leasing my land for hay -- suggested contract details needed

[Senile_Texas_Aggie]

All,

I am to the point now where I think I want to lease about 80 acres of my pasture land to someone else for them to bale hay. I have read through a number of threads on this forum, including the many wonderful responses I received for my very first thread "what do I do with 100 acres of pasture?" (https://www.backyardherds.com/threads/what-do-i-do-with-100-acres-of-pasture.38064/) as well as the thread "Leasing pasture from neighbor?" (https://www.backyardherds.com/threads/leasing-pasture-from-neighbor.37640/). So now I have some specific questions to ask regarding the details of the contract.

+ Should I offer a short-term contract or long term? I would think that it would make more sense for the leaser to sign a long-term lease so that any long-term improvements they make will benefit them for years to come.
+ Should I add provisions that will offer the leaser a rebate of some of their costs should I need to terminate the lease? While I don't have any plans to change the use of the land from hay production to something else, I may perhaps need to sell the property should my wife or I (or both) encounter serious medical issues that required us to move to a nursing home.
+ Should I add provisions to the contract that require the leaser to fertilize the land? I would hate for the leaser to hay the land to where it is only fit to grow weeds and then they terminate the contract and I have to recondition the land back to being productive.
+ What about adding provisions that permit me to cut the fields should the leaser decide that there is not enough grass present to warrant cutting for hay (such as having a very dry year)? I do not want to have the fields get overgrown with weeds or saplings just because the leaser can't make enough money off of it and therefore decides not to cut it.
+ Anything else?

I know that there are a number of folks here on this forum (such as Miss @farmerjan) who know more than I ever will about growing hay, so I am reaching out to you folks for some guidance. I want to be fair to both myself as lessor and to the leaser. I am not looking to make a killing on the land -- I figure that I will be lucky to lease for $20/acre -- but instead simply want to keep the land in agricultural use and keep the pastures cleared out of weeds and saplings.

Thanks to all for your help.

Senile Texas Aggie

 

[Latestarter]

 

[Donna R. Raybon]

Ensure that hay is picked up off the land in a timely manner. If it remains too long it kills grass and that is how weeds take over. Unless equipment breaks down or it pours rain we get hay off within 4 or five days. If renters have to haul a distance and it takes them days to get done? Then have them stockpile hay bales on a plot as you can reseed that if it kills grass.

 

[farmerjan]

There are as many types of leases as there are people.
If it is marginal hay ground, neglected or weedy, then often we have gotten the land for the first year for no cost in order to do some improvements in the grass. I think you would be good to go back to that person that you had come out to look at the land and see what their opinion is. Most extension services here have a basic formula and idea of what land is leasing in the area; with type of grass/hay and such taken in consideration.

Long term leases definitely do provide for and allow the person leasing it to do some improvements and to benefit from them. Let's face it, as a farmer, we want to get the most return off the land for our time and labor. It is in our best interest to have a good hay crop so that we are not running our equipment over land that the resulting hay won't even pay for the time and fuel used.
BUT, you also need to be careful as to give a long term lease with no idea if it is a good and decent farmer can really screw you.
Most leases here that are "long term" are 5 years or more.
What we have done on several places where we don't know the owner and vice versa, we do a 1 year initial lease. We do fertilizer in the spring, usually the recommended amount of conventional chemical fertilizer. Providing it is a somewhat normal year for rain etc, we see what the land will produce. And the owner gets to see if we do what we say and make the hay in a timely manner, again providing we have a "normal year" and have some rain and sunny periods where we can make the hay....not like it has been here this year...UGH...
Then at the end of the year, we make a proposal to the landowner for a longer lease if we want to keep it and then do negotiating (sp?) on what needs to be done.

Fertilizing is necessary in order to not "mine all the good out of the ground and use it up" . Some places we split it if we do some sort of split for the hay. One place we don't split the hay, but the landowner pays for us to add a weed killer to the fertilizer when we get some problem weeds that inevitably creep in. If the farmer is getting all the hay he should pay for the fertilizer....BUT the initial fertilizing is often shared if the land is starting out poor and has not been taken care of before, or sometimes we don't pay any rent the first year.

We use quite a bit of poultry litter. Good to add organic matter as well as the fertilizer value. Most people who sell/haul it; they are contracted to clean out the houses and haul it away if it is not used by the person with the houses; will provide an analysis of the "fertilizer value": NPK and such. Also, they will sell it by the ton, some will spread it, others just dump it in piles and the farmer spreads it. Make sure if you go that route, you see weigh tickets for the loads. Litter can vary alot according to conditions of the house, what type of poultry, how long it has been setting, stored inside or out..... this will insure that the farmer is putting down what he says....if that is how you write the lease.

