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Revisiting Flexible Cash Leases

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  • Paulson, Nicholar

Abstract

This paper discusses the recent increases in the returns to crop production as well as trends in land rental rates and the types of rental agreements used in the Midwest. The concept of a flex cash lease and an approach to defining the terms of such a lease, relative to the current fixed cash or share arrangement, are outlined within the context of an example Midwestern corn farm. The resulting flex lease results in returns to the tenant and landowner which are a hybrid of those realized under the more traditional fixed cash and share rent agreements. Using these alternatives as benchmarks, the approach to defining a flex lease could be applied to other specific farm scenarios.

Suggested Citation

  • Paulson, Nicholar, 2012. "Revisiting Flexible Cash Leases," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2012, pages 1-13.
    • Handle: RePEc:ags:jasfmr:190760
    DOI: 10.22004/ag.econ.190760
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    File URL: https://ageconsearch.umn.edu/record/190760/files/375_Paulson.pdf
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    References listed on IDEAS

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    1. Peter J. Barry & LeeAnn M. Moss & Narda L. Sotomayor & Cesar L. Escalante, 2000. "Lease Pricing for Farm Real Estate," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 22(1), pages 2-16.
    2. Joseph E. Stiglitz, 1974. "Incentives and Risk Sharing in Sharecropping," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(2), pages 219-255.
    3. Nicholas D. Paulson & Gary D. Schnitkey & Bruce J. Sherrick, 2010. "Rental arrangements and risk mitigation of crop insurance and marketing," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 70(3), pages 399-413, November.
    4. Nicholas D. Paulson, 2011. "Rental arrangements and risk mitigation of crop insurance and marketing," Agricultural Finance Review, Emerald Group Publishing, vol. 70(3), pages 399-413, January.
    5. Edwards, William M. & Johanns, Ann M., 2011. "Flexible Farm Lease Agreements," Staff General Research Papers Archive 34461, Iowa State University, Department of Economics.
    6. Schnitkey, Gary, 2012. "Crop Insurance in 2012," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 2, July.
    7. Edwards, William M. & Johanns, Ann M., 2011. "Cash Rental Rates for Iowa Survey," Staff General Research Papers Archive 12400, Iowa State University, Department of Economics.
    8. Schnitkey, Gary, 2011. "Crop Insurance in 2011," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 1, March.
    9. Allen, Douglas W & Lueck, Dean, 1992. "The "Back Forty" on a Handshake: Specific Assets, Reputation, and the Structure of Farmland Contracts," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(2), pages 366-376, April.
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    Cited by:

    1. Paulson, Nick & Schnitkey, Gary, 2014. "Farmland Value and Rental Rate Behavior in Illinois," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2014, pages 1-14.
    2. Hauger, Michael H. & Burton, Robert O., 2015. "What to Do with a Gift of Farmland: Part One," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2015.
    3. Langemeier, Michael & Liu, Yangxuan, 2020. "Comparing Net Return to Land and Risk for Alternative Leasing Arrangements," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2020.
    4. Bigelow, Daniel & Borchers, Allison & Hubbs, Todd, 2016. "U.S. Farmland Ownership, Tenure, and Transfer," Economic Information Bulletin 262138, United States Department of Agriculture, Economic Research Service.

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