Farm Leases: What Are Your Options?

It is a dilemma almost as old as farming: how to encourage a newer generation of farmers without drowning them in debt. The question has arguably never been as important as now, with many farmers looking to scale up their businesses and stay profitable.

The money required to bankroll all farming operations can stretch the financial resources to a breaking point. One valuable asset for such farmers is leasing land.

Negotiating a yearly farm lease is a sure way to put you ahead in agribusiness in Townsville. Depending on where the specific farm is, you will have different lease options. Below are the three most common leases an attorney will negotiate on your behalf, with their risks and opportunities:

Cash-rent lease

Here, you will pay a fixed amount of rent which could be negotiated per acre or farm. You can have your lawyer change this lease depending on the crop yield so that you pay more in the good years. In this kind of contract, the landlord allows the farmer autonomy.

However, since the landlord is not very involved in your operations, you may be unable to participate in different federal programmes.

Crop-share lease

This lease agreement allows the landlord to share in the costs of the inputs. The tenant mainly provides the labour. After harvest, you divide the proceeds according to your understanding. This lease allows the farmer to share risk and allows the landlord to feel engaged.

The rental income is customarily taxed under self-employment which may lower both the tenants and landlords security check upon retirement.

Hybrid Lease

This type of lease allows you to enjoy the best of cash-rent and crop-share leases. You have your attorney draft an agreement that meets your needs as well as your landlord’s. For instance, they could negotiate a minimum fixed rent and a share in decision-making and profits for the landlord.

Whatever your situation, make a point of memorising the terms of your agreement to avoid breaching the contract. As your attorney will tell you, in agriculture, tenant-landlord contract varies with location. Consequently, so does the consequence of breaching contract.