Farmland Lease Arrangements

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Nationally, approximately 39 percent of all land is under some type of lease arrangement. According to the USDA National Agricultural Statistics Service (NASS), in Mississippi, the number is closer to 57 percent with more than 60 percent of the cropland in the Mississippi Delta under a lease arrangement. Leasing allows producers who do not own any land or enough land to scale their operations to a size that fits their equipment needs and/or to a size that allows producers to earn a living. Leasing also provides young and beginning farmers the opportunity to participate in a farming operation while they are building their financial base to a level that supports land ownership. The three predominate types of agricultural crop leases in Mississippi are cash rent, share rent, and a flexible/variable cash/share lease. This publication highlights some of the possibilities of farm leasing arrangements and is by no means all-inclusive.

Each type of farmland rental agreement has its advantages and disadvantages. Cash rental agreements are the easiest to implement and require the least amount of management. However, most of the risk is placed on the tenant in terms of making a profit at the agreed upon rental rate. Share rental leases allow the tenant and landowner to share the risk at the agreed upon share percentage and if that agreement is a 50 percent share, then both the tenant and landowner bear similar levels of risk. Flexible/variable cash rental agreements combine components of both cash and share rental agreements. It also allows some degrees of certainty for the landowner and limited expense to the tenant. There can be many variations of the flexible/variable cash rent agreement that both the tenant and landowner should thoroughly explore before entering into an agreement.

Tenants and landowners are encouraged to explore all options available before entering into an agreement. For answers to specific questions, please contact state Extension specialists or your local Extension office.

Publication 4091 (POD-03-25)

By Steve W. Martin, PhD, Extension Professor, Delta Research and Extension Center, Kevin Kim, PhD, Assistant Professor, Agricultural Economics, and Brian Mills, PhD, Assistant Professor, Agricultural Economics.