Cooperative Extension Service
Purdue University
West Lafayette, IN 47907

Crop Share or Crop Share/Cash Rental Arrangements For Your Farm


Rental arrangements for cropland vary widely in each locality and from one farming area to another. The purpose of this publication is to help tenants and landlords make sound decisions and develop fair crop share arrangements. The first section addresses whether one should be using a crop share lease arrangement. Part II deals with some basic crop principles, while Part III discusses how to develop a fair crop share lease arrangement. Buildings, pasture, and other cropland are often involved when leasing cropland. How to deal with these parts of the operation is discussed in Part IV. Part V discusses the importance of developing a written agreement and contains a sample lease form.

Part I

Should You Be Using a Crop Share Arrangement?

Landlords and tenants can choose from several types of rental arrangements. In addition to crop share, the lease agreement can be a crop share/cash, or cash or flexible cash arrangement. In addition to leasing, a landlord may hire custom operators to do the field work or direct operate" by hiring labor to operate the owner's machinery.

Advantages of Crop Share Arrangements

Disadvantages of Crop Share Arrangements

Part II

Establishing a Crop Share Arrangement


Farming is a business in which land, crop machinery. labor, and management are combined to produce crops. Each of these items is owned or contributed by different parties. Payment for the items must be equal to the value contributed toward production. Equitable payment to each party is the reason for developing a fair lease. A good lease, therefore, must be developed using some basic rules or principles. Five important principles to follow are:

Principle No. 1

Variable expenses which are yield-increasing should be shared in the same percentage as the crop share.

Variable inputs or expenses are those used in production, such as: seed, fertilizer, herbicides, insecticides, fuel, harvesting, drying, and hauling. Some, such as fertilizer, are directly yield-increasing. Sharing a cost such as fertilizer in the same percentage as the crop is shared encourages the parties to use that amount of the input which maximizes net returns to the total business operation. The application of this principle is illustrated in Table 1.

For the most profitable production, fertilizer could be added until the added cost of the last unit just equals the added return. For example, an owner-operator would apply three units of fertilizer to achieve a 90-bushel yield, since at that point the added crop value would equal the added $25 cost of the third unit of fertilizer.

With a 50/5O share arrangement, the tenant and landlord will also find the most profitable use to be three units of fertilizer since the $25 fertilizer cost will also be shared 50/5O. Thus, the $12.50 of added cost will equal the $12.50 added return for the tenant or landlord.

However, if the tenant were required to pay all of the fertilizer cost but receive only 50 percent of the crop, then the most profitable use of fertilizer would be two units (see Table 1). Failure to share yield-increasing inputs in the same proportion as yields are shared would then tend to reduce yields and resultant income.

In contrast, the failure to share non-yield-increasing variable expenses will not likely affect earnings. For example, failure to share the cost of fuel for tillage or harvest operations will not be likely to cause the tenant to avoid performing these operations. Thus, if landlords and tenants wish to adjust variable contributions so as to operate on a certain percentage basis, inputs that are not yield- related should be used to make the needed adjustments.

Principle No. 2

As new technologies are adopted, share arrangements need to be adjusted to reflect their impact on costs and returns.

Substitution occurs when some input can be used to replace another input. For example, chemical weed control may replace cultivation. Who should pay for the chemicals? Three situations affect who should pay.

Figure 1: Effects of Land Quality and Farm Costs on Crop-Share Rental Arrangements.

Principle No. 3

Both parties should share in total returns in the same proportion as they contribute resources.

This principle implies that if a landlord contributed 50 percent of total resources and the tenant 50 percent, then a sharing of the crop 50/50 would be equitable. All inputs should be valued, including management and risk.

The relationship among these inputs is that on high-priced, productive land, the landlord's share of the crop should be increased (See Figure 1). This fact results because the tenant's costs (machinery, labor, and management) tend to be nearly the same on either high-priced, productive land or low-priced, less-productive land.

For example, if the tenant's operating expense represents two-thirds of the total expense on less-productive land with the expected yield equal to 75 bushels, then the tenant's share of the crop would be two-thirds or 50 bushels. On more productive land, the tenant's expenses may represent only 50 percent of the total expense. Therefore, if the expected yield was 100 bushels, the tenant's share of the crop would still be 50 bushels. But, the proportionate share of the crop has decreased from two-thirds to 50 percent.

A major problem with crop share leasing is that crop share percentages are influenced strongly by customary arrangements in the area. A further problem is that customary share arrangements change little over time, even though the relative values of land, machinery, labor, and management may change markedly.

Thus, the landlord and tenant should determine their contributions according to the actual operation, rather than on the basis of what has been, or is, customary for the area.

