cash rent or crop share??

[dyck]

Which is better. Where could I get a generic rental agreement? Does the renter usually pay any of the expenses in a crop share agreement?? Any input appreciated. Thanks

[tdarling]

In my opinion, neither is better; they're just different. Commonly, the land owner does pay a portion of the input costs. A typical share agreement might be 1/3 (owner) to 2/3 (renter) with each of them paying the same proportion of the seed, herbicides and fertilizer. However, this is not cast in stone; each situation will be different. Other agreements that are becoming more common are a 1/4 (owner) and 3/4's (renter) with the renter paying all costs except land taxes. Flexible cash rent is another option. Under this agreement, the owner receives a payment based on a set number of units of product. For example, the owner might get a payment equivalent to 18 bushels of barley. Under this type of agreement, the owner accepts a share of the price risk. Generic agreements for these and other rental agreements can be found in the Alberta Agriculture publication 'Leasing Cropland in Alberta.' It's available from any district office or from the department's website (listed below) for about $5. This publication is being re-written and the new version should be available soon.

[monner]

I found it interesting when I moved north to the Peace that a lot of the agreements were including a share of the chemicals and fertilizer. I was used to a situation where the tennant paid all expenses on a 1/3 2/3 crop share. I also found that some farmers attitudes about crop share renting were that this land would be delt with last because the farmer was getting all the crop from the other land whether it was cash rent or wholy owned. In southern Alberta where I grew up you made sure the landlord was kept happy because if you didn't there were a lot of other farmers that were willing to take your place farming this land. Supply and demand of both rentable land and tennants play a big roll in what kind of deal you can negotiate. What I suggest to landlords now is: if you know your tennant is a 'good' farmer, trustworthy and that he rarely if ever leaves crop out over winter, then some form of crop share is generally a better deal for you. If this is not the case or you are uncertain as to this information about the tennant then lean towards some form of cash rent. Remember, the opposite can be true for the tennant. So here again supply and demand of land and tennants will play a big roll in what you can negotiate.

[dyck]

There's a lot of 'it depends' for this question. Cash rent gives the tenant more flexibility and independence in cropping and management decisions. It also gives the renter all the benefits if prices and/or yields rise. However, the renter assumes all the production and marketing risk. Often, a portion of the rental is due up front. These leases are usually short term and yearly negotiation is common. Crop share leases allow sharing of production and marketing risk. Thus, both land owner and tenant share in the profits (and losses). Since these leases are longer term, there is more certainty for the renter. However, crop share leases require more administration (quotas, delivery, etc.) and rely on the integrity of the tenant.