Foulk Farms has several land agreements in place with our partners currently. This ranges from no land cost and leaving standing crop for wildlife and hunting, to 50-50 crop share, cash rent, flex lease, etc. We want to enter into a multi-year agreement that works for everyone. We have single year, three year, and even 10 year agreements that provide a fit for both the landowner and the tenant, and provide stability and predictability to everyone involved. Below is an overview of the different agreements for you to review and see which might be a best fit for you.
Of Note- unique to Foulk Farms: One thing Foulk Farms does for landowners that is unique is provide a monthly payment option. For instance, in a cash rent scenario, we can determine the total amount and set up automatic bank withdrawals or direct deposits from our bank to your home or bank account- monthly, quarterly, or annually. No worries about us missing a payment or not getting the check in the mail on time. This consistency helps you plan your income throughout the year! This can be arranged in all scenarios as a base income, and any additional income paid out at the end of the year.
Here’s a detailed comparison of 50-50 Crop Share vs. Cash Rent vs. Flex Lease,
breaking down the pros and cons for both landowners and tenants.
1. Overview: How Each Lease Works
2. Pros & Cons for Landowners
💰 50-50 Crop Share – Pros for Landowner
✅ Higher Potential Income in Good Years – If yields and prices are high, the landowner can make far more than fixed cash rent.
✅ Shared Costs on Inputs – The landowner splits costs on seed, fertilizer, chemicals, and drying/storage, reducing out-of-pocket expenses.
✅ Incentivizes Good Farming Practices – Since landowner income depends on yield, there’s motivation to ensure proper soil fertility, drainage, and crop rotation.
✅ Long-Term Land Value Protection – Since both parties are invested, the land is often better maintained compared to some cash-rented fields.
❌ 50-50 Crop Share – Cons for Landowner
🚫 Highly Variable Income – If yields are low or prices drop, the landowner’s income falls dramatically.
🚫 Higher Management Involvement – The landowner must be involved in crop decisions, input purchases, and grain marketing.
🚫 Risk of Disagreements – Differences in farming practices, input choices, and grain marketing strategies can lead to conflicts.
💰 Flex Lease – Pros for Landowner
✅ Some Risk Protection – Income is higher in good years while still providing some base rent.
✅ Potential for Higher Returns than Cash Rent – If structured well, landowners can earn above-average rent in good years.
✅ Lower Management than Crop Share – Unlike 50-50 crop share, the landowner does not have to be involved in purchasing inputs or grain marketing.
❌ Flex Lease – Cons for Landowner
🚫 Variable Income – Unlike cash rent, there’s no guaranteed fixed payment.
🚫 More Complexity – Rent calculations require tracking yield, prices, or revenue, adding administrative work.
💰 Cash Rent – Pros for Landowner
✅ Guaranteed Income Stability – No market risk, no weather risk—just consistent annual payments.
✅ Minimal Management – No involvement in farming decisions, input costs, or grain marketing.
✅ Easier for Estate & Tax Planning – Stable rental income simplifies estate planning, property division, and taxes.
❌ Cash Rent – Cons for Landowner
🚫 No Upside Potential – If yields and prices are strong, the landowner doesn’t benefit beyond the fixed rent.
🚫 Fixed Rate Can Become Outdated – If cash rent is locked in too low, the landowner misses out on higher potential income.
3. Pros & Cons for Tenants
🌱 50-50 Crop Share – Pros for Tenant
✅ Lower Upfront Costs – Since the landowner pays half of input costs, the tenant doesn’t need as much working capital.
✅ Lower Risk in Bad Years – If yields or prices drop, the landowner absorbs 50% of the losses.
✅ Long-Term Land Security – Landowners are more likely to keep a reliable tenant in a crop share than a cash rental arrangement.
❌ 50-50 Crop Share – Cons for Tenant
🚫 Sharing Profits in Good Years – If yields and prices are high, the landowner takes 50% of the profits.
🚫 Less Autonomy in Decision-Making – The tenant must collaborate with the landowner on crop choices, input selection, and marketing.
🚫 More Administrative Burden – Must keep records, track shared expenses, and coordinate grain sales with the landowner.
🌱 Flex Lease – Pros for Tenant
✅ Lower Rent in Bad Years – If yields or prices are poor, rent payments adjust downward, helping with cash flow.
✅ More Fair Long-Term – Prevents overpaying in bad years while allowing for profit-sharing in good years.
✅ More Autonomy than Crop Share – Unlike 50-50 crop share, the tenant doesn’t need approval for every decision.
❌ Flex Lease – Cons for Tenant
🚫 Higher Rent in Good Years – If yields or prices are high, rent increases, reducing profits.
🚫 More Record-Keeping – Must track yield and price data to determine rent.
🚫 Potential for Disagreements – If terms aren’t clearly defined, disputes may arise over how rent is calculated.
🌱 Cash Rent – Pros for Tenant
✅ Predictable Costs – Fixed rent allows for easier financial planning and budgeting.
✅ Keeps All Profits in Good Years – Unlike flex leases or crop share, if the tenant has a great yield and high prices, they keep all of the extra profits.
✅ Full Farming Control – No need to consult the landowner on crop choices, inputs, or marketing.
❌ Cash Rent – Cons for Tenant
🚫 High Fixed Costs in Bad Years – The tenant must pay full rent no matter what, even if the crop fails.
🚫 More Risk – Since input costs are rising, tenants must be careful not to overpay for land.
🚫 Competitive Pressure – In high-demand farmland areas, cash rents can become very expensive, making it harder for smaller farmers to compete.
4. When is Each Lease Type Preferred?
5. Final Verdict: Which Lease is Best?
For Landowners Seeking Stability → Cash Rent
For Landowners Wanting Upside Potential → 50-50 Crop Share or Flex Lease
For Tenants Wanting Risk Protection → 50-50 Crop Share or Flex Lease
For Tenants Wanting Control and Predictability → Cash Rent