60/40 Rent, Do I Understand it?

[blueriver]

Beside the land I own I rent pasture and hay ground, to this point everything is cash rent ... I pay and then I do as I like and pay for the fertilize, lime, fences etc.

Another neighbor asked me last evening if I would rent his meadow on 60/40 I told him I would get back to him. Now this morning I'm thinking maybe his idea of 60/40 is not the same as mine. Anyone care to share their thoughts on 60/40 rent.

Which way is it. I pay all and he gets his 40% or is everything split 60/40?

 

[radman1]

I have some crop land that I do on a 50/50 split. The renter provides all the equipment, fuel for equipment and labor. In turn, I pay for 50% of the expenditures such as seed, fertilitzer and fuel for the irrigation. Then I receive 50% of the crop which he hauls to market for me. In this kind of agreement, the risk is shared by both. In some 50/50 splits, the renter and owner each get 50% of the crop and the owner has no expenditures but has to haul his own crop to market. Bad crop or prices, you both suffer. Good crop or prices you both win. Splitting the crop ensures you of some income. In cash renting, if crop is bad or bad prices, the renter may not be able to pay. There are pros and cons to both.
In your situation you are going to have to ask him to be clear on his intentions. My guess is he is providing the land and you will get 60% of the hay. Do you have to haul and stack his 40%? It sounds like a reasonable deal. In many cases the land owner just wants the thing mowed and taken care of for him. I let my neighbor hay my 6 acres of meadow for free just so I don't have to mow it. I don't want to mess with the small amount of hay and have no livestock to feed. He hays it once a year in late summer.

 

[blueriver]

Thank you for the reply, you are right I will have to have him be clear on his intentions. I understand 60/40 to be His land, my equipment, labor, fuel and yes I will have to stack his 40% of the round bales, he also said he doesn't need hay and wants my help in selling it. I understand he should pay 40% for the fertilize, lime, spray, etc. If we would decide on other things, for example seeding or sprigging or winter grass. The same would go he pays his 40%. I will let you know his thoughts.

I like cash rent, pay them and thats it. Of course as you said in a bad year I absorb it all.

 

[radman1]

I would also find out what he wants to help sell it. He may just be wanting contacts so he can sell it. IMO, whoever buys the hay, hauls the hay. Are you putting up small square bales, large round bales etc. He may need help loading the hay for someone who wants to haul large bales.
In our area, we typically don't fertilize or lime grass-type hay. Usually isn't worth the expense for the amount of return. May be different in your location. Probably need to know if he expects any direct out of pocket expenses. Based on what your telling me, he probably just wants a little return on the land with little to no hassle on his part. Cash rent maybe a better option for both of you.

 

[MarkV]

Then there is the question of who decides what needs doing, lime, fertilizer, spraying, if the other does not want to put out any cash. Or, he gets 40% of the hay sale price after you deduct 40% of the production costs.

MarkV

 

[blueriver]

Thanks guys, round bales it is and yes his share will need to be stacked and I assume when sold I would have to help load. Yes, the issues of fertilize, lime, spray ... Thats why I like the cash rent ... quess I will need to have a deeper conversation with him!!

By the way, here we lime our hay fields, pastures every three years. Then near The last of April first part of May, I like 200# to the acre of Liquid Nitrates and 1 pint to the acre of grazon (sp) both the hay and pasture, then after the first hay cutting I apply fertilize at the rate recommended by our soil test.

Then we pray for ample rain at that given time ... Sometimes it Works!!!!!!!

 

[chh]

Will throw in to be sure to get everything squared away upfront and preferably in writing. You don't have to go to a lawyer and get a contract unless you really feel the need to, but it is sure a lot better to have it written down and signed by both parties. Can save a lot of, but you said, and I thought you were going to do this, type of situations. Been there, done that. I have a neighbor that is infamous locally for agreeing to partner in something and then only following thru if it suits him or starting something and then wanting to change the terms or quitting in the middle.

 

[jimg]

Then there is the question of who decides what needs doing, lime, fertilizer, spraying, if the other does not want to put out any cash. Or, he gets 40% of the hay sale price after you deduct 40% of the production costs.

MarkV

Wondered the same thing and figured both parties need to be on the same page before signing anything. If theyre only willing to manage to x tons/ac and you want x+y there could be some conflict.

 

[Robert_in_NY]

I have some crop land that I do on a 50/50 split. The renter provides all the equipment, fuel for equipment and labor. In turn, I pay for 50% of the expenditures such as seed, fertilitzer and fuel for the irrigation. Then I receive 50% of the crop which he hauls to market for me. In this kind of agreement, the risk is shared by both. In some 50/50 splits, the renter and owner each get 50% of the crop and the owner has no expenditures but has to haul his own crop to market. Bad crop or prices, you both suffer. Good crop or prices you both win. Splitting the crop ensures you of some income. In cash renting, if crop is bad or bad prices, the renter may not be able to pay. There are pros and cons to both.
In your situation you are going to have to ask him to be clear on his intentions. My guess is he is providing the land and you will get 60% of the hay. Do you have to haul and stack his 40%? It sounds like a reasonable deal. In many cases the land owner just wants the thing mowed and taken care of for him. I let my neighbor hay my 6 acres of meadow for free just so I don't have to mow it. I don't want to mess with the small amount of hay and have no livestock to feed. He hays it once a year in late summer.

Around here I have all the hay land I want as everyone is happy to have me maintain their open fields. I farm fields for four different people, three are grape farmers who have some open field that borders my farms, the other use to do his own hay and has a 70 acre farm that is all hay ground except for the house and barn. I bale all the hay there, fix up the fields that need redone, fertilize and more or less treat it like my own land and he has his choice of hay, usually 300-500 bales that he pays for at cost (he insist on paying). He just does not want his ground to grow up and go to heck and all he has is a Ford 4000 with a 6' woods mower. If I wanted to I could pick up a couple hundred more acres of open ground but a lot of it would need a good size investment to be good hay and the land is out of my way. Plus I would be run ragged trying to do that much hay ground.

There is a lot of people just begging for someone to maintain their open land. My advice is this, don't sink a lot of money into the field until you get an idea what type of people they are. If you do soil test and spend a lot of money on lime and fertilizer the first year to fix it up then all of the sudden the second year they want you to pay rent. Then you are stuck as you already invested a good portion of money into the field and they know it. Go a couple years doing a little bit each year and just gauge how the land owners treat you. If they are still happy to have you cut their property then talk to them if the ground needs more work and see if they mind. They will be happy to have their ground improved even if they don't understand what the improvments are.