Report Changes in Rental Agreements?

Report Changes in Rental Agreements?

You don't have to report changes in a cropland lease if FSA considers your lease to be a cash lease. If it's a share lease, yes you need to let FSA know of any changes. What about a flexible cash rent lease?

Question: I renegotiated my cash rent lease with one of our landlords for 2011. With higher grain prices this winter, he wanted more money for rent in 2011, so last week I agreed to pay him $50 more per acre. On another farm with a different landlord, I've switched from a straight cash rent lease to a flexible cash rent lease. Do I need to notify FSA about these changes for 2011?

You do not have to report to FSA the changes in your lease arrangement if the lease is considered to be a cash lease by FSA. The landlord isn't eligible to share in government farm program payments with cash leases. If you have a share lease, then yes, you do need to report changes in your lease arrangement to FSA. Landlords are eligible to share in government farm program payments with share leases.

Direct and Counter Cyclical Program (DCP) contracts are to reflect who shares in the crop.

A lease is considered to be a cash lease if the lease provides for only a guaranteed sum certain cash payment, or a fixed quantity of the crop (for example, cash, pounds or bushels per acre). If a lease contains provisions that require the payment of rent on the basis of the amount of crop produced or the proceeds derived from the crop, then this agreement will be considered to be a share lease.

What about flexible cash leases? In the past there was a lot of discussion about flexible leases, focusing on whether or not landlords should participate on the DCP contracts, etc. Many of those rules have been revised.

Now, if a lease provides for a guaranteed amount and also a share of the crop or crop proceeds, such an agreement will be considered a cash lease if the lease provides a guaranteed amount such as a fixed dollar amount or quantity, and a share of the crop proceeds.

In situations where FSA considers the lease a cash lease, landlords are not eligible for direct, counter-cyclical or ACRE Program payments. The leasing of grazing or haying privileges is not considered cash leasing.

If you have specific questions or need details regarding USDA farm programs, contact your local USDA Farm Service Agency office. You can also get news and information about DCP, ACRE and other USDA programs at www.fsa.usda.gov.

Two Iowa State University Extension Web sites have farm program information and analysis. They are ISU's Ag Decision Maker site at www.extension.iastate.edu/agdm and ISU Extension Specialist Steve Johnson's site at www.extension.iastate.edu/polk/farmmanagement.htm.

And be sure to read the regular column "Frequently Asked Questions about the Farm Program" that appears in each issue of Wallaces Farmer magazine and at www.WallacesFarmer.com

TAGS: USDA
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