July 8, 2019

Providing Reports for Crop Landowners

Communicating with landlords is crucial for tenants regardless of the type of lease that is utilized.  It is prudent for a tenant to provide updates of crop conditions throughout the year and make sure that crop shares and possible bonuses emanating from flexible cash leases are understood by both parties.  This article discusses how to effectively communicate through timely reports and the importance of providing an end of the year report.

Many landowners, particularly those that have farmed the ground in the past or grew up on the farm, have interest in what is going on during the growing season.  Landlord reports could include a description of what was planted, how the crops are developing, rainfall, and photos of the crop.  For a crop-share lease, it is important to keep the accounting of the expenses current.  Explain each item on their bill and make sure the landowners understand each expense.  It is often important for landowners to be able to classify each expense (e.g., seed, fertilizer, pesticide) for income tax purposes.  Also, landowners often need information pertaining to historical crop yields so they can make crop insurance decisions.  For flexible cash leases, it is important to provide potential yield and price information to landowners so they have a feel for whether they may or may not receive a bonus.  Of course, landowners should have a detailed explanation as to how base case rents and bonuses are computed.

We encourage tenants to provide an end of the year report to each landowner.  This report should include at least the following information: crops planted, crop yields by field or tract, production notes (including challenges), land issues (e.g., drainage problems), and plans for next year.  For crop share leases, a detailed summary of shares should be included.  For flexible cash leases, components of the rent formula (i.e., crop yields and prices) should be included.

TEAM LINKS:

PART OF A SERIES:

RELATED RESOURCES

Production Risk Management & Contingency Planning

December 28, 2022

In this second episode of a new series on Farm Risk Management, Jenna Nees, Ed Farris, and Michael Langemeier join…

READ MORE

Human Resource Risk Management & Contingency Planning

December 14, 2022

Farms and agribusinesses are confronted by many different types of risk, but consideration to human resource risk is overlooked by…

READ MORE

U.S. Farm Sector Capital Expenditures

December 6, 2022

In response to relatively strong net farm income during the last three years, real capital expenditures have increased approximately 32 percent. Whether capital expenditures continue to increase depends on future net farm income prospects as well as factors such as interest rates, machinery inventories, and machinery and building prices.

READ MORE

UPCOMING EVENTS

Farming Together: Cultivating Relationships and Having the Cash to Bring in the Next Generation

Where do you begin if you’re looking to transfer your farm to the next generation? Before starting with a legal entity, it’s important to come together and establish common goals and a direction for where you picture your operation moving in the future. Our Farming Together workshop will help you begin discussions to lead you to a successful transition.

Read More

Commodity Classic 2023

The Purdue University Center for Commercial Agriculture will present a Learning Center Session on Thursday, March 9 entitled Financial and Risk Management Strategies for 2023, at Commodity Classic in Orlando, Florida.

Read More

Monthly Corn & Soybean Outlook Update

Webinar each month following USDA’s release of the updated World Agricultural Supply and Demand Estimates (WASDE). Catch the next monthly update on February 9 for the corn and soybean outlook following release of USDA’s February Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports. Registration is free.

Read More

2023 Crop Cost and Return Guide

January 13, 2023

The Purdue Crop Cost and Return Guide offers farmers a resource to project financials for the coming cropping year. These are the January 2023 crop budget estimations for 2023.

READ MORE

December Corn & Soybean Outlook Update

December 19, 2022

Recorded December 19 | Purdue ag economists discuss a longer-term view of the changing cost structure facing corn and soybean prices, key factors likely to impact corn and soybean prices in 2023 and discussed how to use scenario’s when analyzing price risk and making marketing decisions.

READ MORE

Comparing Net Returns for Alternative Leasing Agreements

September 2, 2022

Obtaining control of land through leasing has a long history in the United States.  Leases on agricultural land are strongly influenced by local custom and tradition.  However, in most areas, landowners and operators can choose from several types of lease arrangements.  With crop share arrangements, crop production and often government payments and crop insurance indemnity payments are shared between the landowner and operator.  These arrangements also involve the sharing of at least a portion of crop expenses.  Fixed cash rent arrangements, as the name implies, provide landowners with a fixed payment per year.  Flexible cash lease arrangements provide a base cash rent plus a bonus which typically represents a share of gross revenue in excess of a certain base value.  Each leasing arrangement has advantages and disadvantages.

READ MORE