The Rural Voice, 1987-03, Page 51ADVICE
firewood. These things have a value
to the landlord, but may be more
economical than a cash outlay on the
part of the tenant.
Payment terms might also be
negotiable. Can part of the rent be
paid after stabilization is received?
Stabilization may be a major part of
your crop retums. Try to anticipate
the cash flow to minimize credit
needs.
Similarly, you might agree on a
low basic rental rate but provide for
bonus payments depending upon
yields or prices above some pre-
determined levels. For example,
basic rent might be $25 an acre plus
$1 a bushel for every bushel of corn
yield over 120 bushels per acre.
If there are windfalls, you should
plan to share some of the benefits
with the landlord if he'll give you a
break on rental rates.
The key is mutual trust. Docu-
ment your agreement. Keep in
touch through the season.
Third, consider a share agreement
as a possibility. In recent years,
there has been a steady growth in the
number of such agreements, and they
can offer advantages to both the
landlord and the tenant.
Share -crop income can qualify as
farming income for the landlord.
Cash rental does not qualify the
landlord as a farmer.
Any crop received as share
income can be covered with both
crop insurance and stabilization. A
properly documented and registered
share agreement could provide the
landlord with more security in the
event of the financial failure of the
tenant.
The tenant benefits because the
cost of inputs is reduced and risk is
shared. Involving the landlord more
closely also keeps him tuned in to
the realities of both the production
and marketing of the crop.
There is mutual benefit in
improved crop and soil management.
A good basis for calculating shares
can also be the foundation of a
longer-term rental agreement.°
Art Lawson
Farm Business Advisor
London OMAF
Tell them you saw their adver-
tisement in The Rural Voice.
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MARCH 1987 49