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Discussion Board - Contracting farm ground

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Animal

11-30-2007 05:57:42




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I am wanting to share crop some ground next year, I would like to have something in writing, can I do this myself with both of us signing and would this be binding? I am wanting to crop this at a fifty fifty split after expenses, is this fair?




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Iowa Jim

12-11-2007 05:19:19




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 Re: Contracting farm ground in reply to coup, 11-30-2007 05:57:42  
I am not a fan of sharecropping on hay ground. Unlike commodity crops, a bale is not necessarily a bale, where as a bushle of corn is pretty much the same throughout a field.

I prefer to cash rent the ground and have the freedom to do as I wish. Too many vaiables for an easy split on hay.
Jim



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John (MO)

12-10-2007 14:35:19




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 Re: Contracting farm ground in reply to Animal, 11-30-2007 05:57:42  
I do 33.3/66.6 with the renter covering all expences except taxes. That is fairly common around here although some went to 25/75 a couple years ago when oil prices went up and before crop prices changed any. Some people cash rent, but many of those renter aren't around year after year after year, as they are more apt to lose their shirts.



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hayray

12-03-2007 03:37:29




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 Re: Contracting farm ground in reply to Animal, 11-30-2007 05:57:42  
sounds like the share cropping agreement will be tough to work out all of the variables, especially if you loose some hay to weather but you still have the cost associated with harvesting/producing, as was already mentioned by Kyhayman. The land owner most likely will not offer to help pay for your losses. Maybe have a contract that describes the profits to be disbursed, which means having a complete cash flow analysis with records for this piece of property. Also, would you have the lee-way to sell the hay for whatever price you want, or need to go to market price? Very difficult to write up this type of contract. The type of share-cropping I have done with land lords is guaranteeing them a set amount of hay for their own livestock, wheather it comes off of their field or one of my own, otherwise I prefer to just pay a flat rate for the lease on the property with a 3 year min. but alot better to get the 5 year with stipulation if contract is broke off beforehand that they pay you back all planting expenses. Looks like you are getting some good advice from the others.

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BillinCentralMO

12-02-2007 13:16:56




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 Re: Contracting farm ground in reply to Animal, 11-30-2007 05:57:42  
We have rented out our farm for many years.We get one third.If tenant wants some improvements we work that out separatly.Has worked well for both parties.



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kyhayman

12-02-2007 07:16:20




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 Re: Contracting farm ground in reply to Animal, 11-30-2007 05:57:42  
50/50 after expenses? What happens in the event that expenses exceed sales? I'd be particularly concerned about getting things all nice and legal. Some places contracts have to be in writing and filed at the courthouse if the duration is longer than a year.

Suggestion, get a lawyer to write it up after you all work out the terms. Mine charges me $50. To me thats money well spent.

As to the terms. I farm in two adjoining counties. In one, the land owner typically pays for the fertilizer and any seed, the farmer pays all other expenses, equipment and applies the fert/plants the seed. Split is 50/50. In the other, its usually 1/3-2/3 with the 1/3 to the land owner but the farmer furnishes anything that gets put on.

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hayray

12-03-2007 03:41:30




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 Re: Contracting farm ground in reply to kyhayman, 12-02-2007 07:16:20  
In my area it has traditionally been that 1/3 to 2/3 as you mentioned, tenent does all inputs.



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paul

11-30-2007 09:06:08




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 Re: Contracting farm ground in reply to Animal, 11-30-2007 05:57:42  
Yes you can. I would look up online some of the farm land lease agreements, for an outline of how to do it. Very simple is fine, but _if_ there is an issue there can be a few surprises in your state law - such as termination of the lease, etc. Each state is different a bit, you might look to your state extension, most have a sample lease on-line.

'Here' many share crop go 40% owner, 60% to the renter. Chemicals are also split 40-60. Some times fert also. Occationally seed is as well.

I hear other regions are 50-50, mostly more costs to the renter then.

50-50 after expenses is pretty broad statement, not sure which expenses you are including, you mean all inputs also split 50-50?

If this land is in the farm program (which expired & so we are in limbo - will likely get a 1 year extension of past program....) then any crop share arrangement forces the land owner into taking a share of the farm payments as well. Be aware of that you don't get full payment, and the landlord should realize how that affects his taxes.

Most rents have gone to cash rent because of this.

--->Paul

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Animal

11-30-2007 16:21:56




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 Re: Contracting farm ground in reply to paul, 11-30-2007 09:06:08  
First of all thank you Paul for your reply I value your knowledge and opinions very much. I am taking on more hay ground, it has been milked to death in the past and not taken care of. I can get it certified organic as no one has spent a nickel or for that matter any time with this land. It has never been in the govt. plans of any kind. The fellow that owns it moved to this farm 5 years ago, he is a local fellow that does antique furniture for a living, he is not a farmer, but all his so called farmer friends have taken advantage of him and his good nature. As for the split, I will take fuel, twine, clover seed, organic inputs etc. off the top of our sales, and then split with him the 50%....Does this seem fair to you? I will guarantee you it will be alot more than he has seen in the past. I know I am in for a lot of work, and that is why I want a 5 year contract, I would not be in very good humor when I get has ground producing to its potential, and some friend or relative sweet talks him into taking it over.

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paul

11-30-2007 22:01:35




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 Re: Contracting farm ground in reply to Animal, 11-30-2007 16:21:56  
Hay ground! That is a different animal.

I believe you are close on the 50-50 split the way you are doing it. Would seem right for my area.

You are very wise to get a long-term contract. Very important for hay ground, good for you.

My ph averages 7.1, so liming is not done 'here', but deal with that first if you are in an area that needs lime. Rest of the stuff won't help much until you get the ph close to right. Ph improvements are long-term, cost a lot the first year, so again - good on the long term contract.

You might want to work out the initial costs to bring land up to par, as there might not be much 50-50 to spread around the fist year..... Regular P & K have skyrocketed in price in the past 3 months like you wouldn't believe, I assume organic sources have followed suit. If you need to do lime & perhaps try the 3 year application of P & K that would be typical (hay seems to prefer the shock treatment over small doses every year?), you can be into shocking the poor fellow. Might want to prepare him for the idea & that costs will be way down & income up in following years. But, depends on how you need to do it for organic.

--->Paul

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