Farmland Lease Considerations



By:  Allan Vyhnalek

A couple of co-workers and I adapted a publication to reflect cropland rent lease considerations.  If you would like a copy, contact the office and we can get you one.  It is a one page handout that gives a laundry list of items that can be considered as lease provisions.

Please treat this lease considerations list as just a list of suggestions.  I don’t expect any two parties to use all the items listed to develop their farmland lease.  It is adapted to provide some key considerations to think about.

This same team of educators has just completed a round of the lease meetings across the state.  In total there were 27 meetings starting back in August here in Columbus and for me finished this past Monday in Norfolk.  I appreciate people coming out.  More importantly, I learn more from the participants than I ever teach.  To study the faces of fellow Nebraskans as they are thinking about their farmland lease issues is a very interesting experience.  I’m really confident that a vast majority are really trying to do this right.  It is very reassuring.

One lease provision that we will need to think about for upcoming years is a provision surrounding the use and application of Phosphorous (P).  P is essential for top yields.  The landlord and tenant should put together a lease provision that protects both parties as it relates to P in our fields.

From the landlord side, if the tenant doesn’t put out a lot of P, and decides to use the P in the soil reserve, the P can be depleted over time.  Conversely, there are certain circumstances where too much application of livestock manure can lead to over application of P to the soil over a period of time.   To protect the landlord, defining the level of P in the soil may be an appropriate provision.  If there is too much, consider not allowing additional manure application until the level is lowered.  If the tenant vacates the lease with a ‘low’ level of P in the field, then some compensation to the landlord may be appropriate to bring the level back for the next tenant.

From the tenant side, you may have to put a lot of P on a field to bring it up to productive levels.  That can be expensive.  In addition, you may expect P to last for more than one year, especially when you put on a significant amount of fertilizer to replenish the available nutrient.  The tenant should ask for a provision in the lease that indicates that the tenant be reimbursed for some depreciable amount of the P if the lease is terminated prior to using that applied P.

All of this requires soil testing.  If the landlord wants this additional soil test information, they probably should be willing to help with the soil test costs. 
The whole concept of writing a provision around soil fertility has been more challenging than I imagined.  If you have any questions after reading this, please contact me.

For more information or assistance, please contact Allan Vyhnalek, Extension Educator, University of Nebraska-Lincoln, Extension in Platte County.  Phone: 402-563-4901 or e-mail avyhnalek2@unl.edu
 

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Topics : Business_Finance
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Locations : Columbus
People : Allan Vyhnalek




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