Share & Lease Options

Crop Share and Lease Options

    

Sterling Heritage Farms offers a variety of options for landowners and investors.  The four main agreements are explained below.  If you have questions, please contact us by clicking here.  We would be happy to set up a time to visit with you further.

 

 


 

Cash Rent

Operating under a cash rental agreement, SHF pays the landowner a set amount per acre.  Typically payments are set up twice per year; however, we also have a number of landowners who enjoy a monthly payment instead.  This arrangement makes it easier for the landowner to know how much money is coming in for budgeting purposes because it is always the same set amount. This is a clean, simple, and uncomplicated type of arrangement.

 

Cash Rent Benefits:

  • Easy budget planning
  • The simplest arrangement
  • Almost no risk for the landowner
  • Highest guaranteed income for the landower
  • Tenant assumes almost all of the risk
  • Semi-annual, quarterly, or monthly payments
  • No expense sharing

Flex Lease

Flex leases are a newer arrangement and are gaining popularity.  In a flex lease, there is a base rental price set per acre, similar to a cash rental arrangement.  The base rental fee is based on soil fertility, APH, and other factors.  An additional amount is added or subtracted from the base price based on market volitility, leaving upside potential for landowners to take advantage of.  

 

Flex Lease Benefits:

  • Base rental price for budget planning
  • Has a guaranteed income component
  • Landowner risk is fairly limited
  • Semi-annual, quarterly, or monthly payments
  • Opportunity to capture upside potential in grain markets

 

Crop Share

In a crop share agreement, the landowner and SHF decide upon shares for which they will split expenses and income.  Assistance with grain marketing is available upon request.  All of our landowners have access to our on-farm storage, allowing them more flexibility in marketing their grain.  They have many options, from selling across the scale at harvest to  holding it in storage and selling in the winter when the market typically recovers from the harvest slump.

 

Crop Share Benefits:

  • Greatest ability to capture profit upside potential in grain markets
  • Direct involvment in grain marketing
  • More involvment in decision making regarding production, purchasing, and marketing.
  • Shared risk with tenant
  • FSA payments are shared

Custom Farming

Custom farming gives the landowner one hundred percent control over every aspect of the crop year cycle.  One hundred percent of the profit and expense are the landowner's.  We are paid by the task.  We offer competitive rates for all ag services from planting to harvesting.  Assistance with grain marketing and the Farm Service Agency are available upon request for no fee for landowners who use SHF for their custom farming needs.

 

Custom Farming Benefits:

  • Landowner has complete discretion on all grain marketing and production decisions
  • Landowner pays for each service
  • Landowner assumes all risk but also receives all profit

New Arrangement- Covenant Producer

Covenant Producer is the newest arrangement and is best described as the direct opposite of Custom Farming.  In a Covenant Producer Lease, the landowner continues to farm the ground but has none of the headache of marketing the grain or dealing with FSA compliance.  The tenant pays the landowner every time the landowner goes over the field, similar to a Custom Farming arrangement, except that the landowner receives payment for each service rather than the tenant.  The tenant receives all grain and markets the grain.  This arrangement is perfect for retiring producers who want to continue farming without dealing with logistical headaches.

 

Covenant Producer Benefits:

  • Guaranteed income
  • Maintain production and harvesting control
  • Landowner risk is fairly limited
  • Payment to the landowner by service
  • Tenant handles all paperwork and marketing