; Evaluating Risks when Leasing Land | Conferences | AgRisk Library


Conference Name Evaluating Risks when Leasing Land

Gregory Ibendahl


Leasing land can affect both financial and production risk for producers. By renting land, producers forgo purchasing land which would typically increase financial risk. Most producers also find lenders imposing a cap on how much financial risk the producer can undertake. However, renting land adds its own elements into production risk. The choice of the lease arrangement especially, can affect how much risk the producer incurs by renting additional land.

This poster presents the results of training and fact sheets designed to educate producers about the risks involved when leasing land. Some of the factors leading to a particular lease type are also examined. Cash leasing transfers most of the risk onto the producer yet this is the most common type of lease used. Either producers have reasons for assuming these risks or there is a lack of understanding about leasing risks. In addition, the still common practice of oral leasing indicates producers do not fully comprehend the risks of not putting lease terms in writing.

A survey was used to investigate why a particular lease type was chosen and then these results where used as the basis for training and for fact sheets. Other information about leasing risks was also included in the training. Training about risk education when leasing land was included in seven women-in-ag conferences throughout the state and also as part of several country meetings. The fact sheets were used to explain why producers sometimes act as they do when leasing and also to illustrate the risks involved with different land rental arrangements.