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ISU specialist encourages flexibility in cash lease terms

Agriculture.com Staff 08/24/2006 @ 2:29pm

In the state of Iowa, tenants or landlords who wish to make changes for the following year's lease arrangements must provide termination of the existing farmland lease on or before Sept. 1 each year.

In late August, some anxious moments occur just before the dreaded "termination notice" that is usually delivered in person or by certified mail.

Iowa State University farm management field specialist Steven Johnson offers some additional questions for landlords regarding leases for 2007 and beyond in workshops conducted recently around central Iowa.

  • "Can your tenant grow whatever crop he/she wants?" Johnson asks. "If they can and you have productive soil, they'll likely be growing more corn on corn in the coming years. You've got to be in tune with your farmland, leasing issues and communicate with your tenant. Put lease arrangements in writing so the intent of both parties is clearly stated."
  • "Is fertility of concern? Growing multiple years of corn may affect the land's fertility," Johnson says. "Growing corn on corn will likely mean additional tillage and perhaps more animal manure to reduce fertilizer costs."
  • "Do you have erodible land, that creates some issues," he says. "Have you seen the conservation plan for your farm or does one need to be included in your farm lease?"


Recommendations
Johnson advises landlords to work with their tenants along with the U.S. Department of Agriculture Natural Resources Conservation Service (NRCS), district soil and water conservation, university extension service, crop consultants and farm managers to craft leases that might reflect soil test information and proven yields adjusted for dry weight. The written lease would need to spell out such provisions that both the tenant and landlord agree to.

Requiring grid soil sampling using a GPS system to more accurately reflect changes in nutrient and lime might be considered. Because the information benefits both the landlord and the tenant, they may want to split the costs for collecting this information.

Johnson encourages landlords and tenants to consider flexible cash rent leases which include a set rental rate with provisions for additional dollars if yields and/or prices improve. Few operations are using such leases now, because flat cash rental rates are much easier. With an emerging biofuels demand-driven market, yet uncertainty for the 2002 farm bill beyond the 2007 crop production year, these flexible cash rent leases make sense.

In the state of Iowa, tenants or landlords who wish to make changes for the following year's lease arrangements must provide termination of the existing farmland lease on or before Sept. 1 each year.

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