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FAQ: Farmland Leases

photograph of hay bales on farmland

The agricultural sector heavily depends on leasing land and equipment to meet the needs of farmers. Farmland leases (also referred to as agricultural land leases) play a vital role in the farming industry, granting farmers access to land for production without the need for outright purchase. This arrangement allows for greater flexibility and efficiency in agricultural operations, ensuring that farmers can focus on their core activities while still meeting the demands of their profession. In this guide, we will outline some frequently asked questions about agricultural land leases.

What is a farmland lease?

An farmland lease is a legal agreement between two parties, where one party (the landowner) agrees to rent or lease their land to another party (the tenant) for the purpose of farming or other agricultural activities. The complexity and scope of farmland leases varies substantially depending on the entities and negotiations involved in the lease agreement. A proper agricultural lease will generally describe the parties, the property, the rental rate, and the length of time it will run.

Why are farmland leases important?

Agricultural land leases play a crucial role in providing farmers and other individuals or organizations with access to land for agricultural production. Leasing allows for a more manageable and flexible way of acquiring land, especially for small-scale farmers who may not have the financial resources to purchase land outright. Agricultural land leases also contribute significantly to the overall productivity and sustainability of the agricultural sector.

How does leasing farmland work?

There are various types of farmland leases, including cash rent, crop share, hybrid leases, and grazing permits.

  • Cash Rent Leases: These leases are straightforward agreements where the tenant pays an agreed-upon amount of money for the use of the land. Cash rent leases are more risky for the tenant than the landowner.

  • Crop Share Leases: This type of lease involves sharing profits from the crops grown on the leased land between the landlord and tenant. Both the landowner and the tenant share the risks and rewards in a crop share lease.

  • Hybrid Leases: As the name implies, these leases combine elements of both cash rent and crop share leases, providing a balance of risk and reward for both parties.

  • Grazing Permit: A grazing permit authorizes the use of public land for the purpose of grazing domestic livestock. The Bureau of Land Management and the U.S. Forest Service administer grazing permits.

What are farmland lease rates?

According to the USDA, the average cash rent in the United States for farmland in 2023 was $155 per acre. Agricultural land lease rates vary between irrigated and non-irrigated cropland as well, with irrigated cropland being more valuable than non-irrigated cropland. In 2023, the average rate per acre for irrigated cropland was $237 (up from $227 in 2022) and non-irrigated cropland was $142 (up from $135 in 2022). The scope of farmland leases varies substantially depending on the entities and negotiations involved in the lease contract as well as supply and demand for farmland in the local area.

Which factors affect farmland lease rates?

There are many factors that affect farmland lease rates. Supply and demand for farmland in the area plays a major role in determining an appropriate lease rate. In areas where farmland demand is high but supply is low, lease rates are higher than in areas with low demand and high supply. Resource capacity is another consideration- rental rates can be calculated as a function of the soil type and condition, size of the property, and other factors that can vary from state to state, farm to farm, and even within the same field.

Farmland lease rates are influenced by production costs. Farmers can include the projected reasonable cost of land in their business plans to showcase the actual costs of production. If stewardship requirements in the lease impact the tenant's production costs, these should be taken into account when determining the rent amount.

Another important factor that affects farmland lease rates is the presence of water. Land that has water access (for irrigation or livestock) is more valuable for farmland leases than land that does not have water access.

How can I determine a good lease rate for farmland?

There are a few additional things that landowners should consider when determining an appropriate lease rate because the value of agricultural land varies across the country. You should analyze the local market rental rate by connecting with other farmers, or by working with a land realtor that is familiar with local farmland lease rates. Additionally, you can analyze cash rent data county-by-county using USDA data.

How long are farmland leases?

Farmland leases are completely negotiable and vary lease-by-lease. The length of a lease can also vary depending on the type and size of the property. Typically, farmland leases last between one to five years, but it is not uncommon for them to extend up to twenty or more years. Short term leases are quite common because they allow the landowner to quickly make changes as circumstances evolve. For instance, when grain prices rise, the rental rate can be adjusted accordingly in the following year. Conversely, when grain prices are lower, the landowner may need to accept a reduced rental rate.

How can landowners lease farmland?

There are various strategies for locating a farmer to lease your farmland. At minimum, word of mouth in your community might do the trick. However, a more systematic and comprehensive approach is often warranted to ensure that you're getting the best possible deal. Here are some ideas to help you organize your search:

  • Place an ad in an agricultural publication and/or local newspaper

  • Post a notice at agricultural events, supply stores and equipment dealerships

  • Place an ad in an agricultural publication and/or local newspaper

  • Post a notice at agricultural events, supply stores and equipment dealerships

  • Work with a locally licensed land realtor. LandGate can refer you to a land realtor.

  • Utilize online listing services, such as LandGate

Listing your farmland for lease on LandGate is completely free- we do not charge any fees or commissions, and you are not obligated to accept any offers that you receive through your listing. It starts by generating your free property report on our map:


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