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vari rent lease
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BigNorsk
Posted 8/30/2007 11:42 (#195746 - in reply to #195401)
Subject: Re: vari rent lease



Rolla, ND
Generally a flex lease is going to put the landlord at risk.

Iowa state extension has a pretty good article on the matter at: http://www.extension.iastate.edu/AGDM/articles/mceowen/McEowCIMar07...

It has the FSA explanatory document attached.

That document gives this example of a flexible lease that would be considered a cash lease.

"C Flexible Leases Based on External Factors

Some flexible or variable lease agreements provide that the rental payment is based on a set
amount of production based on a future market value, not associated with the farm’s specific
production. Program regulations provide that this type of arrangement shall be
considered a cash-lease situation because the rental payment is not contingent on the actual
production of the crop or the crop proceeds.

Example: A lease states, “The annual rental payment is $150 per acre, but in the event that
average corn yield for the county exceeds 170 bushels and/or the average cash
price at the local elevator for the months of September, October, and November
exceeds $3 per bushel, the rent per acre shall be $175 per acre.” This lease would
be considered a cash lease because the bonus payment is not tied to a specific
yield on the farm nor the price received for that specific production.

In cash-lease situations, the tenant is eligible to receive 100 percent of the DCP payments for
the applicable farm, provided all other program eligibility requirements are met."

Hope that helps.

Marv

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