North Central Illinois | DeereMan97 - 8/27/2024 12:21
Its 30% of the crop
So say your fall crop insurance price is $4
250 bu/ac x $4 = $1000 x 30% = $300/ac
$300/ac - $250/ac base rent = $50/ac bonus payment
For soybeans
Let’s use $10/bu
70 bu/ac x $10 = $700 x 33% = $231/ac
Since the $250/ac base rent wasn’t exceeded there wouldn’t be a payment on the soybeans
Hope that makes sense
Furthermore, make sure that it’s understood that the bonus payment is based purely off of yield and insurance price. No additional payments will be figured into gross per acre income such as insurance payments or government payments.
Say for example the farm yields 35 bu/ac and you receive a $200/ac insurance check, that total is not to be used for figuring gross income at the end of the year for bonus payment, only yield and fall crop insurance price
The only thing I question here is the exclusion of insurance payments. Whatever works between landowner and tenant can go into a contract, but I could see this rubbing a landlord the wrong way if at the end of the year I grossed above the bonus trigger, but didn't pay a bonus. Most of the time that's not the case with an insurance claim, but if it is...
One other factor to consider is farms split between crops or multiple tracts. Is the bonus paid per crop, per parcel, or averaged across everything. Either way can work, but gotta pay attention to the details when negotiating the base rent and bonus factor. |
Cash rent plus bonus questions
