Analyzing Dryland Crop Leases
Author: Herbert Hinman*
| Excel Files | Quatro Pro Files |
| Analyzer | Analyzer |
| SFWW | SFWW |
| SFWWB | SFWWB |
| Wheat-Lentils | Wheat-Lentils |
| Wheat | Wheat |
Approximately one-half of all crop producing acreage in the dryland production areas of eastern Washington is leased under some sort of landowner - lessee agreement. Crop share leases tend to be the more popular type of lease. However, cash leases are bocoming more and more common.
The objectives of this publication are to provide a method for landowners and tenants to determine if their current land lease is profitable to both parties and to provide a method by which changes in the current lease arrangement can be evaluated in terms of a more equitable distribution between landowner and tenant. In addition, this publication provides a means by which landowner and tenant can estimate the cash rent amount they each can afford in a cash rental arrangement and also describes the workings of various types of flex-lease arrangements that may be appealing to certain landowners and tenants.
Determining a fair and equitable crop share lease ...sizable contributions occur in the form of land, machinery, labor, and management - inputs that do not necessarily carry explicit monetary values... In analyzing the profitability of a given crop share lease, one must look at the estimated monetary values that each party contributes to the production of the product and compare these values with the estimated returns they receive from the sale of the product. Most often the net returns to the landowner are measured as returns to land while the net returns to the lessee are measured as returns to management and risk. This approach will be demonstrated with an annual crop example, then with an example using two annual crops, and then with a summer fallow - winter wheat example.
*Herb Hinman is an Extension Economist, retired, at Washington State University.
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