The purpose of this publication is to help landowners and tenants enter into fair tenancy agreements. To adapt collection or harvesting shares to cash-related methods, use the following formula: flexibility can also be added to cash rental rates obtained either by the market approach and/or by the owner`s approach to ownership costs. The first step is to develop performance and price estimates. For example, the rent of $32, divided by an estimated price of 5.00 $US per bushel, implies that the landowner would receive 6.4 bushels. Then the percentage of the total return that the landowner receives is determined. The 6.4 bushels were indebted to the owner by the expected or average total yield of 30 bushels, indicating that 21.3% of the total harvest is received by the landowner. Actual year-end production figures can be applied to adjust rent. In our example, the owner of the land would be preserved: in this case, the adjusted rental rate is lower than the base rate. If the rent had been paid in advance, the landlord would be required to reimburse the tenant for the difference ($32.00-29.33 USD – $2.67 per hectare). The method of determining the actual price should be indicated in the rental agreement. See table 1 z.B.
Calculations for yields and alternative prices. A fair tenancy agreement must be regularly reviewed and adapted to remain fair. Changes in price, cost and performance can derail a fair deal in a short period of time. Thus, in recent years, significantly higher costs of fertilizers and fuels have led to higher shares for homeowners. A flexible cash regime can reduce the frequency of necessary adjustments and spread a greater risk among the parties. Suppose the average cash rent for comparable land in the area is $33 per hectare. A soil sample from the leased land shows that the soil is applied slightly higher than normal due to the low amount of nitrogen. The parties estimate the additional cost at $4/Acre. In addition to the payment to be made, each written rental agreement must contain certain points: the names and addresses of the parties concerned, a legal description of the property, the number of hectares, the reservations of rights by the lessor, the duration of the rental and renewal options as well as the signatures and confirmations of the landlord and the tenant. Witness signatures and/or confirmation of registration may also be required. A fourth method of estimating cash rent is to convert a harvest share agreement into a cash base (spreadsheet 3).
Costs and returns are estimated to determine the amount the lessor would receive as part of an equity agreement. Parties must agree on average prices and yields, as well as the owner`s share of all operating inputs such as fertilizers, chemicals or harvest costs. When setting prices, consider the duration of the lease again. Fixed land costs, such as taxes that the landowner will continue to pay, should not be included in the calculation. Yields are multiplied by the share a landowner would receive. The costs are multiplied by the share that a landowner would contribute. Not all items in the spreadsheet are distributed between the two parties in all share agreements.