Sustainable farm lease optionsSustainable leases allow for leasing land and investing some income into land improvements. Allowing the land to be managed in a sustainable manner.
Sustainable leases can be implemented that is fair to both the landowner and operator/tenant.
Options for sustainable lease; Factors to consider;
- Production risk
- Market risk
- Capital/financial risk
- Rate of return
- Control of assets
Types of lease/sharefarm/alternative lease:
- Lease – % of land value. Usually between 4-7% return.
- Sharefarming – varied responsibility of involved parties.
- Contracting – outsource all management services, cropping, spraying and harvest.
- Joint venture/collaboration farming – synergies of businesses to deliver efficient operations with specialist areas.
- Equity Sharing Lease – opportunity to hedge the production risk between the operator/tenant and owner/landholder. The equity arrangement provides a level of risk acceptable to both parties.