It’s time to negotiate land rents

By Gary A. Hachfeld, University of Minnesota Extension

Fall is generally when many land rent negotiations take place. Landowner and tenant alike often find this task a bit daunting.

In Minnesota, there is no statute that sets a specific time for notification to the tenant regarding a change. A good rule of thumb is to write any of those types of provisions into the rental contract. Provisions might include a final date by which the landowner will notify the tenant if there will be a change of tenants.

Other provisions might include rent payment dates, plow-back provisions if there is a change in tenants, and reimbursement for crop inputs if the tenant or landowner requests a change of tenants after inputs have been applied. A written rental contract is needed. If there is no written contract or the contract has no specific date, common sense would dictate that the landowner notify the tenant of a change by the end of harvest at the latest. Notification should also be in written form.

A second issue this past year is flexible lease contracts. Farm Service Agency states that if a landowner utilizes a flexible lease based upon the tenant’s yield and price received, the landowner is eligible for a portion of the commodity payments. This can be troublesome for both landowner and tenant.

However, there is a way around this rule and a form of flexible lease can be utilized. For the yield portion of the lease, tenant and landowner can use a yield such as the average National Agricultural Statistical Service yield for the county where the land is located. For price, they can use the average price at the local elevator over a given period of time. As long as neither the contract yield nor the contract price are tied directly to the tenant’s actual yield or price, FSA will accept the lease as being a cash contract. Note that this is the current ruling under the current Farm Bill.