A lease of plant shares may be okay for a farmer by sharing the fruits of her labour in exchange for increased protection against economic and weather factors beyond her control. Compared to cash leases, the farmer needs less working capital under a harvest share lease, as the lessor participates in these costs. A farmer who uses a lease with a crop share must maintain a shared expenditure count and be able to articulate realistic production targets for the owner. Most of the time, when we talk about fair rent, we are really talking about a fair and equitable rent, based on the equity contributions that both parties are prepared to make in this tenancy agreement. For a landowner who wants to generate a higher rent than the current local cash rent and is willing to take some risks, a lease with harvest share should be considered. Crop shares can be a fair way to lease farmland. It is recommended to write rental contracts. To learn more about the definition of a fair action agreement and see an example of a culture-sharing lease written, visit aglease101.org. This is really just the tip of the iceberg when it comes to renting harvest coins. For more information, including a worksheet that applies the above principles, visit the Univeristy of Tennessee Farmland Legacy website and click Crop-Share Leasing for UT Extension Publication PB 1816-E Crop-Share Leases. The spreadsheet can provide answers to the questions – how to divide the crop between owner and tenant? How will the cost of common inputs be shared between landowners and tenants? This article picks up where my last one left the farm. A second type of business rental is the agreement on the share of culture. This is more flexible than the fixed rent in cash.
Under a contract to participate in the harvest, the lessor and tenant agree that the rent is paid in the form of a percentage of the income of the estate concerned. For example, the parties may agree that the landowner should receive 25% of the land`s income as rent. This generally assumes that the landowner does not contribute to the country`s inputs (seeds, pesticides, fertilizers, etc.). In the case of other cultural action leases, the landowner may agree to pay 33% of the salary and accept 33% of the income. Harvest participation agreements differ from firm leases in that the amount paid as rent varies from year to year on the basis of the country`s income. A good year, with high prices and incomes, will result in high rents. A bad year, in a drought or with the lowest prices, will generate a low rent. A contract to participate in the harvest distributes the risk between the owner and the farmer.