Principle No. 4

Tenants and/or landlords will be compensated at the termination of the lease for the unexhausted portion of long-term investments.

If such arrangements cannot be developed, then the party that will likely control this investment at the termination of the lease should make the contribution. For example, lime applied to cropland is usually paid by the landlord as the value lasts for several years. If the tenant pays for the lime application, then the lease should provide for a method of calculating the payment to the tenant for the unused portion of the lime if the lease is terminated before the total value of the lime is recovered.

Principle No. 5

Communication must be maintained between landlord and tenant.

If the lease does not follow the first four leasing principles, the farming operation may not produce at maximum economic efficiency or one party may gain at the expense of the other.

However, strict adherence to these four principles will be for naught if the communication/management part of the equation is not correct. Therefore, securing a good tenant and making necessary adjustments to the lease arrangement so as to make it an attractive business operation for the tenant may well be the key to the maximum profits for the landlord.

Part III

Developing a Fair Crop Share Lease Arrangement

The next step is to apply the above principles in determining a fair crop share arrangement for your operation, whether it be for a single crop, separate parcel, or whole farm. Such an approach must separately consider each of the following five components: (1) cropland rented on shares, (2) cropland rented for cash, (3) pasture, (4) service buildings, and (5) the house.

Thus, the cropland lease can be developed regardless of improvements and pasture. Although improvements and pasture are usually cash-rented, the land and investments may be considered when developing the crop share lease.

The Crop Approach

The crop approach may be used when establishing a new lease arrangement or testing existing arrangements.

Worksheet 1 is designed to provide information for establishing a fair and equitable crop share arrangement. The concept is based on the principles discussed earlier. particularly the principle that both parties should share in the total returns in the same proportion as their contributions.

The worksheet provides answers to two problems:

1. How should the crop be shared between landlord and tenant?

2. How should the cost of shared inputs be divided between the landlord and tenant?

The worksheet can be used to analyze your situation in either of two ways:

Approach No. 1: Contributions approach. The percentage contribution of each party is determined. Then, the parties share other operating expenses and crop(s) in the same percentage. The example shows a 40-60 share of crop, and all operating expenses not listed would be shared on the same basis.

Approach No. 2. Desired share approach. In this case, the parties specify a given percentage share basis (say, 33/67), and then adjust contributions to fit this percentage. This approach may violate principle No. 1 if yield-increasing inputs, such as fertilizer, are not shared in the same percentage as the crop.

The major task with either approach is to establish fair values and annual use charges for the various contributions. The following discussion will outline this valuation process, illustrated in Worksheet 1. A blank worksheet is also provided for your use.

Land: Land should be the fair market value for agricultural purposes. The influence of location near cities and other non-agricultural influences on value should be ignored.

Interest on land: A practical "bargaining" rate of interest may approximate 5 to 7 percent because:

Real estate taxes: The actual taxes due annually.

Land development: The average dollars spent annually for lime, conservation practices, and other land improvements.

Crop machinery: The value of machinery should be the average value of a good line of average machinery necessary to farm in the area. The value should not be the cost of a new line of machinery. Likewise, the value cannot be the actual cost to the tenant (as land cannot be the actual cost to the landlord) because the tenant may have a very large investment of machinery spread over a few acres. In turn, the tenant may have old, serviceable machinery which has a low value. Machinery values can be obtained from your local county agent, or most state extension services provide cost guides and budgets.

Machinery depreciation: Depreciation years for machinery are 6 to 8 years remaining useful life.

Machinery repairs, taxes, and insurance: Farm records indicate repairs are 6 to 9 percent of the average machinery value. The charge for taxes and insurance should be from 1/2 to 1 percent.

Machinery interest: The current interest costs on the average machinery value (usually one-half the total value) should be used.

Labor: Labor can be contributed solely by the tenant, or by both the tenant and landlord. (Caution should be used to not form a partnership when considering contribution of labor and management by the landlord.) Each party is given credit by placing a value on labor contributed to the business.

Placing a value on labor is a bargaining process between the parties entering the leasing arrangement. A guide for estimating the value of labor is the going wage rate paid to farm employees within the community. Most farm operators are certainly worth more than the value of an average employee because of their management. (Management is valued separately from labor.)

Management: Management is an important contribution to a successful leasing agreement. The function of management may or may not be shared. Experienced landlords may make substantial contributions to the management of the farm business. But, inexperienced or absentee landlords may contribute nothing to management. If the landlord contributes to management, then credit needs to be given. If the tenant bears all management responsibility in the choice of crops, inputs, etc., then a value should be placed on this management function.


The value of management becomes largely a bargaining proposition between parties entering into the leasing agreement. Two alternatives are possible:

1. A possible guide is 1 to 2 1/2 percent of the average capital managed in the business. The average capital managed is equal to the market value of the land and value of machinery.

