When starting a farm operation, likely the biggest expense will be from leasing land or a building to grow your produce, crops, or raise your livestock.
There are many benefits and drawbacks to leasing, but some of the main benefits are flexibility, portability, and adaptability.
Irrigation, greenhouses, fences, and all of the other costs for running your operation are now reduced because you are leasing a property that already has those things included.
If there is a lot of development needed for a piece of land before you can begin farming, then it is likely not wise to purchase that land. The expenses are going to be much higher than you expected.
Constructing the buildings, digging for irrigation or ponds, creating enclosures for animals, and many more expenses can add up very quickly, to the point it makes it difficult to start the actual farming process.
With all of that being said, finding a piece of land to farm is just as difficult as finding suitable land to purchase.
You'll really need to do some legwork (just like anything worth pursuing in life) to find options to consider. Here are the top 6 things we recommend when researching:
- Search Google for "leasing farmland" in your local area. You will likely find websites that offer that specific service and can potentially find "gold" here.
- Put a small advertisement in the local paper. Many people still read the newspaper, especially people in the demographics who are most likely to own land in the first place.
- The water and soil district newsletters are great to get the attention of your target audience. I.e; people who own the land you want to lease.
- Facebook groups for farmers can lead to connections, and those connections can refer you to people who have land for lease.
- Simply writing a letter or cold calling people to ask around for leads.
- Finding realtors who specialize in leasing land
When you find some potential, you need to ensure a thorough inspection takes place before signing on the dotted line. You need to understand the types of soil, drainage systems, water supply, and other factors that are needed to produce on that land.
And most importantly, those conditions must match the requirements for production in the specific operation you want to start developing.
The Lease: What Should Be Included
A lease agreement is essential whether you decide to pay rent, work on shares, or have a permit to develop on that land. The lease is so critical because it outlines what the renter and owner are agreeing to, so there is no misunderstanding.
The main thing a lease provides is a mutual understanding of what the owner expects, and what they are obligated to provide you, so everything is fair.
Please note: This is not legal advice. When creating a lease agreement, you should consult a licensed attorney who is authorized to consult with you on these matters.
Here are some things the lease should include:
- A in-depth description of assets you are renting, including buildings, equipment, and land. You need to outline the current condition of these things.
- The restrictions and rights of owner and renter.
- Any improvements that will be made, and which party is responsible in paying for these improvements. For example: If there are building included in the agreement, it needs to be clear who is paying for any renovations, paint jobs, roofing jobs, etc.
- The Ag practices being used. Whether producing organically or agronomically, these practices need to be outlined in detail.
- Land condition upon lease ending. It's very common for agreements to state that land must be in similar condition to when the renter first started.
- The terms of payment. For BOTH normal, successful production conditions and if the crops fail! This is extremely important so don't leave it out.
- The time frame of the agreement. We recommend to start with 1 year if you can.
- What the early termination terms and conditions are.
- Insurance consideration.
- That taxes are the owners full responsibility.
Here's an example of a farm lease -----> Example farm lease
We hope this short guide was a helpful starting place for you. There are many other details that we left out but ultimately, this should give you an overview of how the process works and some places you can begin your search.
When you are ready, consult with a practicing attorney and they should be able to take you through the process of developing and fortifying the lease for your specific situation.
Best of luck!