Posted by MarkB_MI on May 15, 2012 at 02:35:32 from (32.178.67.167):
In Reply to: Cash Rent Contracts posted by Christos on May 14, 2012 at 12:48:49:
Hmm. If the rent is based on yield, it's not really a cash rent, is it?
Did you really mean "median" rent, or did you mean "mean" (average)? I would expect the median to be lower than the average, since a few very high rental rates would skew the average higher. I'm not sure where you got your data from, but you can go to the USDA NASS site at http://www.nass.usda.gov/Surveys/Guide_to_NASS_Surveys/Cash_Rents_by_County/index.asp and get the average cropland rental rate for your county.
My leases all specify: 1. Term of lease 2. Actual acreage 3. Rate per acre 4. Who gets the government farm program payments.
The lease should also stipulate that good farming practices are to be followed (e.g. noxious weeds and erosion controlled) and anything the tenant is responsible for maintaining (e.g. fences, roads, buildings).
I have heard of leases where the cash rent was automatically adjusted up or down based on a specific commodity price. But I've never heard of a cash rent being adjusted based on yield. The tenant is the one who has the most control over yield, and you have no way of knowing if he's being honest about how much he harvested.
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