Pasture Lease Advice

[Texas PaPaw]

Dave

IMO-Bez & Stepper have given good advice. Sounds like a reasonable deal to me.

I feel a longer term lease is in everyone's best interest over a short one. What I see in my area in a 1 yr lease is the tennant has no incentive to improve the place, therefore just mines the soil further. Sure as he improves it, someone else will come along & outbid him after he makes it productive. With the 5 year lease, he has incentive to improve fertility, grass, fence, etc. If he choses not to continue after 5 years you should have a place that is more productive, more valuable & command even higher rent.

If you are in this for the long-haul, the long term deal is the way to go. One year deals are what's-in-it-for-me-now.

By all means get everything agreed,signed and in writing. If the guy is trustworthy, negotiate a long term deal & if you don't trust him run like h*ll.

Check out this link for the book "No Risk Ranching":

http://www.stockmangrassfarmer.net/cgi- ... d=360.html

No Risk Ranching is all about grazing leased pastures. He tells how to write leases, figure expenses, etc. I think you will get a good perspective from it.

Just my 2 cents worth.

Good luck & happy trails.

Brock

 

[MoGal]

Illinois doesn't have many rocks - its mostly rich black soil and flat so you can see farm fields for miles..... or southern IL anyways, at least most of it.

Land in this area is renting for $35-$50 acre on a yearly basis only and I understand CRP is paying $70 an acre but not sure how many years it has to be in the program. Also its quite frustrating to see some of these farm fields which would be great for pasture being turned into rows of trees planted thru a MO Conservation Plan program that pays per acre.

Perhaps if you could explain more clearly what type of land you have? Maybe some could give you a better opinion if they knew how your land was (gently rolling, rich black soil, etc...)

Also alfalfa hay is bringing much higher prices than in the past as its already being trucked out to the drought states. I would think he should be able to start paying on yearly rent the 2nd year.

 

[DetectDave]

WEll, after much consideration, I think this is our plan. To start hing sout on a good foot, I pulled 3 samples from each 2.5 acre section. I stopped by the ASCS office and found out I have right at 22 acres tilable. I didn't realize that I have to get approval from them to put this ground back into production as it's been better than 30 years since it was cropland. I guess we're looking for wetlands and snowy owl habitat or something. I pulled the samples and will deliver them to a local lab for testing and to find out exaclty what we need to dress the ground with to support an alfalfa orchard grass mix. It's interesting that no one farm service or delaer can give us the same recommendations for seeding rates. The 2 most common blends appear to be an 18 # orchard grasss to 7 # alfalfa mix or just the opposite: 18# alfalfa to 7 # orchard grass per acre, but we're still open. We're now looking at a 3 year lease and he is going to buy back some equipment that he previously had sold to a friend. ...JD 550 square baler, power rake and conditioner. We are going to start with a roughly 4.5 acre section just to see how the crop quality goes. I will do the marketing and he will suppply labor/equipment as well as the initial seed and fertlizer startup. My thought is that we do a complete burn off w/ Roundup or a similar product, wait 3 weeks and then bushhog the field as close to the ground as we can. The ACSC office has a no till drill that we can use for $8 an acre which I think will help us avoid any erosion issues on some areas that would have to have waterways if we plowed it first. I have been told that we can apply the lime and fertilizer directly over the top and get the desired nutrients leached down w/out cutting it in. He would like to to continue to bale the grass that is in the rest of the pasture in the meantime. This area usually averages about 42 round bales a cutting. He would like to use the proceeds from all of the hay sale to pay all the previously stated equipment and intial startup costs which he has estimated at about $7K and then start paying me as soon as he reaches the breakeven point. I intend to go ahead and at least lime the remaining part of the property as a good faith effort and to help him reach the profit point a bit quicker. I foresee a 1/3 2/3 split on profit after that with my fam helping bale and me doing some of the delivery work particularly if we can ship south. I'm still looking for thoughts, comments and suggestions. I have seen some interesting disparity in alfafa seed costs ranging from 1.50 to $5 a lb. I'm not sure of the best variety. The lime costs are across the board as well ranging from $14 to $20 a ton delivered and spread. I would be interested to hear some suggestions to a product that might be better than Roundup foir the burnoff.

