Common Contracts

Flexible Cash Rental Arrangement

September 21st, 2001

• Filed
  September 21st, 2001

Flexible cash rental agreements are designed so that landowners and tenants share in the boom-bust cycles of farming. The tenant assumes nearly all the risk in a cash rental arrangement. In a crop-share agreement, the tenant and landowner share risk in proportion to input costs paid or output received. A flexible cash rental arrangement is a hybrid between a cash and a crop- share rental agreement. It allows for some of the tenant’s risk under a traditional cash rental arrangement to be shifted to the landowner. With increased risk there is a greater chance for higher profit. Therefore, over several years the landowner should receive a monetary return that is greater than would have been received in a cash rental agreement, but less than the landowner’s share in a crop-share rental agreement.