left, the only fair way is not charging rent on those acres and paying custom rates for planting, spraying, and also pay for inputs on those acres. This year the costs per acre will shock you!
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I look at this different. I don't expect a tenant to improve my soil quality just as a don't expect them to degrade it. That is where soil testing can come into play. It establishes a baseline of what is there. I expect my tenant to put back what they take out. Beyond that the tenant needs to make their own assessment on the risk/rewards of farming/markets/etc. I would def be concerned about it! The farm I just sold had a $300/acre nutrient deficiency when I bought it. That is not something you want a tenant to leave you with as they run to the bank and out of your life!

.... If I let someone barrow my truck and its on full I expect they return it on full.
 
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Lots of moving parts for a fairly simple arrangement. Lol. My arrangement is payment per acre, I pay for the seed fertilizer, etc for the few standing acres, I control all hunting, and stop anytime in my shed for a beer as the fridge is always stocked. 20 years and going we’re still friends. Keep it simple. Jesus. Handshake btw. What gen are we in, ZZ, XZ, clueless Z, Whatever
 
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Seems sort of complicated for something that also seems so simple. I feel dumb :). Right now I dont think I want to leave any standing crop, just want to rent out the tillable for a profit to help pay the bill for now. Seems multi-year lease seems to be the way to go, how many years is normal, 3, 5, 10? Any recommendations on a lawyer/office to help draft up a lease agreement?
 
Windlooker said:
Lots of moving parts for a fairly simple arrangement. Lol. My arrangement is payment per acre, I pay for the seed fertilizer, etc for the few standing acres, I control all hunting, and stop anytime in my shed for a beer as the fridge is always stocked. 20 years and going we’re still friends. Keep it simple. Jesus. Handshake btw. What gen are we in, ZZ, XZ, clueless Z, Whatever
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I'm in gen "try not to get sued"

Good luck with your handshake. Besides Fauci said we can't do that anymore.
 
Written contracts. Consider adding required no-till and multi- species cover crops to NRCS standards also. That would make them plant things like wheat, oats, turnips, clover,etc each fall. It would really add to your available food for deer. Plus its the same stuff you likely put into food plots. Nrcs has cost share if willing to jump thru the red tape. Or just take a few less dollars in rent and make it part of the contract. Should cost no more than 50 per acre.
 
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