 

[3MR]

I only have two things to commetn on your plan.

1. I think its a good idea to go ahead and lime the whole thing now like you said. Lime can use the head start.

2. When you are shopping for lime, realize not all Lime is created equal.

 

[3MR]

Sorry, one more thing.

Here is a link to Alfalfainfo.com. They have an ask the experts feature that will send your questions about seed mix, etc. to a regional expert.

http://www.alfalfa.info/

Good luck.

 

[DetectDave]

Thanks for that link....pretty infomative. I did send a message about the mix to a regional expert. How does that lease arrangment sound to you 3MR?

 

[3MR]

Well, Im sure somebody will dissagree; but.....IMHO

Granted I dont know what he is paying to buy back this equipment. Less than $7,000 as thats the total estimated startup.

22 acres isnt really enough to support/justify the purchase of haying equipment. I have been taught 800+ to support the purchase of bailing equipment. I disagree with that number as they figured it with new equipment, not cheap used, but still 22 acres is a long way from that. Also you are starting with 4.5 acres and a three year lease. Its not uncommon to not get a harvest the first year from a new stand, I realize you will be doing a mix, Im not really familiar with those aspects of orchard grass.

Does he have additional fields he will be haying that will go entirely towards the purchase price of the equipment?

If he is only going to fertilize the 4.5 acres you lose lots of the benefits tauted by BEZ in pasture improvement.

Hes paying for the fertilizer and seed, but your property is reimbursing him for it and you wont be getting a share or anything until it does. So in reality your paying at least half, if not more, of the start up cost. Being he also gets to keep the equipment, and could move on after three years, that doesnt sound very fair to me.

Having it custom cut is always an option. A custom cutter around me will do it for somewhere between 50/50 - 40/60, to the cutters benefit, split. This kind of sounds like what he wants anyway, except he want you to help pay for the equipment. Sort of defeats the reasons to use a custom cutter.

If I was going to do it I would specify the entire 22 acres be planted. If you follow the recomendations from the lab it will grow fine.

I guess the bottom line is if you are happy with the deal then you got a good deal, if your not then you didnt. Even if it doesnt work out, your only out the 1,500 you would have gotten otherwise over three years.

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I dont know what kind of soil you have, but if its loose enough, a cheaper way than the roundup is to disc it. You can still use the no-till drill, but loose the benefits of the stubble.

 

[rkm]

Talk about a mountain out of a mole hill? One thing to remember you can't lease it to someone else with out making the same offer to the neighbor who has been renting the land.

 

[DetectDave]

Well, I crafted a lease that I got from FarmDoc, a website run by the U of I Extension Service that I felt met both of our needs. I have offered to lime the property at an average of 8 tones per care and provide the herbicide for the initial burndown of the 5+ acres that the tenant is going to start with. I did not offer the lease to the former tenant as he has expressed that he has no interest in maintaining the fields other than to mow and bale them. I have proposed that the lease run 3 years at the tenants request but would easily make it 5 if he wants. My plan was to have him keep all profits until his equipment is paid off. I might note that he is buying the equipment back from a friend to whom he sold it a few years back. I estimate the buyback cost at somewhere around $2500-3000. He has readily offered to provide balance sheets of expenses and profits and I proposed a 1/3 -2/3 crop share following the point where he comes out into the black. The expected yields here are approx 4.5 tons per acre and he plans to plant by months end. I have offered to help w/ sale and delivery of the hay and we would count my expenses for same against the profits as well. I hope that this will help him get the start that he wants with the ultimate goal of him starting a new cattle herd. He has or will have plenty of storage for small squares and my previous tenant will custom round bale for us should we choose to do so. I have made these decisions after careful consideration for my neighbor/friend, from all of your input, that of my brother who is a commodities risk manager, and my local crop production specialists. Our relationship is sound and I look forward to help him get a start and perhaps a few dollars profit for myself. Thanks to all of you. I've been around farming as a hired hand and owner all my life w/ limited exposure to alfalfa w/ the exception of baling so I am pretty excited about our undertaking.