URBANA, Ill. — Those who cash rent cropland from non-operating landowners should consider adding a conservation addendum to their lease terms. This is according to University of Illinois agricultural economist Gary W. Schnitkey, who noted that independent crop insurance policy requirements are trending toward inclusion of required conservation practices. 

How to negotiate with non-operating landlords to include conservation practices on rented cropland was the topic of an Illinois Soybean Checkoff program webinar on Thursday, Aug. 20. Also included were detailed instructions on how to complete a series of online conservation addendum templates the university is offering for free to producers and landowners.

“Nutrient loss is driving this, nitrogen in particular from Illinois, entering waterways and affecting aquatic life. There are also concerns about sustainability of production with soil drainage. Those conservation concerns have always been challenging agriculture, but we feel this is being heightened by the Nutrient (Loss Reduction Strategy) and the general shift in societal concerns about how farms produce their food,” said Schnitkey, a professor and farm management specialist for the U of I Department of Agricultural and Consumer Economics in Urbana. 

Growth in organics, sustainability and conservation practices on farms will continue to increase. Since the 1985 Farm Bill called for farmers to implement HEL (highly erodible land) plans on their operations in order to receive farm program payments, compliance mandates for conservation practices have evolved to include crop insurance. 

“You can look forward to more of those (mandates), not less,” said Schnitkey. “You can look at some of the political discussion that’s happening out there in more closely tying what’s happening on farmland to farmland program payments and crop insurance. You can reasonably anticipate that in the future crop insurance eligibility and premiums will be tied more to practices on the farmland.”

A growing ecosystem services market means that farmers will want to get on board with conservation practices in order to take advantage of higher premiums paid for commodities. In addition, “you can see where payments could be made to farmers in Illinois and elsewhere for various soil health building measures, related to tillage, cover crops and a number of items,” Schnitkey said. “These markets are being developed now and will continue to be developed in the future.”

Convincing non-operating landowners to absorb a share of the costs associated with cover crops, bioreactors and other conservation measures can be a deal-breaker for many producers. While studies have shown that cover crops will eventually increase soil nitrogen levels, the amount of time required to prove the effectiveness of the practice can be viewed as non-essential by many landowners, especially in a share rent or custom farming agreement.

“The payoffs are long-run, but (cropland lease) contracts are usually short-run,” said Schnitkey.

This is why the U of I has developed three conservation lease addendum templates that can be downloaded and combined with standard leasing agreements (also available for download). These conservation addendums are:

Nutrient Management Addendum (addresses issues with how farmer applies fertilizer, efforts to reduce fall application)

Soil Health Addendum (farm practices such as reduced conservation tillage and cover cropping)

Conservation Habitat Addendum (if the leased farm includes wildlife or other habitat areas

Adjustments to rent amounts are recommended to help defray the costs of starting and maintaining many of these practices, Schnitkey noted. “One thing I would mention is that if the landlord wants cover crops on-farm, it isn’t consistent to have a very high cash rent, especially if it is the first time doing cover crops. Cover crops have benefits in the future for the environment that don’t necessarily immediately accrue to the farmer. We should probably be reducing the cash rent somewhat to cover those cover crop expenses, particularly in the economic environment we are in now,” said Schnitkey. 

The U of I economist said that 40 percent of the nation’s 390 million acres of farmland are operated on a cash lease basis, but in Illinois, the ratio is 50 percent leased.

A rebroadcast of the ISA webinar, Conservation and Farmland Leasing: Issues for Non-Operating Landowners, can be accessed at:

https://www.ilsoyadvisor.com/on-farm/ilsoyadvisor/webinar-conservation-and-farmland-leasing-issues-non-operating-landowners.

The complete roster of lease forms offered by the U of I can be downloaded at: www.farmdoc.illinois.edu/management/handbook#lease-forms