WEST LAFAYETTE, Ind. – An agreement on cash rents should be recorded in a lease to protect the tenant and the landowner, according to agricultural economists from Purdue University and the University of Nebraska-Lincoln.

Purdue officials always recommend written leases, noted Michael Langemeier, also director of Purdue’s Center for Commercial Agriculture.

For pastures, “you need to know (the) stocking rate,” Langemeier explained. “You want to make sure that they’re not over stocking or even under stocking. Properly stocking that pasture – make sure that’s in there. You want to make sure that there’s something in there about services. Who’s going to provide the services, who’s going to fix the fence, who’s going to pay for the repairs of the fence? And so, even though there’s not as much money involved (in pasture leases) per acre, it’s important that there’s some things written down.”

Jim Jansen, an extension educator at Nebraska, said even if a tenant trusts the landlord, that same tenant might not trust a probate judge if the landlord is elderly and dies.

“That’s why we always want to get a lease,” he noted. “A good lease is just not for the protection of the landowner. It is equally for the protection of the tenant. If you sign a five-year lease with someone that’s in their 90s, that lease is in effect until it is terminated. So just make sure you get whatever you want to do in writing.”

Langemeier and Jansen discussed cash rental rates during the Sept. 30 Purdue Commercial AgCast.

The two suggested a website – aglease101.org – as a place to start in creating a lease. A private attorney is also an option. On the website, the lease forms are commonly four-five pages long, Jansen said. If certain sections don’t apply in a specific situation, those sections may be crossed out, initialed and dated, he added.

When setting the cash rent price for crop or non-irrigated land, the economists suggested checking information provided in the Purdue Farmland Value and Cash Rent Survey and from the USDA’s National Agricultural Statistics Service (NASS). Generally, the numbers in state surveys – such as Purdue’s annual report – are higher than those provided by NASS, Langemeier said.

NASS breaks down the information by county, while Purdue’s report looks at regions of the state, Jansen said.

For pastureland, one way to think about cash rents is to consider rates on a cow calf pair, they said.

“The idea behind a cow calf pair (one cow with a calf by its side) rental rate, in Nebraska, the grazing season’s usually about five months, based on rainfall and growing season,” Jansen said. “In Nebraska this past year, we’ve seen cash rents trail livestock prices with cattle prices being higher. We also saw the cow calf pair rental rates go up.”

In the central part of Nebraska, the average cow calf pair rental rate was about $70 a month, he said. The rental for the season would be about $350 per pair ($70 a month for five months), Jansen said.

“In the lease, you’re going to specify how many pairs you’re allowing out on a property,” he pointed out. “Sometimes, when you’re renting by the acre, you don’t always specify how many animal units or how many head or whatever the measurement is that you’re using. What matters the most, though, is what is someone willing to pay and what is someone willing to accept?”

Langemeier said he likes the idea of using cow calf pair rental rates in Indiana.

“The reason I like that in Indiana and for states similar to Indiana, where you don’t have as many cattle, and so there’s not a plethora of rates. You can’t go to your neighbor and say, well, what are you renting your pasture for? Their neighbor might not have any pasture.”

In that scenario, Langemeier suggested looking at states with a lot of cow calf pair rental rates, such as Nebraska and Kansas.

The economists said other things to consider when setting pasture cash rents are who provides upkeep and if water is available.

The first question is always who provides control of noxious weeds and unwanted brush, Jansen said.

“The thing we always tell people in our meetings, from what we can tell based on our phone calls, it’s always the other party,” he stated. “It’s always someone else. It’s not me, it’s them.”

It’s easier to negotiate a lease if the property is well maintained, Jansen said. For example, if a fence is already well established, little work needs to be done. But if a quarter mile of the fence needs replaced, those materials are a landowner expense because if the tenant vacates, that tenant is not going to remove a barbed wire fence, he said.

Landowners might consider offering a discount if tenants use their own equipment, such as a skid steer or tractor, to repair the fence. The cash rent could be discounted over the next year or more, Jansen said.

As for noxious weeds, Langemeier said if the tenant is responsible for maintaining those weeds and there’s no cost share on herbicides, the tenant shouldn’t be paying as much rent. He mentioned other situations in which a rate adjustment might be necessary.

“If he’s responsible wholly for the fencing, he shouldn’t be paying as much,” Langemeier said. “Another factor that we sometimes talk about (in) various regions, the Corn Belt and also the Plains, is the quality of the grass. We get into is it native, is it improved pasture? But also just some simple things like eyeballing it and say, ‘it that fair? Is that good?’ and maybe make some (rental) adjustments related to that.”

Jansen said other things to be negotiated on grazing land are what happens in the case of a disaster such as fire, hail and drought. Also, would the land be available for hunting.