Consider Using a Flex Cash Lease for 2021, or a Modified Fixed Cash Lease

Image of farmland with Sugarloaf Mountain in Maryland. Image by Mike Procario via flickr.com

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            As we move through 2020 and a potentially lower period of crop prices due to issues associated with the global pandemic, many of you might be looking at renewing existing agricultural leases.  While you might be utilizing fixed cash rental rates or crop-share rents, with projected low crop prices, now might be the time to consider using a flex-cash lease.  Flex-cash leases are a rental agreement which work like a hybrid of the cash lease and state that the tenant will pay in proportion to either or both the price and yield level. This form of a lease might be better suited for producers who are working to handle low crop prices in their operations.  At the same time, if you do not want to consider a flex cash lease, you might want to consider adding language to your fixed cash lease which could reduce the rental rate if prices stay low.

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