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3. 2019 National Farm Business Management Conference

Cropland Lease Arrangements: Mitigating Yield and Price Risk

Jim Jansen and Jeffrey Stokes

Summary

Approximately 40 percent of the farmland in the United States has a rental arrangement in place for crop or livestock production. In major grain producing regions, crop production on rented acres may exceed 50 percent of the farmland in an area (NASS 2014). Landlords and tenants commonly utilize three types of rental agreements on rented land including crop shares, cash leases, and alternative flex lease arrangement.
Landowners and operators commonly face uncertainty in crop yields and prices when negotiating rental arrangements. Depending upon the terms of the lease, the equitability of the contract may vary depending upon actual crop yields or prices. This session will demonstrate how optimum lease arrangements change based upon conditions by evaluating simulated crop yields and prices for an eastern Nebraska farm. Specifically, discussion included as part of the presentation will define the differences between the three major types of leases, evaluate the relationship between crop yields and prices, and develop strategies based upon the simulation to better formulate cropland rental arrangements.
Educational efforts on land management and lease arrangement have extended throughout Nebraska over the last decade with over 500 people per year attending these outreach events. Findings from this session will be utilized in outreach across the state. Attendees at this session will improve their understanding on formulating cropland leases when advising or conducting outreach for agricultural producers.

Details

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