Leasing agricultural land plays an important role in the farming industry, as it allows landowners to generate income with their property while giving tenants access to the space they need to raise crops and livestock.

For both landowners and tenants, there are a few things to keep in mind when it comes to leasing agricultural land. During his appearance on the National Land Podcast, NE Land Broker and leasing specialist Ryan Schroeter shared some insights on agricultural leasing.

Here’s what to know!

Tips for Landowners to Lease Their Agricultural Land

Conduct Tests

Landowners looking to lease their land need to have a comprehensive understanding of their property, since this will allow them to better present it to prospective tenants and also help determine a fair rate for their lease. One of the best ways to get a better understanding of a property is by conducting a few tests.

Surveys and Soil Tests

Land surveys are important since they accurately outline the natural features and boundaries of a property. It’s a good idea to have a current survey done if thinking about leasing land for agriculture to give potential tenants an up-to-date idea of the property’s features and size.

The other survey that’s especially important for farmland owners is a soil test. Soil tests are used to determine the overall health and fertility of the soils on a property. “Before leasing, you need to know your land, and so you should start with the soil. You need to know the soil type and you’re essentially looking for bad spots, to keep it general,” stated Schroeter.

Identifying the soil type and overall fertility of a property will help to set realistic expectations for possible tenants and ensure that the land will fit their needs.

Make a Plan For Maintenance

Landowners should take some time to figure out a plan for maintenance around the property. Making a maintenance plan will ensure that the property is kept in good condition throughout the entire lease. A maintenance plan should address things like mowing roads or ditches, clearing debris, and other kinds of general upkeep.

Arguably one of the most important aspects of agricultural land is irrigation. Making a plan to supply adequate irrigation for tenants should be a priority for any farmland owner looking to lease their land. If the land isn’t already irrigated, then irrigation equipment will need to be brought on-site. 

In this case, it’s important to establish responsibility expectations with prospective tenants to make clear who is responsible for the general upkeep and maintenance of these irrigation systems and the property as a whole.

Things Ag Land Tenants Should Know

Here are a few things for tenants to keep in mind as they look for agricultural land for lease.

Find Out Where Your “Break-Even” Point Is

One of the worst things an ag land tenant can do is get into a lease that isn’t going to be profitable for them. By understanding all the costs of working the land, tenants can get a better idea of the lease rate they can afford. 

Failing to take these expenses into account could leave a tenant stuck in a lease that’s costing them more than it’s generating.

Conduct Tests

As mentioned in the landowner section above, it’s important to thoroughly evaluate the property before signing any lease agreements. A large part of this is done through soil tests and land surveys. It’s always best to enlist the help of local, knowledgeable professionals when looking for land to lease since an informed assistant will prevent 

Even if the landowner provides soil test results themselves, it’s best to have your own tests conducted just to make sure everything is as the landowner claims it is. Doing this before signing a lease agreement can prevent future disputes and ensures the land is fit for the tenant’s needs. It’s hard to be too thorough when evaluating a potential property for lease!

Discuss Lease Term

The duration of a lease is an important factor for many tenants. Longer leases are often preferable since they allow tenants to build a deeper connection to the land and the landowner which encourages them to invest more in maintenance and general upkeep around the property. It also means that they won’t need to pack up all their things and search for another landowner to lease from in 12 months. Discussing and agreeing upon a term can help to foster a more beneficial relationship between tenants and landowners.

Leasing agricultural land can be hugely beneficial to both tenants and landowners if done correctly. By taking into account the needs and responsibilities of each party, you can create a lease agreement that works for everyone. If you’ve got more questions about leasing farmland, get in touch with your local Land Professional today!