Who Leases Farmland?
Whether we acknowledge it or not, the farmland lease agreement is an integral part of the food system. According to the 2012 USDA Census of Agriculture, forty percent of US farmers acquire access to land by leasing.
What Types of Farmers Benefit from a Lease?
Every farmer that grows on leased land needs a lease. The complexity of the lease will differ depending on the types of products grown.
For farmers growing conventional commodity crops like corn and soybeans, leases can be simple and straightforward. These leases may only need to state the location of the leased parcel, the term, the amount of rent to be paid and the timing of the rental payment. This is an important document, but it can be reduced to a single page.
Other types of agriculture require more complex leases that are specifically tailored to the needs of the tenant. Stone fruit farmers need leases with longer terms that account for the maturation of planted trees. Organic farmers converting conventional land need to consider the time as a factor as well, to recoup the expense of organic soil amendments. Sugarbush leases need to specify how taps should be set so as not to damage maple trees, which are multi-generational assets.
How Does Our Lease Consultation Work?
Before we begin drafting a lease, our consultations begin with a simple series of open-ended questions:
- What are you growing?
- What investments are you bringing to the leased land in order to make the farm financially viable?
- What is it about the land that makes it appealing to you as a tenant farmer?
This conversation informs our drafting. With a little background information on the farmer’s plans for the land, we can begin to use lease language to guarantee the things that will make the farm business viable. For example, if a farmer needs to invest in fencing in order to utilize the leasehold, we can advise the farmer to extend the term of the lease, or to be compensated for the value of the fencing in the event of early termination. If a farmer is attracted to a parcel because it has excellent access to water, we advise that the landlord warranty the water source.
Our lease consultations are designed to get to know the farmer, understand their business goals, and to see through their eyes what is most important to them about the land they are leasing. Whatever the farmer identifies as important, we perceive the loss of it to be a risk to the farmer’s business. Our clients come to appreciate our lease agreements as some of the best risk mitigation tools in their arsenal.
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