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Discussion Starter · #1 ·
Ive been renting a piece of land from a friend and we are trying to figure out a good formula for rent. He wants to get the most $$ he can and i need some protection to high rent costs as the field can be prone to flooding and have only received one really good crop in the last 5 years from it. The land is really nice and is capable of producing well if mother nature cooperates but shes had a real hate on for us the last number of years. Any ideas on how to correlate rent with yeild and crop prices??
 

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Discussion Starter · #3 ·
Can you be more specific about crop share? how it works? Rent right now is 35$ per acre and he would like 40+ but this year i pulled about 16-18bu/acre canola off the field and would go broke at that rate lol. Ive been working on drainage here and there but theres lots of little pot holes that under normal years would never be an issue and would probably take a pretty good investment to drain them all.
 

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We had a similar situation a few years back. Had a piece that we were renting for $35 and landlord decided he wanted $50. It was at the beginning of the wet years here and we had some spring flooding on that field. I normally would have told him we weren't interested in renting anymore at that price but the bonus on that piece was 15000 bu of storage that we needed. So we struck an agreement that I will pay $45 per ac on the acres we are able to seed which has been between 65 and 80 % of the field in the last 5 years. So we are actually now paying less than before on average. But the constant flooding does hurt the general yield and weed control is more difficult.
 

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I have 11 land lords with multiple different leases. Still, they are all basically cash or crop share. I strongly prefer to keep it simple. Crop share is simple. Landlord gets x% of the crop. Say you get 2/3 and they get 1/3. I do have one lease were the owner gets 1/3 and pays 1/3 the fertilizer. I have a couple that are 30%/70%, some 25/75. I fertilize and probably make a bit less with the 30/70 split, but I prefer it over 1/3 and 2/3. Keeps things simple instead of trying to keep track of fertilizer use on each field to figure out owners share of expense. If you only have one or 2 landlords that can be an easy thing to do. My dad does 1/3 and 2/3 then shares fertilizer and crop spray. He only leases from one person. Makes it easy to figure out. Most places he buys from splits the cost while he purchases supplies and bills it accordingly.
 

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Discussion Starter · #6 ·
1/3-2/3 share seems ridiculously high... On 20 bu/acre canola thats still 64$/acre. Even at 25/75 split that still works out to 48/acre. I dont understand how anyone can make a profit at that rate? If a guy could rent land out for that price he'd be better off than trying to farm it.
 

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1/4 crop share is common in my area, as long as theres trust between both partys.

I'll only do cash rent. Its a write off and what ever I get I get
 

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Here is something I found a couple years back. It can be contribute to a conversation. Print it out and play with the numbers, it's interesting what happens if a variable or two are changed. There is room to compare different crops in a rotation if desired.
 

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Here is a crop share arrangement I have with a good friend who has some land.

We are assuming his land is worth 45/ acre and my equipment,labour etc is worth 90/ acre he pays 2/3 of all seed, chemical, and fertilizer, and supplies the land. I pay 1/3 of seed, chemical, and fertilizer and supply
Equipment and labour. After harvest we split the crop 50/50 and then go drink some beer. On some crops his share of expenses are higher and on some they are lower. Here is the math on canola

RR canola Seed 60. Chemical including fungicide. 30. Fertilizer 70= 150
His share. 100 mine. 50.

So my costs are 50+90= 140
His costs. 45+100= 145
Keep in mind that this is for a good friend and neighbour oth people may not want arrangement like this but I think it is fair. And more of the cash expense risk is with the land owner. The other option we talked about was a straight custom farm arrangement
 

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Here is a crop share arrangement I have with a good friend who has some land.

We are assuming his land is worth 45/ acre and my equipment,labour etc is worth 90/ acre he pays 2/3 of all seed, chemical, and fertilizer, and supplies the land. I pay 1/3 of seed, chemical, and fertilizer and supply
Equipment and labour. After harvest we split the crop 50/50 and then go drink some beer. On some crops his share of expenses are higher and on some they are lower. Here is the math on canola

RR canola Seed 60. Chemical including fungicide. 30. Fertilizer 70= 150
His share. 100 mine. 50.

So my costs are 50+90= 140
His costs. 45+100= 145
Keep in mind that this is for a good friend and neighbour oth people may not want arrangement like this but I think it is fair. And more of the cash expense risk is with the land owner. The other option we talked about was a straight custom farm arrangement
sorry but your chem and fert cost are too low imo, just my 2 cents
and what is in your $90 dollar an acre in cost.
 

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I might be a little low on my equipment costs but if I was gonna custom farm his land it w old be in that 90 buck range for all operations.this cost is basically for my equipment and manpower. Chemical costs = three passes of glyphosate @1/2 lt equivalent and a fungicide. 10+15=25. Fertilizer costs are what I ihave booked and paid for 70-25-0-20 blend. These are my costs. Thanks though you got me thinking first thing in the morning. :)
Keep in mind I may not do this for any land owner I much prefer the strAight cash rent, however this is a different situation
 

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1/3-2/3 share seems ridiculously high... On 20 bu/acre canola thats still 64$/acre. Even at 25/75 split that still works out to 48/acre. I dont understand how anyone can make a profit at that rate? If a guy could rent land out for that price he'd be better off than trying to farm it.
We've done a 1/3 share agreement in the past where the landlord pays a third of the expenses. It can still be very profitable for the landlord on good years but limits the risk to the farm operator.
 

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with these flex rents there has to be lots of trust between the farmer and landlord (especially on landlords side)
we don't do flex rent as it makes things complicated and I like to keep it straight he knows where he stands and where we stand, wouldn't want anyone to talk to a landlord and say ya we bought fert cheaper or chem cheaper and get him worked up (you can imagine how coffee shop talk goes) if there's a bad year that's the risk of farming we deal with it and move on. You can't always eliminate all risks in farming by telling the landlord hey you carry some risk too, he wants max profit and wants to know what he is going to end with the end of the year money wise.

just my 2 cents
 

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Did the crop share with land lords paying their share in the past. Now do cash rent. Much easier to not have to be hitting up guys for their share of this and that. Have numerous landlords so is much better not having to keep everything seperated in storage or when hauled to town.
 
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