Trends in Leasing

Over the last handful of years cash rent has been on the rise in popularity when it comes to cropland leasing.  This is due to many inexperienced buyers coming into the market.  There is a new idea creeping up into the cropland leasing world.  It's called cash rent plus leasing.

Cash Rent Plus

Cash rent plus is a new trend in cropland leasing.  How it works is very simple.  Take the base rent regardless of price or production and add it to additional rent if prices rise or production is above average. 

For example.  Let's say the base rent is $300 per acre.  Remember, this is regardless of yield or price.  You would add that to additional rent based on 33% of actual yield.  You would then multiply that by the average of spring and fall crop insurance price.  Then take out the base rent and you would have your plus rent.

Let me show you the numbers in another example in case that didn't make sense.  

200 bushel corn yield X $6.50/bu.= $1,300

$1,300 X 33% = $429/acre

$429.00 total rent - $300 base rent = $129/acre extra rent