The best way to make sure they are not using up the soil, is for the farmer to do soil samples. It is his best interest to sample so he can put down what he needs for a good hay crop.... but it will also allow you to see if the land improves at all over the term of the lease. Most all do soil samples, we do on our leased land as well as our pastures... not all every year, but most of them most every year. It costs too much to over fertilize and if you don't soil sample, you really don't know exactly what you need.

One thing that we do insist on is if the land needs lime, then the owner has to share the cost. If it is that "sour" or depleted, it will take awhile for the lime to benefit and the benefits will last longer than the first year. In fact the benefits will often not really be seen for a couple of years. Once the land gets to a place where it is improved and fairly healthy, then we can do some lime on "our nickle" but ONLY if it is a long term lease...preferably 10 or more years. All the fertilizer in the world will be basically useless if the land is in desperate need of lime and the PH is way off.

We have one place that it is stipulated that it is cut twice in a year. Sometimes the second cutting is not much, sometimes, like this year we just finished FIRST cutting in late August due to the wet weather making it very difficult to get a big enough window to make the hay. We will probably bush hog it for the 2nd cutting since there will not be much growth. If it isn't like a swamp and we can get on it, this fall and it stops raining long enough. It is a good distance from us also, but we have had it for many years. The husband passed away and the wife is listening to some others about it and the rent has gone up and she is expecting more and more along with wanting more money. We do the fertilizing for our hay crop, it is just simple grasses, not improved. We used to do alot of extras, when the rent was fairly low. Added weed killer to keep it from getting crummy, shared the cost of lime years ago; but now the rent has gone up, she will not share any costs, and it is too high a price for the quality of the hay we get. There is also a pasture and we used to spray for the multiflora rose bushes every couple of years, and we bush hog the pastures. It is rough ground, there are coyote problems so we only run yearlings or heifers to breed, no baby calves, but when the rents get too high you can't put anything back into the land. They get the ag break on taxes which is significant. We don't expect it for nothing, but there isn't alot of money in the cattle business, and we can not afford to pay more than we can make back. My son and I have been discussing that maybe it is time to give it up.

There are no stipulations in any of ours for compensation if the owner has to sell. Again, in Va the new owner has to honor the lease at least for the current year. It is a contract... so there are laws to protect both. But if the farmer has a long term lease, and you have to sell, and he has just put down lime and fertilizer and such, then he is entitled to some sort of return.... but it is unlikely that you would find out today and sell it within a week...
Maybe talk to your real estate agent... they might have some suggestions and know about farming leases and such in your area.

Hope you don't fall asleep reading this

 

[Baymule]

@farmerjan I always learn so much from your posts. You are a wealth of information. You should write a book!

 

[farmerjan]

@Baymule ; Thank you for the compliment. Don't think I could sell a copy if I were to write a book. Lots of people alot smarter than me in the farming business.
If I was really smart, I would have sold 99% of the cattle about 5 years ago when they were bringing 4-5 x what they are now. Steer calves were 3.00 lb for 4 wts, bred cows were 2,000 and up. Tried to get my son to sell down and pay off some stuff but he didn't see where they were going to drop anytime soon. I did sell all my calves those 2 years, heifers and all. He thought I was nuts. I told him when I sold a couple of really nice heifers out of a couple of my favorite cows, that I still had the cows, that they would have another heifer or two and that when heifers were over 2.00 lb now I was going to make the money because they could be $.50 next year. He has told some people in the cattle business that I was right and he should have listened cuz I was the smart one.
I didn't have an inside tract.... just a gut feeling and living through many years and watching the cattle cycles. I am looking at it now and thinking it is time to buy some cheap breds, as I think feeder steer prices are going to go up in the next year or so. Maybe not last and it will greatly depend on the election and if Trump will have support for the next 2 years of his presidency... farmers usually suffer with republicans first get in, but then it evens out and gets better. We have got to get this country back on a better financial footing, even it means we are hurting for awhile as farmers. Got to get the trading between countries more fair, and it will benefit the farmer in the long run. Hell, it will benefit everyone if they would only look past the end of their noses.

 

[Senile_Texas_Aggie]

Miss @farmerjan and Miss @Donna R. Raybon,

Thank you both for your replies. I probably should have mentioned when I initially posted that I am not interested in keeping any of the hay, as I currently do not have farm animals and currently am not planning any anytime soon. Even if I do get some farm animals, I can always bale some hay/weeds from the overgrown pastures that I started cutting earlier this year, if I ever need some hay. I don't need the income that the lease will provide, but I would like to be able to get/keep an ag exemption. I am considering leasing the land quite low (at least it seems low to me), namely ~$10/acre/year, for a total of $750 for the 75 acres of somewhat good pasture (relatively smooth, almost no trees, of unknown grass quality). I figure at that rate the lessee could decide just how much money to put into the land for the return they would get.

