A flexible-cash lease agreement is a rental arrangement in which the landowner receives additional cash payments from the tenant or operator in addition to the base rate often adjusted for changes in crop prices and yields.
- One example is using both the base crop insurance yield for the property and the spring crop insurance prices to give a set dollar amount per acre as a base rental rate.
- If the base corn cash rental rate was $150 per acre and the crop insurance yield is 150 bushels with a $5 price that would give a total base price per acre price of $750.
- At harvest if the total return was $900 per acre then the owner would share in the additional income at a predetermined rate.
- For example a rate of 25% of times the $150 increase per acre returns would give $37.50 more per acre for the landowner for a total income of $187.50.
Get a copy of the SDSU Extension Flexible-Cash Farm Lease.