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Friday, Apr. 29, 2016

Taking mystery out of land leases

Thursday, October 15, 2009

As harvest time goes on, farmers and landowners are going to start thinking about the coming year.

The future can be a scary image in farmers' eyes since it is usually full of mystery. One thing that farmers can start thinking about and dealing with now to help alleviate some of the mystery is to discuss their land leases with their landlords.

Both landlords and tenants need to realize that the important date of Dec. 1 is approaching. This ideally is a good date to have finalized decisions between both parties to ensure that farmers are given adequate time to begin making fertilizer applications, clear brush, etc., in the late fall and early winter before soil conditions become sloppy or while the ground is frozen enabling field access. Thus, landlords should notify tenants prior to Dec. 1 if a tenant change is to occur.

A lot of factors go into deciding how the farmland lease is arranged. Therefore, it is always best for the lease to be written down. This way, a lot of unforeseen issues can be prevented. These issues include: "What happens if the tenant or landlord passes away?" and "Who gets the large benefits (or loses) if an extremely good (or bad) year occurs?"

However, most do not realize that by documenting the farmland lease arrangement they could prevent disputes from arising. In fact, research suggests that as few as 20-40 percent of farmland lease arrangements are actually documented. Therefore, there needs to be a push toward more farmland lease agreements being documented to help handle possible disputes and to help farmers with multiple agreements keep them straight.

When deciding on your farmland lease, it is important to consider the agricultural economic climate.

Generally, farmers say they never make any money. What they need to remember is that there are actually good and bad years economically. So when deciding what level to set case rent at, farmers and landlords need to consider commodity prices, input costs, and the condition of the field. Therefore, it is important to realize that the Purdue cash rent and land value survey information is based on average land and that most land is not average due to natural factors, implementations and previous management. Overall, the farmer bears more risk in the case rent agreement. It is important to note that some individuals have implemented variable leases. If you are considering implementing a variable lease, you need to remember that it will have some impact on payments received through the Farm Service Agency office.

Since farmland lease arrangements have been a challenging issue over the past few years for farmers and landlords, the Bi-State Ag Group is hosting a program to help farmers and landlords become more informed. Their program will be Nov. 10, from 5-8 p.m., at the Beef House in Covington. The cost of the program is $20 and is payable at the door. It includes a Beef House meal and all program materials. If you are interested in attending, please call the Purdue Extension Warren County office to register at 765-762-3231 or e-mail kppearson@purdue.edu. Registration needs to be made by Nov. 4.

When negotiating your farmland lease, it is always a good idea to work toward an agreement that suits all parties involved. Then once an agreement is met, write down all the details of the agreement so that it can be referred to if a dispute arises. For more information on farmland lease agreements, consider going to the Bi-State Ag Group program Nov. 10, or contact your local Purdue Extension Office by calling 448-9041 in Clay County of 812-829-5020 in Owen County.

If you would like to contact me directly, I can be reached at either of the two numbers listed or via e-mail at smith535@purdue.edu.

Upcoming opportunities available to you through Purdue Extension include:

* Oct. 19 -- 4-H Award Program Night, Owen County Fairgrounds, 6:30 p.m.,

* Nov. 7 -- Forest and Wildlife Field Tour, Martinsville, 8:30 a.m. (call 765-342-1010 to register),

* Nov. 10 -- Bi-State Ag Farmland Lease Program (call 765-762-3231 to register by Nov. 4), and

* Nov. 20 -- Fall Achievement Program, Clay County, 7 p.m.