While land ownership has the obvious benefits of allowing you to build soil and investment in a piece of property over time, there are some definite benefits to leasing land as well. First, it’s typically a cheaper way to access land, making it oftentimes more feasible in the first few years of farming. Second, it allows you to evaluate an area, soil types, irrigation district, and farming community without the commitment of land ownership. If you find that the region’s climate isn’t working for you, it’s a lot easier to pick up and move if you’re leasing. Finally, leasing can allow you to just get started, beginning to build profits, brand visibility, and experience while you search for the land you’ll buy. It can also help you to build up the three years of management experience you need to apply for Farm Service Agency farm ownership loans.
However, leasing is not without its challenges. Probably the foremost challenge is writing a lease that protects you and the landowner equally. The first step in lease writing is to get clear on your goals – and to have your landowner get clear on theirs. Once the goals of each party have been articulated and shared, the next step is to develop a written lease agreement that will combine the goals and resources of the owner and tenant into a package. The agreement should encourage use of the optimum levels of technology, capital, labor, and management for profitable operation of the farm. Consideration should also be given to yield and price risk and who will bear them. The division of risk is key in determining what kind of lease is acceptable to both parties.
Finally, the question of what costs or resources are contributed by each party must be answered. The terms of a lease contract should be viewed in total to determine fairness to both parties involved. Individual provisions should be written so that they contribute to the equity of the lease as a whole. Module 8: Land Access of Planning for On-Farm Success includes several considerations when writing a lease, as well as a sample lease to help you get started.
This resource from the Farmers’ Legal Action Group covers the pros and cons of leases versus buying, landowner benefits of leasing, basic requirements and terms, and how to structure leases to encourage or require the use of sustainable practices.
If you’ve read Module 8 and are interested in checking out a few other ideas, we recommend perusing Farmland Changing Hands, a guide put together by Washington Farm Link and the Cascade Harvest Coalition. The guide highlights projects and strategies for land transfer, tenancy, and ownership that have good potential for increasing land access among beginning farmers.
Created by The Greenhorns, chapter 2 of this resource, “Land Tenure by Leasing,” outlines not only the elements of a good lease agreement, but also reasons one might benefit from leasing as opposed to owning land, general information about the leasing process, and an overview of different lease types.
This is a comprehensive resource from Land For Good which, specifically in chapter two, explains the benefits of leasing land from the perspective of the landowners. It also provides an overview on successful landowner-tenant relationships (chapter 6) and leasing information (chapters 7 & 8).