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Landlords looking to profit from higher grain prices
This growing season, landlords are looking for ways to share in the higher grain prices. Tenants may be looking for a way to share the risk of low yields, since costs are increasing every year.

Robert Moore, former OSU Extension Specialist, is now a practicing attorney in Columbus. He has written an article for the next Ohio Ag Manager Newsletter that we feel is so important we cannot wait until April to get it into your hands.

Moore writes, the flexible cash lease sets a base rental price with an adjustment based on crop prices, yields, or some other factor. While this type of lease allows the tenant and landlord to share the benefits of high prices and risks of low yield, it has significant implications with Farm Service Agency programs.

In Ohio, most farm leases are either cash rent or crop share. In a cash rent situation, the tenant receives all direct and counter-cyclical payments, while in a crop share arrangement, the tenant and landlord split the program payments proportionally.

The issue becomes, does FSA consider a flexible cash lease a cash lease or a crop share lease? Because the landlord shares in the risk of the lease, FSA considers a flexible cash lease to be a crop share lease. Therefore, the landlord must receive his/her portion of program payments. Two issues arise when the landlord changes from a cash rent landlord to a crop share landlord. First, the landlord will be required to file all program eligibility forms, which include names, social security numbers, and addresses of any and all owners of the land or entity owning the land. The filings will be an additional burden on the landlord in both time and effort as well as causing more private information to be revealed to FSA than the landlord is accus

3/14/2007