What is a Flex lease in farming?

What is a Flex lease in farming?

Flexible-cash lease agreements involve the tenant paying the landowner a predetermined cash fee adjusted for changes in prices and/or yields. The landowner has increased opportunities to share in additional income under a flexible-cash lease agreement when compared to a fixed-cash agreement. Agriculture &

What is flexible cash lease?

In a flexible cash lease, the rental payment varies each year with the price of grain, thus the risk of any change in grain prices is shared with the landowner. Compared to cash leases, these agreements do not require periodic renegotiation when grain prices change.

How does cash rent farming work?

Cash-Rent Lease: This is where the tenant usually pays a fixed dollar amount in rent (either on a per acre or whole farm basis). These types of leases may be modified depending on crop yield (i.e., increase in good years and decrease in bad years).

How is farm cash rent calculated?

A cropland cash rental rate can be computed by multiplying the average CSR2 by a rental rate per CSR2 point. For example, assume a typical rental rate per CSR2 index point of $2.75 for your county. A tract of land with a CSR2 of 80 would have a rental rate of $220 ($2.75 × 80 CSR2 = $220) per acre.

How does a flexible cash lease work on a farm?

Flexible cash rent leases typically establish a minimum base rent and allow the tenant to share a potential flex payment with the landlord when the tenant has higher crop revenue on the rented farm.

How does the Flex payment work on a farm?

This “flex payment” usually reflects the farm’s yields, harvest cash prices or the average cash prices for harvest-delivered bushels, and then subtracts non-land crop input costs. How have returns to fixed cash, flexible and crop share leases compared in recent years?

How does a flexible cash rent agreement work?

Although no two agreements are exactly alike, most of them fall into a few general categories. The most common type of flexible lease bases the final cash rent on an estimate of the actual gross revenue realized from the crop each year. In many cases the rate is simply a percent of the price times the yield.

What is the Flex cash lease calculator used for?

Flex Cash Lease Calculator is a simplified spreadsheet used to determine cash rents for agricultural land based on commodity prices, for the benefit of landowners and tenants. Before you begin you will need to know: The spreadsheet opens to the instructions.