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Flex rent reading list
Flexible cash rental agreements are complex. Before you venture into one, you need to understand it thoroughly. So, take what you can from this story, then spend a day or two reading the details in papers you can access at the following sites.
A good place to start is the Iowa State University (ISU) Ag Decision Maker site (www.extension.iastate.edu/agdm). At the home page, scroll down to the category entitled Whole Farm and click on the title Leasing.
There are lots of publications about leasing agreements and rental rates at this site. I suggest starting with the paper entitled "Flexible Farm Lease Agreements" (C2-21). Near the end of this publication is a link to an interactive spreadsheet for analyzing flexible farm lease agreements.
Next, check out "Flexible Cash Rent Lease Examples" (C2-22).
A paper entitled "Computing a Cropland Cash Rental Rate" (C2-20) might also prove helpful.
ISU offers an online Farm Leasing Arrangements course. The course shows how to compare different types of farm leases, negotiate lease terms, resolve legal questions, and develop a fair lease agreement. It has major sections on cash leases, crop share leases, and flexible leases. For more information about the $100 course, go to www.extension.iastate.edu/ames/ and click on Farm Leasing Arrangements.
Another ISU site worth visiting is the Center for Agricultural Law and Taxation at www.calt.iastate.edu/.
Near the upper left corner of the home page, click on Management. Then at the bottom of a column called Farm Economics Facts and Opinions, click on Search archive for all earlier Illinois Farm Economics: Facts and Opinions here. Then scroll down the list.
Be sure and read "2009 Rental Decisions Given Volatile Commodity Prices and Higher Input Costs" (FEFO 08-17, 10/15/2008) by Gary Schnitkey and Dale Lattz.
Then scroll on down to a paper entitled "Flexible Cash Leases Based on Crop Insurance Parameters" (FEFO-07-13, 8/8/2007) by Schnitkey and Lattz.
Make at least one more stop before you leave Illinois. Return to the farmdoc home page and click on law and taxation (which is immediately below management). Scroll down to the section called Acquiring Agricultural Land and locate the paper entitled "Illinois Farm Leases: One Variable Cash Rent Option" (Revised August 2008) by Donald Uchtmann and A. Bryan Endres.On December 19, 2008, the USDA Farm Service Agency issued Notice DCP-202. In simplest terms, it says that flexible cash leases will be treated as cash leases rather than crop share leases. Go to www.fsa.usda.gov and do a search for DCP-202.
Purdue University has a comprehensive list of publications from Purdue and elsewhere about all types of rental arrangements. Go to www.agecon.purdue.edu/extension/pubs/farmland_values_resources.asp.
At the bottom of that list there is a section on Lease Analysis Programs that has links to spreadsheets for analyzing rental arrangements.
Ohio State University has several Fact Sheets about renting land. Go to http://ohioline.osu.edu and click on Farm. Then click on Fact Sheet Series. Finally, click on Farm Rental Series. Check out "Flexible Cash Rents for Farmland." Also look at "Tax Issues for Farm Rental Agreements." It has information on Social Security rules and tests for material participation.