Figuring How much Land Rent to Offer

[wade]

In our area (SW Alberta) most have gone away from the old 1/3 crop share agreement to a cash rent because of rising input costs, etc.
If 33.3% is too high, then what percentage of gross returns do you base a fair land rent price on?
Also, who owns the straw with most contracts?
Other considerations?

[Oliver88]

33% is insanity.

20% would be my top end.

[15444]

33%?! No wonder you grain farmers don't make squat. You give the profit to someone else!

[15444]

33%?! No wonder you grain farmers don't make squat. You give the profit to someone else!

[stonepicker]

33% must be with paying some inputs also?

[riders2010]

Not much shares here unless family as many arguments over how much grain there was or not moved in time etc etc. But it used to be 25% or if 33% then 33% of input costs also.

[Braveheart]

We did 33% with one landlord this year. He paid 33% of all inputs except fuel. We felt we did well. Landlord did very well. Crop was canola and yield was extremely good.

[farmaholic]

There is a 20-25% crop share with a "minimum" cash value rent. Kinda different. If you bomb you still owe a cash rent. Not sure on values though.

[Richard5]

The more you give away on the crop share the less income tax you pay

You don't get a donation receipt though...

[fjlip]

Crop share is a storage hauling selling nightmare, I was told by one who has 5 such landlords.

[blackpowder]

Could be different from area to area. Used to be 33% at one time here with owner paying 1/3 of seed fert chem and ci. Most went cash here. Some are going back to a % of gross, no expenses. Most are at %25.
@ the time, on the land I had under these arrangements, I compared the two scenarios, %25 vs %33.3. They worked out very close to the same.
Having said that, the % of gross is enough hassle without keeping inputs seperate. Dont forget your %1 aginvest loss if u sell in his name.
My preference would be %20 of gross. Especially as most landowners have no bins. Of course depending on cash rates in your area!! This is with cash in our area of $80 - $115 / ac.
Any higher % takes too much in the great years, and still gives them a decent minimum in poor years. They have no ins.
All of this is moot of course as, with the price of gas, you pay the market or walk. And your competitors may have a lower fixed cost than you so can pay more.
Remember the beneficiaries who get the land will require a %5 roi including appreciation. Good luck!

[blackpowder]

Could be different from area to area. Used to be 33% at one time here with owner paying 1/3 of seed fert chem and ci. Most went cash here. Some are going back to a % of gross, no expenses. Most are at %25.
@ the time, on the land I had under these arrangements, I compared the two scenarios, %25 vs %33.3. They worked out very close to the same.
Having said that, the % of gross is enough hassle without keeping inputs seperate. Dont forget your %1 aginvest loss if u sell in his name.
My preference would be %20 of gross. Especially as most landowners have no bins. Of course depending on cash rates in your area!! This is with cash in our area of $80 - $115 / ac.
Any higher % takes too much in the great years, and still gives them a decent minimum in poor years. They have no ins.
All of this is moot of course as, with the price of gas, you pay the market or walk. And your competitors may have a lower fixed cost than you so can pay more.
Remember the beneficiaries who get the land will require a %5 roi including appreciation. Good luck!

[blackpowder]

Oops. This seems to be the only site i have this problem with.

[Flatlander]

I think it's all cash here these days. I ended my last crop share a dozen years ago. Grew 30 bu green peas got 9.50 / bu, anyway LL got $100/ acre me got $200/acre. Only trouble was all in I spent North of $200. Next spring LL suggested I seed whole farm to those green peas.

[wade]

A third crop share is from a few years back. Gave it up, couldn't afford it. Had to have a starting point for discussion. Wanted to know other operations views or ways of figuring a "pain"(paying) threshold