Crop Share Rental Arrangements For Your Farm

North Central Farm Management Extension Committee

Type: PDF
Knowledge level: Intermediate

Farm Table says:

Very similar to Irrigation Crop-share and Cash Rental Arrangements for your Farm, but more recent and fleshes out Principles with more depth. Brings out some key considerations that we might not be talking about in the Australian content - i.e. how to treat yield increasing inputs.

This US-based publication, written in 2011, has the following purpose:

to help operators (lessee) and landowners (lessor) make sound decisions and develop equitable crop-share arrangements.

It focuses on:

  • Advantages and disadvantages of crop share arrangements
  • Establishing a crop share arrangement
  • Developing an equitable crop-share lease agreement
  • Establishing Rents For Other Cropland, Pasture, And Buildings
  • Putting The Agreement In Writing

The following principles are practical and insightful:

Principle 1 – Yield-Increasing Inputs

  • Variable expenses that increase yields should be shared in the same percentage as the crop is shared.
  • A worked through example is provided

Principle 2 – Technology

  • Share arrangements should be adjusted to reflect the effect new technologies have on costs and returns.

Principle 3 – Equitable Shares

  • The landowner and operator should share total returns in the same proportion as they contribute resources
  • Figure below is a simplified example showing how the value of the land affects the landowner’s contribution.
Image: North Central Farm Management Extension Committee

Principle 4 – Compensation For Unused Investments

  • Operators should be compensated at the termination of the lease for the undepreciated balance of long-term investments.

Principle 5 – Communication

2011 - United States - North Central Farm Management Extension Committee
Read ArticleSave For Later

Related Resources