Purdue University`s website goes even further by offering a table that allows a breeder to compare the rents he would pay for various income, costs and prices under a cash lease, Crop Share and Flex Cash. While this table is designed for U.S. breeders, it can be easily adapted to Canadian crops. This table is just a link on a website with a wide range of information about land leasing. www.agecon.purdue.edu/extension/pubs/farmland_values_resources. Asp The price adjustment factor can be determined by reports comparing the current year`s prices with the price of crop insurance. For example, if the price of wheat rises by $1 to $6.50/bu. The basic interest rate is revised upwards by 6.5/5.5 times the base rate of $44, or $52 per hectare. Both landlords and tenants benefit from higher prices. If the price had dropped by 50 cents, the rent would be reduced to 5.0/5.5 times $44, or $36 per hectare. Part cutting is not as widespread as it used to be, but it is still a popular agreement between landowners and tenants.
The amount of land, buildings and expenses made available by the owner determines its share of the harvest. It is not uncommon to see that the owners share 18 to 35 per cent of the crop. Leasing plant shares is becoming increasingly rare because many landowners do not want to take a risk of yield or price. These leases are usually 75 percent tenants: 25 percent landlords. If fertilizers and chemicals are shared, then the rental contract moves to 66 percent tenants: 33 percent owner. It is important to agree on how yields will be measured and when prices will be set. As falling prices tend to be lower, the agreement could use an average fall and spring price to determine the price. Good points out that flexible cash agreements could be made on the basis of a basket of crops reflecting the rotation of individual crops or crops. Prices can be compared to previous year`s prices or a moving average of a number of previous year`s prices; which will remove some of the price volatility from the calculation. The basic cash rate could reflect local fair value or be determined exactly as the cash rental rate is agreed.
It could be defined by welcoming a percentage of the yield and price of the crop. Since the contribution approach requires detailed budgeting, Nibourg indicates that many donors simply do not attach themselves to the market approach for the determination of the share of the crop, support the common allocation in the area and then modify the agreement to reflect unusual circumstances, such as the owner. B that delivers grain deposits or provides some of the work or equipment. Whether you agree on cash, flexible cash or Crop-Sharen rental, there are many non-monetary factors that should also be included in the agreement. These include soil-working practices, fertility practices, thatch incineration, straw removal, weeding, use of residual herbicide, crop rotation, and specific payments and commitments, such as the possible sale of emission credits. Craig Dobbins goes straight to the point. “In most land leases,” says the ag economist at Purdue University, “both parties really have a hard time knowing where the rent should be set.” On the other hand, a portion of the harvest includes the owner in the agricultural process, including marketing, purchasing equipment and even choosing the crop. So what`s the best option? Crop action or leasing? The answer is that it depends. The lessor could also be considered a farmer if the lease is structured as a detailed crop plan in which the landowner retains control over land use, crops, fertilizer rates and pesticide use.