Writing a Farmland Lease

What Is a Farmland Lease?

A farmland lease, aka agriculture land lease, is an agreement between a landowner and a farmer, which allows the farmer to use the landowner’s land for specified agricultural purposes in return for providing compensation.

Compensation rates can be determined in many ways, but some of the most common types are:

• Fixed Rent – the farmer (tenant) pays a fixed yearly price
• Crop Share – rent is tied to the success of the farming operation
• Fixed Rent/Crop Share – a mix between a fixed rate and crop share

How Long Is a Farmland Lease?

Farmland lease agreements typically range several years, with the most common ranging 3 – 5 years. Farmland leases are rarely set for less than a year because crops require significant effort to implement and take time to turn a profit.

Agroforestry Farmland Lease

For agroforestry-specific farmland leases, we recommend forming a lease with a minimum length of 5 years.

Why is this? Because agroforestry requires time to turn a profit! You must let your trees and shrubs grow before you can harvest them for fruit, nuts, wood, etc.

Obviously, the length of your lease will depend on the types of trees you are planting and what you are planting them for (food or timber production). Some will take just a few years to harvest (elderberry, black currant, cider apples, honeyberry, etc.) and others will take over a decade (oak, maple, Chinese chestnut, etc.).

The wait is usually worth it though because once your tree crops are planted, they often require very little effort and cost to manage for many years, unlike traditional annual cash crops. Traditional annual crops require annual planting, tilling, and fertilizing, which can be laborious and extremely expensive.

Benefits of an agroforestry farmland lease include:

• Affordable land for the farmer to grow their crops while they wait for them to mature.
• Passive income for the landowner (you can pay off your mortgage or even the land).
• Ensures the land will be taken care of (or restored) for many years while requiring very little effort from the landowner.
  • This is perfect for aesthetics, hunting, hiking, etc.
• Landowners and farmers can receive conservation funding at the federal, state, or local levels for implementing these practices.

What happens if the land lease expires before crops are ready to harvest?

If a farmer’s crops are not ready to be harvested by the time the lease agreement expires, a handful of states have protective provisions that allow the farmer to revisit the land to harvest their crops. This provision is referred to as the doctrine of emblements.

It is important to keep in mind that this situation rarely transpires, and if it does, usually there is little disagreement over it. However, it is still best practice to discuss this situation and include a provision addressing this while forming the initial farmland lease agreement to avoid any confusion down the road.

Things to Consider While Forming Your Farmland Lease

There are many factors to consider when implementing an agriculture land lease, so here are some we want to make sure you are thinking about:

• State laws
  • Laws vary by state for lease agreements, so it is best to be aware of any unique requirements your state has.
• What will the lease payment be?
• Your vision and goals as either a landowner or farmer
• Who pays for the establishment costs of crops?
  • Split
  • Landowner only
  • Farmer Only
• Types of crops being planted
  • Traditional cash crops
  • Perennial crops
  • A mix of cash crops and perennial crops
• Is it supposed to be an all-organic operation?
• Does the landowner have equipment that can be used?
• Openness to failure
• How will crops be valued and who decides when they will be sold?
• How will access be negotiated between the landowner and the tenant?

This is in no way an exhaustive list, it is simply just supposed to help get you thinking!

How to Write a Farmland Lease Agreement

The initial steps to writing a land lease can seem intimidating, but there are many resources out there that can help you! Each farmland lease may be slightly different, but once you get a template out there, you have a great starting point for future leases that you can use. For a high-quality, in-depth guide, we recommend the Agricultural Land Lease Workbook by the nonprofit organizations, Farm Commons, and the Savanna Institute. This guide is completely free, and provides a thorough checklist of things to contemplate while writing your lease agreement, basic legal considerations involved in forming a land lease, and even a sample farmland lease agreement for agroforestry!

It is important to note that it is always best to consult with an attorney before finalizing an agriculture land lease agreement. They can help landowners and farmers address anything they may have missed in the process, as well as provide sound advice.

If you are a landowner who already has a farmer ready to farm their land, we recommend reaching out to your local bar association’s attorney referral program to help you find a lawyer to form your farmland lease agreement.

If you are a landowner without a farmer yet, list your property for free, and get ready to start making money off your land today!