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

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Leasing Your Land

Gene Schriefer UW-Madison, Division of Extension gene.schriefer@wisc.edu (608)930-9850

“Farming looks mighty easy if your plow is a pencil and you are a 1000 miles from the field.” Dwight D. Eisenhower “The farmer is the sole member of society that buys retail, sells wholesale and pays the freight both directions.” John F Kennedy

I heard land is renting for $300/acre? What’s my land worth to rent? Is the rent I’m getting “fair”? https://www.nass.usda.gov/Statistics_by_State/Wisconsin/Publications/Coun ty_Estimates/2020/WI-County-Cash-Rent-08-20.pdf Grant - $209 Green - $198 Iowa - $175 Lafayette - $217 Shouldn’t our rent be the county average? Wouldn’t that be fair?

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“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.

1) Is there a rule of thumb relating cash rental lease rates to farmland value? https://farms.extension.wisc.edu/articles/wisconsin-agricultural-land- prices/#sectionthree

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• Soil Quality/Yield Potential
• Local Demand/Competition
• Field Size
• Field Accessibility
• Distance

Factors Affecting Land Lease Prices

Average Production Costs

FULL DISCLOSURE -

I AM NOT AN ATTORNEY!

Leases in Wisconsin

• Wisconsin Statute 704 -

https://docs.legis.wisconsin.gov/statutes/statutes/704/

• 704.01 (1)"Lease" means an agreement, whether oral or written, for transfer
• f 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

• f a building.

“Nightmare” Leases

• Oral agreements
• Poorly written agreements

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A “pleasing” lease

• Is it written down – and there are 2 copies of it!
• Defines limits
• Clarifies expectations
• Forces you to think about & talk things out

BEFOREHAND

• Good reference when our memories fail
• Win-Win for both parties
• 704.07 (3)(a) If the premises are damaged by the

negligence or improper use of the premises by the tenant, the tenant must repair the damage.

Farm Rental Agreement Checklist

• Who’s the lease between
• General Terms
• Termination
• Operation and Maintenance
• Landlord Rights & Government Payments
• Arbitration
• Crop Share Provisions

Parties to Lease

• Date of the lease goes into affect
• Names and addresses
• Legal description
• Signatures

General Terms

• Time/Period
• Rental Amount
• When & how rent will be paid and any penalties
• Insurance on property
• Not a partnership
• Subletting

Termination

• When & how the lease may be terminated and

notification requirements

• Reimbursement provisions
• Acts of the tenant that would constitute default
• Tenant’s rights if property is transferred

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Operation and Maintenance

• Desired (or prohibited) farming practices
• Process for measuring/maintaining fertility
• Control of noxious weeds
• Maintaining fences
• Right to make improvements and compensation
• Soil conservation practices
• Use of non crop areas not covered in the lease

Landlord Rights and Government Payments

• Landlord right to enter the property
• Landlord right to a security interest in crop
• Participation in federal farm programs, eligibility.

Arbitration of differences

• Changes must in in writing and signed
• Procedure for resolving disputes

Crop Rent Arrangement

 Cash Rental Agreement  Crop Share Lease  Flexible Lease Flex on Price Flex on Yield Flex on Both Iowa County Average Crop Land Cash Rents - 2020 $175/acre (crop)

• NASS data

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

Pasture Lease Agreements

• Your selling grass, more grass = more value
• How many animals are allowed
• You’re renting a

pasture, but I’m leasing a feedlot

Pasture Lease Agreement

• “value” of Pasture affected by:
• Productivity of the pasture (carrying capacity)
• Quality of fencing
• Water
• Facilities
• Size
• Value of alternative forage (hay)
• Distance
• Location, location, location

2019 Iowa County Average Pasture Rent ~$43.00 acre Range in Values $10 - $100/acre

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Animal Unit Month

• 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
• r 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.

Ag Leases 101

• http://www.aglease101.org/

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