Most written cash leases that I know use a Jan. 1 to Dec. 31 or a March 1 to March 1 term for lease dates. Those probably work the best.
A huge problem can occur with using dates of July 1 to July 1, or anything close to that. It gets even more disastrous if a particular clause is left out of a lease agreement relative to compensation for expenses if a lease is terminated.
Here is why. Let's use an example.
In this example lease for 100 acres, let's assume that there is no clause that specifies that if a lease is terminated, the tenant gets reimbursed for his expenses incurred preparing for the next crop. This would include fertilizer applied, seed in the ground, herbicide, and machinery expenses, along with any other expenses relative to the next crop.
We will also assume this lease is for a July 1 to June 30 period of time.
In this example, the farmer harvested his wheat in June 2010 and paid his rent for 2010 ($6,000) per the lease agreement. He needs to rotate the ground to corn in 2011 to get rid of a rye problem. He chisels the ground in September (cost $13/acre), applies 120 units of anhydrous (cost $60/acre), field cultivates the ground in April 2011 (cost $12/acre), hires the MKC to apply more fertilizer and herbicide ($50/acre), plants the crop in April ($14/acre), pays Ag Seeds Inc. for the seed ($65/acre), and make one application of Roundup in May ($15/acre). His total investment is somewhere around $230/acre.
On May 15 the land sells, and he receives a notice of termination – properly delivered according to his written lease.
Here is the problem. He still owes the land owner $6,000 for 2011 rent, plus he has no compensation clause for his $23,000 of expenses put into the corn crop. That is a $29,000 loss on 100 acres because he had an inadequate lease agreement.
Is this situation likely to occur? Maybe not. But this would be a very high-risk lease agreement to sign off on.
What should the tenant have done?
First, he should have insisted upon a "Compensation for Expenses Clause" in his lease agreement. One of the inherent problems with these clauses is that they refer to reimbursement for field work according to custom rates. It could invoke a fairly tough situation in trying to come up with what those rates are considering, the State Board of Ag stopped publishing the "Kansas Custom Rate" booklet.
Second, knowing he was going to be going more than a year with no income, he should have had the landowner agree to an amendment that guaranteed (for 2011 only) that if he paid his rent in June, he got to harvest his corn crop without having to pay any additional rent.
Third, he should have explained to the landowner the risks associated with these summer leases and asked that the dates be changed to a better term.
Share-crop agreements also need to have specific clauses about what happens after a lease is terminated relative to growing crops or preparation for crops.
In oral leases, according to Kansas statutes, once a tenant has started preparing for a fall seeded crop, he gets to harvest the crop.
Note: in Kansas, all oral leases work off of a March 1 to March 1 time frame, so usually wheat or fall seeded alfalfa are the only crops this applies toward.
Managing grass for wildlife
A special meeting of interest to both hunters and landowners will be held Thursday, Feb. 16, at Wilmore's community building. The topic of the meeting will be "Management of Grassland to Enhance Both Hunting and Grazing." The program starts at 11 a.m., with lunch provided.
Wilmore is located in the heart of the Gyp Hills west of Medicine Lodge about 35 miles. Serving on the panel will be Ed Koger of the Hashknife Ranch, Newly Hutchison of the Chain Ranch and Eric Thacker, range biologist with USDA.
No registration is needed. For more information, contact Mike Deewall, Commanche County Extension agent at 620-582-2411.
Switch grass handbook new
K-State Research and Extension has published a new booklet, "Kansas Switchgrass Production Handbook.”
With increasing interest in switch grass as a feedstock for ethanol production, the need for such a publication was recognized.
It goes into history, uses, growth requirements, harvesting and economics of production and marketing.
To get a copy, stop by the Extension office, or simply Google "Kansas Switchgrass Production Handbook" for a download version.
Ethanol
fundamentals
K-State has also just published a brochure titled "Ethanol Fundamentals.” It presents general information on ethanol, E-10, E-85, and important considerations when using an ethanol blend.
It is also online. Go to www.ksre.ksu.edu and click on “Publications.”
New
horticulture site
Our Master Gardeners and Friends have put together a new website with lots of information relating to gardens, flowers, lawns, trees, plant problems, etc.
Go to: www.mcphersonmastergardeners.com
Dale Ladd is the agriculture extension agent for the McPherson County K-State Extension Service office. He can be reached by calling 241-1523.
