Farmland Lease Provisions

Many farmers have experienced striking differences in the management of farmland they cash rent when the land is transferred to the second generation. Gone are the days of a gentlemen’s agreement that concludes with a handshake around the kitchen table. The new landowners are trying to maximize their return on assets and want some written provisions in place to protect their interests. There are some excellent resources available for landowners and farm tenants that address farm leases. The fact sheet found at the website
http://ohioline.osu.edu/fr-fact/0003.html provides a thorough list of items that should be discussed and included in a farmland lease. Sample farmland leases can be found at http://www.mwps.org/index.cfm or http://www.farmdoc.uiuc.edu/pubs/Legal.asp?Subsect=Acquiring&Subclass=Lease

In addition to changing the way land rental agreements are discussed, these new landowners are not shy about renegotiating cash rental rates when they believe the opportunity exists. Current cash prices for corn and beans have landowners Farmers add to this “renegotiation” issue through business expansion goals. This desire to expand results in competition for land and from there supply and demand curves move the market price. There is an excellent article addressing the issue of rising cash rents at http://www.farmdoc.uiuc.edu/manage/newsletters/fefo06_21/fefo06_21.html .

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