Most land owners, especially those without prior farming experience, are familiar with cash rental arrangements. Typically, cash rent value reflect the tillable land’s capacity to produce major grain crops. Assumptions are made regarding drought susceptibility and current and expected grain price in order to establish a cash rent annual (or quarterly) payment that allows both Long Winter FArm and the landowner to be profitable.. The cash rent payments reflects the Landowners earned interest on their investment plus a premium for any improvements on the land. Typical lessee stipulations on a cash rent agreement include requirements for soil conservation and maintenance of soil fertility.
The Landowner is not exposed to variations in the marketplace (in real time) and therefore is compensated to a lesser degree than alternative pricing mechanism such as flex rent or share cropping. Less risk, less reward. The farmer and landowners convene annually or as needed to review the arrangements to reflect the land productivity and the current economic environment.
Cost sharing of capital improvements are typically limited only to lease agreement that span the expected lifetime of the improvement or other definable sunset provision such as buyout – depending on the improvement. Typical cost sharing project include drainage improvements and irrigation – where feasible. Year-to-year arrangement typically do not incentivize for capital improvements. Annual maintenance expenses are typically afforded by the landowner unless prior arrangements are stipulated. Often, property maintenance is built into an agreement in remuneration for lower cash payment.
At Long Winter Farm, we have cash rental agreements with many landowners and estates spanning decades with good working arrangements to reflect the parties’ needs and changes in farming economy. With Long Winter Farm, cash arrangements allow for sharing of relative yield information to aid in negotiations as well as proof of maintenance of fertility. Water quality monitoring and WI-DATCP/DNR certification and compliance are standard operating procedure for every crop, every year. We provide prompt payment annually or quarterly rent checks – and even provide in-kind payments depending on your needs and expectations.