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| Base rate plus bonus for total revenue set up similar to crop insurance.
I have one that's kinda complicated but works good and he loves it....
Yield x higher of Feb or Oct MPCI price - basis (ours is set at -.20)
Subtract actual variable costs applied including custom spray/fert and half planting/combining
Subtract his base rate and my "profit" (my profit is half his base rate)
Whatever is left is split 50/50.
Example:
200 bu * (3.96-.20 basis) = 752
Variable costs:
seed -100
fert -125
chem -40
custom S/F -12
1/2 P/H -22
Base Rate -150
Profit -75
So the total is 752 - 524 = 228/2, bonus is 114/a
I make all management decisions, so we could add F/I or whatever there and it be fine I just have to have it documented.
Pays most years but his base rate is fairly low and I have slim margins for overhead (75+22 for planting and harvesting) on a not so good year.... | |
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Flex Rent
