If you are a landowner with large holdings in the Ozarks, chances are that at some point, you will consider, or be asked to consider, renting out some of your pasture.
Pasture rental/leasing is an age old concept in American agriculture, and when conducted properly, pasture rental can be very beneficial for both the owner and the renter. But if the lease agreement is done improperly, it can spell disaster for both parties. Be sure to carefully consider the lease from all angles so you can get the most from renting out your pasture.
“In any relationship, whether it’s leasing or dating someone, the initial stages are usually marital bliss. But in the beginning is when we should take the time to consider all the issues that may arise down the road,” said Wesley Tucker, University of Missouri Extension Agriculture Business Specialist. “Discussing them upfront will allow us to compromise and develop a mutually beneficial agreement.”
Many pastureland owners who decide to rent out their ground make the mistake of not thinking everything through prior to the tenant turning out their cows.
As the landlord in the pasture leasing situation, take some time to sit down and really think about what you want to achieve through the agreement with your tenant.
David Ballou, of Ballou Saler Farm in Christian County, Mo., said three vital things that need to be considered and addressed prior to signing an agreement by both the tenant and the landlord are “fences, fertilizer and continuity.”
“Both parties need to stop and think about specific things they want included,” Tucker said. “Does the landlord want the pasture clipped? Do they want to retain the hunting rights? Do they want the land fertilized?”
As a landlord, any specific items you want to see completed by the tenant should be included in the lease agreement. Be sure to always include legal specifics such as retaining the right of entry to the land, not allowing subleasing, requiring the tenant to have liability insurance, etc.
“Conversely, if there is anything the tenant wants the landlord to consider doing, now is the time to discuss it,” Tucker said. “For instance, would the landlord consider sharing in long term fertility and lime applications or spraying for weeds that are already there when they (the tenant) take over? Would the landlord consider a long-term lease to give the tenant more incentive to invest in the land? How much notice must the tenant be given if the lease is not going to be renewed?”
All of these details should be addressed up front and discussed in depth when drafting a lease agreement.
Another consideration the owner of the pasture needs to bear in mind during the duration of the lease is communication. Good landlords communicate with their tenants regularly, so both parties are on the same page about any and all adjustments that might need to be made.
Whether you are renting out 10 acres or 1,000 acres, with careful consideration and frequent communication, you can turn your unused pasture into valued land and reap the benefits.
