Crop Share Leasing Agreements Buffalo NY

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Farmland investment is an excellent way of diversifying because of its solid long-term returns that don’t correlate with the stock market. Leasing farmland can provide a long-term investor with some short-term cash flow. With the profits from many crops on the rise in the last few years, farmland owners who choose to share the risks and rewards of farming through crop share leasing may see their profits grow, too.

Crop shares are more complicated than lump-sum payment cash rent leases. With a crop share lease, the tenant and owner split the costs and the profits of the crops. In this case, an investor’s return can be affected significantly by bad weather, poor farming conditions or a less than stellar tenant. Investors must maintain records of shared expenses and market their crops, which involves more time and effort than a cash rent lease.

However, there are a number of benefits to crop share lease agreements, most notably sharing both the risks and the rewards with the tenant. Experienced landowners may be able to share their wisdom with a tenant, which could result in the tenant making more financially rewarding decisions. Landowners who participate in the management may also be able to time buying inputs, such as fertilizer and seeds, and selling crops to manage for tax purposes, according to Colorado State University’s Cooperative Extension.

In recent years, investors relying on crop share leases may have seen higher returns than those using cash rents.

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Author: Beth Anderson
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Brian Heine Licensed Real Estate Broker

(716) 884-4437
390 Linwood Ave., Ste. 3
Buffalo, NY