Small Farm: Leasing Land
Note Number: AG1044
Published: September 2003
Introduction
Leasing land is the means for some small farms to expand their business by gaining access to additional resources without the capital cost of buying the land. This can be very useful where there is a shortage of operating funds.
For other small farms leasing represents a means by which they can generate an income without having to do the physical farming–an important consideration if your main income and family commitments requires you to be away from the property for long periods. The purpose of this Agricultural Note is to provide landowners and lessees with a checklist of issues that may be included in an agenda when negotiating a lease.
Leasing described
Leasing is the renting of land for an extended period of time that involves additional obligations and risks.
It may comprise a paddock being leased for six months or several years. Under longer leases both parties accept additional risks. If the price of land rises the lessor (landowner) misses out on potential income; if the lessee (person leasing the land) has poor seasons then the lease price may be too high and large losses can be incurred. Alternatively, if good seasons and prices prevail then the lessee may make large profits.
It is worth the time to research past prices, seasons, and yields to try and ascertain a fair price. Sometimes the lease market ‘runs hot’ and there are many more people wishing to lease land than land available. This can lead to prices being paid that cannot be serviced from production from the land.
For those leasing land, it can seem like a low maintenance farming system, however there are numerous traps for those who don’t monitor their business. It may be useful to make notes using the following checklist:
| Person Responsible | Owner of Farm (Lessor) | Person leasing land (Lessee) |
|---|---|---|
| Map showing location and area of property (ha)-copy for lessee. | . | . |
| Main property improvements included in the lease (mark our map or separate list). | . | . |
| Source of water and amount included in the lease. | . | . |
| Starting date for lease ……………… Finishing date …………………. | . | . |
| Price for lease $ ………/ha/year, with payment on the first working day of every quarter, starting ………………… | . | . |
| Any bond that has to be lodged as security against default of payment or control of weeds and vermin $ _______ Date of lodgement ______________ | . | . |
| Person responsible for paying Council rates and charges (eg. garbage). | . | . |
| Person responsible for paying power, water charges, gas, telephone and other utilities that are associated with the leased land. | . | . |
| Person responsible for provision of water: a) in normal times b) if normal supply fails. | . | . |
| Main weeds to be monitored and person responsible for their control. | . | . |
| What restrictions if any on use of herbicides? | . | . |
| Annual minimum fertiliser applications to be applied by lessee. Active ingredient Phosphorus (kg/ha) ………………. Other (kg/ha) ……………… |
. | . |
| What restrictions, if any, on grazing, and maintenance of shelter belts? | . | . |
| What is the expectation of each party to monitor livestock and initiate corrective action of issues with their welfare eg. wandering stock, sick animal, mating, extra hand-feeding? | . | . |
| Restrictions, if any, on livestock that can be brought on to the property | . | . |
| What provision is made for supply of chemical, equipment and labour for animal husbandry requirements (eg. drenching, fly-strike, mating)? | . | . |
| What arrangements are there for loading/unloading stock? | . | . |
| Option to have bulls and rams on the property if needed for mating. | . | . |
| Any restrictions with bringing supplementary feed on to the property (in relation to weed seeds)? | . | . |
| Person responsible for maintaining fences and watering facilities during the period of the lease, including labour and materials where needed. | . | . |
| Expected range of crops to be grown. | . | . |
| Restrictions, if any, on the type of crops that can be grown | . | . |
| Description of how cultivated areas are to be returned to property owner at end of lease period, and who is to pay. | . | . |
| The plan if lease fees are not paid by the due date? | . | . |
| Option for lessee to appoint someone local to have access to the property to monitor stock and crops. | . | . |
| Means by which property owner, or their representative, can be contacted. | . | . |
| Person to whom disputes may be referred if both parties agree that mediation is required _________________________________________________ |
. | . |
| Other | . | . |
| Other | . | . |
| . | . | |
| . | . |
| Name of Property Owner (Lessor) ___________________________________ |
Name of Lessee ___________________________________ |
| Phone______________________________ Mobile_____________________________ |
Phone______________________________ Mobile_____________________________ |
| E-mail _________________________ Fax ___________ |
E-mail ________________________ Fax ______________ |
| Postal address __________________________________ |
Postal address ___________________________________ |
| Postcode ___________ | Postcode ___________ |
| Signature ___________________________________ |
Signature ___________________________________ |
| Date signed ___________________________________ |
Date signed ___________________________________ |
Further information
This publication has been developed as part of the Future Family Farms Initiative. For further information 136 186
Max Coster, Bendigo
