The share of the crop is considered a flexible land use contract, in which the landowner and tenant distribute the income of the crops on the farm in a predetermined ratio or percentage. A joint equity agreement would be 25% for the landowner and 75% for the tenant of the harvested grain crop if the landowner did not contribute to the production costs. In some cases, a 1/3 is used for the landowner and 2/3 for the lessor, but in this case, the landowner would pay for crop production for 1/3 of the costs of seeds, fertilizers and chemicals. Since entrance and overhead fees have increased over the past 10 years, tenants can no longer afford the historic shares, 1/3 to the landowner with 2/3 to the tenant without participating in the costs. This difference is different from the fixed cash lease by the fact that the price paid to the landowner is based on income and not on a fixed amount. The dollar is influenced by crop yields and prices. If yields and prices go up, the rent will go up, and vice versa. This series discusses the factors to consider when renting your farmland. A Flex lease is a way to share the risks and benefits of a plant production system. Often, the formula can promise a basic cash rental price, which is often paid in advance, with a possible bonus during the harvest, based on the gross value (price of yield time) of the rent of the crop. Flex tenants can get much higher rents, perhaps better than some of the highest rents in the area.
In the case of a baillist, the tenant is only required to pay the rate of the basic fund. This option has become very popular in much of Michigan in recent years, with commodity prices increasing much more than most expected. The use of this type of agreement has given the landowner high premiums. The comfort level of risk acceptance has an impact on the flex rental decision, with some landlords favouring guaranteed cash rents. Click here to download the harvest contract Some Flex agreements offer a fixed price per bushel multiplied by the average corn yield for this field. (Example of maize: 1 times the average yield, i.e. 150 bushels per hectare, produces a cash rent of 150 $US per hectare.) This relieves the landowner of the risk of marketing and production and links the rental price to the production capacity of each field, which is good for the tenant. As an alternative to the stock culture, a fixed pyre contract with the owners.