Leasing Your Land miles from the field. Dwight D. Eisenhower Gene - PDF document

11/17/2020 “Farming looks mighty easy if your plow is a pencil and you are a 1000 Leasing Your Land miles from the field.” Dwight D. Eisenhower Gene Schriefer UW-Madison, Division of Extension gene.schriefer@wisc.edu (608)930-9850 2 4 “The farmer is the sole I heard land is renting for $300/acre? What’s my land worth to rent? member of society that Is the rent I’m getting “fair”? https://www.nass.usda.gov/Statistics_by_State/Wisconsin/Publications/Coun buys retail, sells ty_Estimates/2020/WI-County-Cash-Rent-08-20.pdf wholesale and pays the Grant - $209 freight both directions.” Green - $198 Iowa - $175 Lafayette - $217 John F Kennedy Shouldn’t our rent be the county average? Wouldn’t that be fair? 5 6 1) Is there a rule of thumb relating cash rental lease rates to farmland value? 65 157.5 120 90 285 192.5 230 260 https://farms.extension.wisc.edu/articles/wisconsin-agricultural-land- prices/#sectionthree “all the women are strong, all the men are good-looking, and all the children are above average.” Garrison Kiellor Averages are accurate, averages are interesting, but they may NOT provide the detail at the individual farm level. 7 8 1

11/17/2020 Factors Affecting Land Lease Prices  Soil Quality/Yield Potential  Local Demand/Competition  Field Size  Field Accessibility  Distance Average Production Costs 9 10 FULL DISCLOSURE - I AM NOT AN ATTORNEY! 11 12 • Wisconsin Statute 704 - https://docs.legis.wisconsin.gov/statutes/statutes/704/ • Oral agreements • 704.01 (1)"Lease" means an agreement, whether oral or written, for transfer • Poorly written agreements of possession of real property, or both real and personal property, for a definite period of time. A lease is for a definite period of time if it has a fixed commencement date and a fixed expiration date or if the commencement and expiration can be ascertained by reference to some event, such as completion of a building. Leases in Wisconsin “Nightmare” Leases 13 14 2

11/17/2020 • Is it written down – and there are 2 copies of it! • Defines limits • Clarifies expectations • Forces you to think about & talk things out • 704.07 (3)(a) If the premises are damaged by the BEFOREHAND negligence or improper use of the premises by the tenant, the tenant must repair the damage. • Good reference when our memories fail • Win-Win for both parties A “pleasing” lease 15 16 • Who’s the lease between • General Terms • Date of the lease goes into affect • Termination • Names and addresses • Operation and Maintenance • Legal description • Landlord Rights & Government Payments • Signatures • Arbitration • Crop Share Provisions Parties to Lease Farm Rental Agreement Checklist 17 18 • Time/Period • When & how the lease may be terminated and • Rental Amount notification requirements • When & how rent will be paid and any penalties • Reimbursement provisions • Insurance on property • Acts of the tenant that would constitute default • Not a partnership • Tenant’s rights if property is transferred • Subletting General Terms Termination 19 20 3

11/17/2020 • Desired (or prohibited) farming practices • Process for measuring/maintaining fertility • Control of noxious weeds • Landlord right to enter the property • Maintaining fences • Landlord right to a security interest in crop • Participation in federal farm programs, eligibility. • Right to make improvements and compensation • Soil conservation practices • Use of non crop areas not covered in the lease Operation and Landlord Rights and Maintenance Government Payments 21 22  Cash Rental Agreement Iowa County Average Crop  Crop Share Lease Land Cash Rents - 2020  Flexible Lease $175/acre (crop) Flex on Price • Changes must in in writing and signed - NASS data Flex on Yield • Procedure for resolving disputes Flex on Both Range in Cash Rent Values $65 - $320/acre https://www.nass.usda.gov/Statistics_by_State/Wisconsin/Publications/County_ Estimates/2020/WI-County-Cash-Rent-08-20.pdf Crop Rent Arrangement Arbitration of differences 23 24 • “value” of Pasture affected by: • Your selling grass, more grass = more value • Productivity of the pasture (carrying capacity) • How many animals are allowed • Quality of fencing • You’re renting a • Water 2019 Iowa County Average Pasture Rent pasture, but I’m ~$43.00 acre • Facilities leasing a feedlot Range in Values $10 - $100/acre • Size • Value of alternative forage (hay) • Distance • Location, location, location Pasture Lease Agreements Pasture Lease Agreement 26 27 4

11/17/2020 • 1000 lb. cow with calf = 1 A.U. • AUM = 810 pounds (DM) of forage/month • a 1400 lb. cow = 1.4 AU • If our pasture acre produces 4500 lbs. forage = 4500/810 • http://www.aglease101.org/ or 5.5 AUM • 1 cow for 5.5 months • 5.5 cows for 1 month • A pasture that would support 30 AUM = 30,000 lbs. If a farmer has 1650 lb. cows = 30/1.65 = 18 cows. Animal Unit Month Ag Leases 101 28 29 5