Put it in Writing: How to Set up a Smart Organic Land Rental Agreement

By Harriet Behar, MOSES

for-rent1Many organic producers in the Upper Midwest once again had weather challenges in 2013, and so may be looking to cushion their production capabilities by leasing a little extra land for crops or pasture in 2014. Conventional farmers are out looking for cropland, too. High demand makes it difficult to find land to rent, much less at a reasonable price within a workable distance of your farm.

However, organic farmers should not get discouraged entirely by the current difficult land rental climate, as their type of production may be attractive to a unique type of landowner.

Finding Organic-friendly Land
Approximately 30% of the farmland in the U.S. is owned by people who do not work the land. In certain areas of the Midwest this average is much higher. These landowners may be absentee or living in a house on the land, and often have an emotional attachment to seeing the land protected and stewarded in an environmentally beneficial way. Some may have inherited the family farm, others hope someday to retire on recently purchased land.

We also see landowners who are organic consumers, who have different priorities than getting top dollar for every acre of land they rent. They would take pride in knowing their land is farmed organically.

Many acres of former Conservation Reserve Program (CRP) fallow land is coming out of the program this year and next. The majority of this land has not had a prohibited substances on it for more than five years, making it immediately ready for organic production. Keep in mind that this fallow land probably will require significant amendments to be productive, though.

Finding land ready to rent for organic production is not easy, but it can be done. If there is a national chapter office or local environmental organization in your region, place an advertisement in its newsletter as an organic farmer looking to rent crop or pasture land. An ad in a local paper expressing interest in finding land to farm organically also might bring a response. A Freedom of Information Act petition filed with the local Farm Service Agency can get you a listing of the CRP contracts that about to expire or those that have recently expired, helping you find the owners of these fallow lands.

Developing an Organic Land Lease
Your lease as an organic farmer should differ slightly from a standard farm lease agreement. You might want to set up a longer-term lease so that you can reap the benefits of your full crop rotation, or for planning and implementing your rotational grazing system. The requirement that organic farmers have a soil-building crop rotation, and are restricted from practices that degrade the natural resources on the farm, can be explained as a benefit to the landowner. The landowner may consider lowering the rent or helping to pay for any needed soil amendments, since you will be improving their resource. You may need to educate the landowner about the positive effects of organic production, and the need for time, commitment and dollars to build and maintain productive soils. Sharing a few facts that prove this point may help make your argument–find them here.

You can write up your own agreement, but it would be a good idea to have an attorney review it before you both sign on the dotted line. Many of these landowners may never have had a written farm lease agreement before, and may be more comfortable if you start with a template that can be customized—look for these at your local Extension office or on the websites listed at the end of this article.

Here is a list of things you should consider in your contract:
1. Name, address, phone, email and signature of both the landowner and the tenant. Indicate if the contract will be binding to heirs or in the event the land is sold.

2. A clear description of the land to be rented, with a detailed map showing all field borders.

3. A lease start and end date, and detail about any renewal option. Note if a crop is still in the ground when the lease ends if there will be a reimbursement provision. Some states have a specific date when the landowner must notify the tenant of a farm lease termination; in Iowa, for example, it is September 1. If no notification is given, then it is assumed the tenant maintains the right to continue farming that land, even if the land is sold or the lease has expired.

4. A clear notice of the rental amount, and when it is due. Indicate if payments can be made over the course of the year or in one lump sum.

5. If the landowner and farmer are going to share the proceeds of the crop, note how the costs and proceeds will be divided, and if there is any requirement for crop insurance.

6. If there is a stream crossing or perimeter fencing for livestock, list who is responsible for keeping it in working order. If the farmer takes on some of these responsibilities, note any monetary limit. Note who will be responsible and pay for any improvements required before or during the lease.

7. If liability insurance is required, indicate if the tenant is responsible, or if there is a “hold-harmless” agreement so the landowner is not liable for the tenant’s activities.

8. Note if the tenant has any use of farm buildings or field edges for equipment or crop storage, or use of a well or stream for livestock or irrigation water.

9. The landowner may want to require that the tenant maintain organic certification status over the term of the lease, and may want to include a stipulation that you pay a penalty if you decide not to continue farming organically.

10. Any restrictions by the landowner should be noted, such as not farming an area where pheasants nest so the landowners can hunt. This prevents any conflicts over land use in the future.

11. If there is a significant amount of land that you will not be farming organically due to required buffer zones adjoining conventional production, suggest not including this acreage in your agreement. If you harvest it as conventional hay or other crop, perhaps this could have a separate payment schedule than the organic cropland.

12. You may want to ask if the landowner would be open to you subletting this land to another organic producer.

13. Be sure to outline a clear method to solve disputes. It would be ideal to solve a dispute with mediation, moving to binding arbitration, rather than going to court, which is much more expensive.

14. Outline a mechanism for modifying the farm lease contract during the term of the lease.

15. Clarify that the tenant has possession of the land, and can use it according to the terms of the contract.

This is just a start for writing a clear contract for leasing farm land. Here are some additional resources:

Farm Rental Agreement Checklist (PDF)–Ohio State Extension

Fixed and Flexible Cash Rental Agreements (PDF)– North Central Regional Extension

Crop Share Rental Arrangements (PDF)–North Central Regional Extension

Tips for Farm Leases and Contracts – ATTRA

Farmers Guide to Organic Contracts–Farmers Legal Action Group

Sustainable Farm Lease Website–Drake University

Farm Leases–University of Minnesota

Improving your Farm Lease Contract (PDF)–Iowa State Extension

Adopting Crop Share Agreements for Sustainable and Organic Agriculture (PDF)–Iowa State University

Harriet Behar is a MOSES Organic Specialist. 

November/December 2013

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