Time to start talking ag leases
With this year quickly wrapping up, it is definitely time to start talking about agricultural leases for the coming year. For the most part, there is speculation within the agriculture community that tenants and landlords may not talk to each other enough. As a result, frustration can build-up and lead to problems later on in the lease, such as a severed lease.
I know of situations where leases have been in existence between families, and non-family members for over 30 years. In many cases, the terms of those leases haven’t changed much in those three decades. Yet, if you look at agriculture over that same time frame, there has been significant change.
It is imperative that landlords and tenants get together and talk. Talk about how the crops did this year. Talk about cropping plans for next year if you need to, talk about the uncomfortable stuff.
When you start getting down to the nitty gritty and talk about cash rental rates or what expenses the landlord is going to share—in a crop share lease, it can get uncomfortable. This is why far too many landlord/tenant discussions don’t get that deep and that is a shame.
Frustration can build up with either party, or the tenant simply can’t afford to continue with a current lease. At this time the tenant may let go of a lease or the landlord may decide it’s easier to find a different tenant than to negotiate new terms.
We can easily look at what crop production expenses are shared and figure out how the crop should be shared. Sometimes landlords come into the lease and they state what share of the crop they want and what expenses they are willing to share; without even figuring if the crop expenses are shared equitably to the amount of the crop share they want. This process seems to be backwards of what it should be.
Then, ideally, we can take an even deeper dive into talking about all the things rarely discussed. Can the tenant double crop after corn or soybeans? Can the tenant graze the crop residue after harvest? Can the tenant fall or spring graze the wheat crop or cover crops if cover crops are planted? Actually, if it’s a verbal lease, a tenant has a right to do all of these things. Their lease may not be renewed if it wasn’t discussed, but in the eyes of the law, they have the right. This is why communication is so vitally important.
For many years now, written leases vs. verbal leases has been a topic of discussion at Extension programs as they are important in spelling out the specifics, which should help to alleviate problems later on.
A K-State Research & Extension, County or District Extension office is in every county of Kansas and will have simple and more complex written leases available and other information on figuring equitable crop share leases, leasing laws and arrangements.
Stacy Campbell is an Agriculture and Natural Resources agent in the Cottonwood District (which includes Barton and Ellis counties) for K-State Research and Extension. You can contact him by e-mail at firstname.lastname@example.org or calling 785-628-9430, if after hours please leave a voice-mail for a return call.