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Primary Types of Agricultural Crop Leases

Cash Rent Lease - This is an agreement where the tenant pays a given amount of cash rent per acre or a lump sum per season for the use of land.  Payment schedule may be made in a lump sum prior to planting, after harvesting, or any other negotiated schedule.  Under a cash rent lease, the tenant pays all production costs while the landowner generally pays irrigation fixed costs from the gearhead and below.  The tenant keeps all the crop income and government commodity payments.  The tenant also controls all decisions concerning commodity program participation.

Net Share Lease - This is an agreement where the tenant and landowner split revenue from the farm based on an agreed percentage split.  Generally the tenant pays all production expenses while the landowner pays irrigation fixed cost from the gearhead and below.  Commodity payments are generally split equal to each parties share of the crop revenue.

Crop-share Lease - This is an agreement where the tenant and landowner splits revenue and a portion of production expenses such as seed, fertilizer, chemicals, and irrigation fuel.  A landowner may own all irrigation equipment under this lease but often irrigation motors are owned by the tenant while gearhead and below irrigation equipment is owned by the landowner.  Commodity payments are generally split equal to each parties share of the crop revenue.

Flex Lease - This agreement is similar to a cash lease but also has functions of a net share lease.  Most flex leases have a minimum rent to set a floor.  Rent could be higher if an agreed upon share of revenue is greater than the minimum rent.  Other flex leases have a cash rent amount plus a bonus if production or revenue is over a predetermined level.  The structure of a flex lease varies depending on what is negotiated.  Irrigation fixed costs from the gearheard and below are usually owned by the landowner.  Flex leases are considered cash rents for commodity program participation.

Custom Farming Lease - This is an agreement where a landowner pays the tenant a predetermined fixed amount per farming activity or share of crop.  The landowner typically pays all production costs and owns all irrigation equipment while the tenant provides the farm machinery and labor.  Under this scenario the landowner will receive all or the majority of farm revenue and commodity program payments.

Bushel Lease - This is an agreement where the tenant agrees to pay the landowner a specified quantity of crop as payment.  USDA considers a bushel lease to be a cash lease for commodity program participation although the landowner still has price risk from taking a set amount of bushels.  Generally the landowner pays irrigation fixed costs from the gearhead and below.

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