(Alice McFarlane/farmnewsNOW Staff)

By Alice McFarlane

Land Rental Agreements

Ministry advises landlords to draft agreements for crop share

Mar 22, 2019 | 3:53 PM

While there’s a lot landowners renting land to other farmers, the Ministry of Agriculture recommends to have a set agreement in place.

Jaycee Peutert is a farm extension specialist with the Ministry of Agriculture. She said the most common type of agreement is cash rent.

The tenant receives all of the income from crop sales but they pay the landlord a fixed amount each year as a dollar per acre amount.

“This is the simplest agreement and that might be why it has become the most popular. The landlords aren’t taking on any of the production or marketing risk. It’s an easy and straight forward deal,” she said noting the second option for landlords and tenants is a crop share agreement, but is not as common.

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“There are two types where the landlord isn’t putting any input costs into the deal so they get a percentage of the sales of the crop. We typically see it as a 25/75 split or sometimes a 20/80 split,” Peutert said. “The second type is when the landlord is taking on more of the risk and puts some money towards the inputs. In these deals you see a one-third/two-thirds share.”

Peutert said some are combing the cash and crop share agreements.

“There is a set minimum cash rent that is paid. If the land produces a high yield above a benchmark the landlord receives some kind of bonus or top up,” she said.

Many rental arrangements are made at the kitchen table with a handshake but Peutert says the best option is a written agreement.

“We strongly, strongly recommend that everyone has all of their rental agreements in writing. They are going to protect both parties’ interests and they can prevent miscommunication,” Peutert said. “You never really need one until the worst case does happen. We would really encourage it.”

The ministry also has land rental templates available on its website or at any of the regional offices.

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alice.mcfarlane@jpbg.ca

On Twitter: @AliceMcF