Successful land leasing in Australia

This RIRDC/AgriFutures report helps broadacre farmers make decisions concerning the leasing of land.

Leasing is considered an advantageous option as bigger businesses tend to achieve higher returns as a result of economies of scale.

The paper outlines the financial and environmental benefits of business expansion through leasing for both lessees and lessors. It also finds that many smaller landowners could be better off financially is they considered leasing their land to larger landowners.

The methods of establishing a fair lease rate and term are discussed:

• The rate of return method.
• Rate per unit of production method.
• Percentage of expected gross margin method.

The paper acknowledges that as a result of high stock prices, there is difficulty in establishing a fair grazing lease. The paper recommends that taxation, legal and detailed financial analysis is undertaken in regards to the lease.