Fall crop harvest is progressing in Indiana significantly better than in the western part of the Corn Belt. Considering our wet, cold spring and flood, it appears that we are blessed with a respectable harvest this growing season. However it is going to be a long harvest season as corn moisture levels are high and many fields had portions that were replanted one or two times making harvest interesting.
Following up on last week's lease discussion, continued rising crop input costs and the uncertainty around 2009 crop production, it will be a challenge to figure out a 'fair' cropland lease. This is particularly true of farms operated in a cash rent agreement.
Probably the most important point this week is the benefit of having the cash lease written. Some tenants and landlords continue to operate within a verbal agreement, or a written lease whose date is no longer valid. Verbal leases are legal in Indiana, so rental transactions can continue to take place without anything in writing. A statement I have heard from individuals on both sides of the contract is that they would prefer a written lease, but do not want to perceived as being 'pushy' or not trustworthy of the other party. A written contract is not a lack of trust, but simply a tool to help communicate the desires of both parties. What if you become incapacitated with a verbal lease? What if there is a problem with executing what one party thinks is important to the contract? The written lease should give peace of mind to both parties.
A cash farm lease prototype is available from the Extension office. Your attorney may also have a lease template and provide insight into your particular situation.
What constitutes lease termination and when is proper notice given? Gerald Harrison of Purdue ag economics writes that without termination and/or a new lease agreement, last year's lease terms apply for the coming 2009 year. Advance notice to terminate in Indiana, if no other provision applies, may be considered timely if delivered before the end of November. This timing is based on a three month advance notice requirement in the Indiana law for year-to-year leases, especially those that are oral leases. Provisions in a written lease may requireconsultation with legal counsel: an hour with your legal counsel may pay big dividends.
A question that has been raised concerns how the tenant is notified of termination. In an ideal world of perfect communication and business transactions, this would be done in person. In reality, landlords do not desire potential confrontation and may procrastinate notifying the tenant, making the process even more stressful. I think all of us can do more to communicate and should voice concerns in a civil manner. If a tenant has done a good job farming your property and you think you should earn more rent for 2009, shouldn't your tenant deserve a chanceto sit down with you and review lease terms? Or if a lease term has been bothersome to you as a landlord, have you voiced this concern to your tenant?
The next few months will be awash in negotiation and communication regarding the 2009 crop season. Several landlords and tenants are sitting down, or have already done so, and discussed just what their expectations are for the coming year. Please think about how your tenant is an asset to your land investment, including care of the land, contribution to community, and positive factors. I will leave you with this question: how well have you communicated with your landlord or tenant this year?
You can contact the local Purdue Extension Office by calling 829-5020 Ext. 14 in Owen County or 448-9041 in Clay County for more information or publication copies regarding this week's column topic or to RSVP for upcoming events. It is always best to call first to assure items are ready when you arrive and to RSVP for programs. While most publications are free, some do have a fee. All times listed are Eastern Time.
Nov. 4 Election Day-Extension Offices Closed
Nov. 11 Veteran's Day-Extension Offices Closed
Nov. 13 Bi-state Farm Management Program, Beef House
Nov. 18 Purdue Extension-Owen County Annual Meeting, Fairgrounds, 6:30 p.m.
Nov. 27-28 Thanksgiving Holiday-Extension Offices Closed
Dec. 2 Bi-state Crops Program w/ PARP & CCH credits, Beef House, 8:30 a.m.
Dec. 5-6 Indiana Farm Bureau State Convention, Evansville
Dec. 11 Farm Income Tax Program, Brazil, 7 p.m.
Dec. 16-17 Certified Crop Advisor Conference, Indianapolis