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Custom farming as an alternative to leasing

A new publication from South Dakota State University Extension explores custom farming as an opportunity for producers.

In "An Alternative to Leasing: Custom Farming," SDSU Extension Farm Financial Management Specialist Burton Pflueger says custom farming has become a logical and efficient alternative for both landlords and tenants.

"Many landowners think of custom farming as a substitute to farming their land themselves or leasing to a tenant under a typical lease agreement," Pflueger says. "Potential tenants may find custom farming an alternative to leasing ground while still providing a way to utilize excess machinery capacity or available labor."

Custom farming allows a landowner who wishes to remain classified as a farmer the ability to retain close control of the farm business but not be actively involved in performing day-to-day activities. The landowner would make all of the farming decisions such as purchasing all inputs and also would receive all income from sales.

The custom operator provides the equipment and labor to perform all crop production activities and is paid a basic lump sum fee for his services. In some cases, the custom operator receives a lump sum as a base and a certain percentage of profits as a bonus.

Click here to read the full report.

A new publication from South Dakota State University Extension explores custom farming as an opportunity for producers.

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