How Does Tenant Farming Work?
For those who plan to rent a farm, the chief considerations arc (1) the land must be suitable for the type of farming planned; (2) the buildings and equipment should be in a satisfactory condition; and (3) the lease should be fair.
There are four basic types of leases: (1) the cash lease, (2) crop-share lease, (3) crop-share cash lease, and (4) livestock-share lease.
The advantages of the first are that the tenant in many cases is free to manage the farm as he pleases, and as a long-time proposition he may pay less rent than under crop-sharing arrangements. The chief disadvantage is that the tenant agrees to pay a definite sum before he knows what his income will be.
The crop-sharing lease is usually workable only in strictly cash-crop farming. The tenant gets part of the returns. Where these are relatively high, as on many Northern farms in good years, it is a fairly satisfactory type of tenancy.
The system of leasing on the basis of paying a fixed sum in cash as well as sharing crops is found throughout the Corn Belt of the Middle West. The landlord, because he receives some payment for the use of the land, pasture, and buildings, is interested in keeping his farm in good condition. This works to the advantage of the tenant.
The livestock-sharing lease may turn out to be a happy arrangement. A common method provides for joint ownership of the basic herd, with tenant and landlord sharing expenses and returns. Thus both are interested in the success of the business and both contribute what they can in capital to keep the buildings and fields in good condition.
How Much Rent Is Right?
What is a fair rental? And how should it be paid?
Here too it is best to get impartial advice from local people. In some instances the county agricultural agent may offer an opinion. The customs and rates in the community should be a guide.
Good lands now rent for $6 to $10 an acre. It is noteworthy that tenancy is most common on the best lands, such as the farms of the Corn Belt and the plantations of the Mississippi-Yazoo Delta region.
Cash rents, like the price of land generally, have risen during the war. In the postwar period, land values may decline and farm prices drop suddenly. In this event, rents agreed to at the beginning of the year, although in line with commodity prices at that time, may be too high at the end of the crop year, when farm prices have dropped. To safeguard yourself, cash leases should, if possible, be put on a sliding scale. In other words, the rental payment should be adjusted to the average price for the year of the basic cash crops grown on the farm.
Is A Long-Term Or Short-Term Lease Better?
Most farms are rented on a year to year basis. In 1940 about 60 per cent of the tenant farmers of the United States had been on their farms only since the previous growing season.
The best arrangement, if things work out well the first year, is a longer term lease, with a clause inserted stipulating that if unforeseen circumstances arise the lease may be terminated at the end of any one year. In this event, due notice-perhaps several months-should be provided for.
All farm leases should contain definite arrangements for (1) keeping the farm and buildings in good condition; (2) the general plan of farming; (3) contributions by each party to operating expenses; (4) making repairs (generally the landlord provides the materials and the tenant the labor) ; (5) provision for replacing buildings destroyed by fire, storm, or other hazard; (6) responsibility for carrying out soil conservation programs; (7) how the lease is to be terminated in case of death; and (8) how disputes about running the farm or other matters should be settled.
The county agricultural agent or an agent of the Farm Security Administration can supply the prospective tenant with a standard lease form. He will also furnish advice on other agricultural