Also, I had the county agent come take soil samples on Monday and should get the results soon, so I will know where I stand on what the pastures need in the way of pH balancing, fertilizer, etc.

I wish I could hire one or both of you as advisors when I negotiate a lease. I would be sure to indemnify and hold harmless both of you, as I would simply be asking you for advice. I would also like to make it so that it would not be seen as legal advice -- I wouldn't want you to be susceptible to being accused of practicing law without a license. I am quite ignorant on so many things, but thankfully I am knowledgeable about my ignorance! Even better, I know of at least two folks who DO know A LOT more than I do!

Miss @farmerjan, I agree with Miss @Baymule -- you should write a book. I have read a lot of your posts and am amazed at how much you know. (I don't mean to put down anyone else by comparison.) That is why I wish you had your own farm journal, even if it only had references in them. And the same with you, Miss @Donna R. Raybon and Miss @Baymule, as I always like to read your posts as well. I know that BYH provides a way to search for the postings of a given member, but it only provides 25 pages of the most recent postings, and that may only go back 6 months. (I know it provides more than that, but I never could get the "Review older postings" to work.) I would greatly enjoy reading both of your journals.

But thanks to everyone for your thoughtful replies.

Senile Texas Aggie

 

[Baymule]

the man that we buy hay from leased a 20 acre pasture for $500 a year. He fertilized it last spring, sowed clover and rye grass and baled it. then it stopped raining and he hasn't gotten another cutting. We finally got some rain and he will bale it next month.

 

[Latestarter]

I was going to suggest $10/acre might be quite a bit low as well.

 

[farmerjan]

Get the results from the soil tests. Then ask the county extension guy what it is worth to lease for hay. Ask if there are farmers in the area that might be interested. You have several months to make some decisions for next years' hay crop.
I agree that $10/acre is low, but don't know the conditions in that area. We don't pay anything for about half the places we make hay on. They want the ag exempt and there are fewer and fewer farmers that want to make hay on marginal places. The younger farmers just don't have the time and many don't want to deal with all these "small estate owners" that buy these 25-50 acres and then want it to look like a "productive farm" but don't want to do the work themselves.
Alot of the ground around here is quite hilly and some are downright steep. I was so glad that we lost one place as it scared me to rake the hay on one of the fields due to the steepness of a field that came around a hillside and had a 6 ft + drop off to the driveway that was cut in. I'm not quite as fearless as I was 10 years ago. But these owners think that they are going to find people to do all this stuff, for nothing, and many of us are just trying to improve what we have and not get into all the travel and time to make hay all across the county. The money is not there from cattle to need all this mediocre hay. And you can't make some of these places into real nice improved hayfields for the amount of work and money it would take and then not have an ironclad long term lease. A bag of clover seed is over $200, it will only do about 2-3 acres in a mix with something else like orchard grass. So say it costs over $100 / acre just to seed it. Not counting killing the old grass/weeds. Then fuel and time and wear & tear on equipment.. working the ground up to make a good seedbed, planting and HOPING you will get some normal moisture so it will grow and establish a root system but not like this year where we have had so much rain that the roots are shallow and much of it has "drowned".
We have a couple of places that we lease and have put quite a bit into making some productive orchard grass hayfields; because that is what we make the money off of for small square bales of hay. But we have at least 10 year leases on them. The hay goes to small acreage farmers; like many on this forum that have some goats or some sheep and only want 10-50 bales at a time or want 200 for the year. There are alot of horse owners that can only handle storage of 50-100 bales at a time. But realize that we are also tying up our time to load, deliver and stack in their barns too. Small time farmers think it is alot of money for small bales of hay but there is so much man hours tied up in them. We do not do "big squares" and some can handle them, but many cannot. And they have to be stored inside not like the round bales that can be stored outside even though there is some loss.
I think that without seeing your place that it would be mostly beneficial to a cattle farmer to make big round bales on, as native mixed grass hay. I can't begin to advise on the price, but if you don't need the income, the possibility of no charge for the first year with the stipulation that they cut the fields twice, whether for hay both times or a second time just to bush hog and keep the fields cleaned up and to see what the production would be. If fertilized decently, then they should produce better the second year and you could make a decision then. Maybe the $10/acre would help to keep the farmer a little honest as he will have something in it but not so much that he would lose money on a year that the yield was low due to weather etc. I would say more to lease it for a flat fee, like $1,000 rather than by the acre. Makes it easier that way. They need to know the acres for fertilizing but nowadays, most modern fertilizer trucks have GPS that will measure the acres etc and all the electronic stuff that meters out the fertilizer so it is evenly spread.