Are farm leases best when set in stone? I ran across this article, “Flexibility improves farm leases” in the Ag Journal. This article is helpful to better understand farm leases and the elements that can make each lease differ.
Farm lease agreements are as easy to determine as land prices. Which means they are not easy to understand. The farm lease and land value formula reflects back to Alfred Marshall’s textbook “Principles of Economics”, and the supply and demand economic model. Then, we throw in Mother Nature’s mix of wind, water, tenure and temperature variables. This formula gives us the reasonable farm lease agreement terms and land value. If only it was that easy!
As the ag industry grows in investment options, so does the number of absentee owners, retiring farmers and custom farmers. In the Ag Journal article, it tells about a program designed by the CSU ag business management economists who are providing decision making tools to help the farm lease process while placing emphasis on flexibility, risk-sharing and communication for both landowners and tenants.
Whether you own land and have someone else farm it, or you farm land for someone else, ideally you want to be fair and both return a nice profit to ease possibilities of entering into another agreement each growing season. A farm lease is not a sorry sucker, see you later, flea market deal. The best lease is one that both parties can walk away with mutual respect and fairness. And, in our changing times, this might mean we have to be more flexible. Hope this information gives you insight on your next farm lease negotiation.
May this season bring you a healthy harvest.
Read the entire Ag Journal Article – Flexibility improves farm leases.
CSU Extention Custom Rates Report 2012