What are the typical lease terms for the farmer?
The lease can either be a cash lease or a crop share lease. With a cash lease a sum certain is established for the crop year. This cash rent can be due in advance, due at the completion of the crop year, or a combination (one-half at beginning of the year and one-half at completion of the crop). Cash rent for irrigated Mississippi farmland normally ranges from $100 to $130 per acre with $125 per acre being a good cash rent amount. On a crop share the owner receives 20 to 28% of the crop produced and harvested. The owner can choose to have the farmer sell the owner’s crop share together with the farmer’s or the owner can choose to sell his own share of the crop. With the strong commodity prices, a crop share rent could produce a stronger rate of return than the typical 5%. However, the owner does have more risk with the crop share arrangement. The majority of our investors have opted for the crop share arrangement.