2. Professional farm managers commonly charge 7 to 10 percent of adjusted gross receipts. (In the case of crop production, gross receipts equal total crop receipts.)

Either procedure will provide an estimated value for management. However, a value equal to 1 to 2 1/2 percent of average capital managed is a more stable figure than a percentage of gross receipts because prices and yields for commodities vary greatly from year to year.

Custom rates: Harvesting. hauling. spreading fertilizer and other operations are often custom-hired. These charges can be entered in the worksheet. Note: If custom hiring is done. the crop machinery investment should be adjusted, as less machinery investment is needed when custom work is part of the operation.

Part IV

Setting Rents for Other Cropland, Pasture and Buildings

Other cropland: See NCR-75, "Fixed and Flexible Cash Rental Arrangements For Your Farm."

The per acre, per head, or total rent for pasture should be entered as part of the crop share/cash lease, along with the stocking rate and any other restrictions.

House: The house should be rented for an amount based on the market rate for the area. The house is sometimes provided to the tenant due to bargaining on other resources.

Service buildings: Service buildings may be divided into two classes: useful and non-useful buildings. The non-useful buildings should not be included in the lease. An example would be an old chicken house which cannot be used for any good purpose by the tenant.

Useful buildings contribute to the farm operation through grain, hay, or machinery storage or livestock production. The rental value should give the landlord a return on the buildings' investment. The return should be based on the following ownership costs: depreciation, interest, repairs, taxes, and insurance. Table 2 can be used to determine the rental value for each useful building.




Item                              charge
Building _____________
Investment $_____________
Depreciation    ________ Years  $__________
Interest        ________ %      $__________
Repairs         ________ %      $__________
Taxes           ________ %      $__________
Insurance       ________ %      $__________
Total rental value              $__________

Part V

Whole Farm Approach--Testing Your Crop Share Lease

Crop share leasing often is handled on a whole farm basis. That is, all crops are shared between the landlord and tenant on the same basis. For example, if crops raised were wheat, corn, soybeans, and alfalfa, then the crops would be shared on the same basis, such as 50-50 or 40-60, for the whole farm approach.

Valuing the Worksheet Items--Whole Farm Approach

The crop approach outlined on pages 6-9 is applicable to the whole farm approach with two exceptions:

1. Costs or values are for the total farm operation.

2. The costs are averaged for the expected acres of each crop. That is, operating costs are different for wheat, corn, grain sorghum. soybeans, alfalfa, etc. For example. seed costs for each crop may be: Wheat-$8.0O; Corn-$21.00; Soybeans-$9.00; and Grain Sorghum-$4.00. Thus, if the total 640 acres shown in Worksheet 2 was planted to wheat, total seed cost would be $5,120. If the total 640 acres was planted to corn, then the total cost would be $13,440. In turn, if 320 acres of each crop were planted, the seed costs would total $9,280. See Part IV for setting rental rates for pasture, house, and service buildings.

Part VI

Putting Your Agreement in Writing

A copy of a crop-share-cash lease agreement form is included in this publication.

Some of the advantages of a written agreement are:

1. It encourages a detailed statement of the agreement which assures a better understanding by both parties.

2. It serves as a reminder of the terms originally agreed upon.

3. It provides a valuable guide for the heirs if either the tenant or landlord dies. The agreement should be reviewed carefully each year to be sure the terms of the agreement are still applicable and desirable.

Every lease should include certain items: the names of the parties involved, an accurate description of the property being rented, the beginning and ending dates of the agreement, the amount of rent to be paid, a statement of how and when the rent is to be paid, and the signatures of the parties involved. These minimal provisions alone, however, fail to meet the requirements of a good lease. These provisions provide no guidance on how the land is to be used, nor outline possible problem areas and solutions. Nor do they provide any indication of the rights and responsibilities of either party.

A good lease should clearly identify the property being rented. If the landlord wishes to reserve the use of certain improvements on the land, these reservations should be stated clearly in the lease.

The duration of the lease can be any length of time agreed upon by the parties. Most leases are for at least one full year. Tenants sometimes request leases for more than one year, particularly if they must invest more capital in equipment or improvements needed on the farm being rented. Landlords, especially, should enter long-term leases only after very careful consideration. Remember that the lease is a contract-a contract that "marries" the parties to undesirable as well as good provisions. Often it's better to include an automatic renewal clause and a provision for compensation for unexhausted improvements made by the tenant.

The sample lease contained in this bulletin provides for most concerns of both the tenant and landlord. The parties can cross out or omit unwanted provisions. (Be sure both parties initial these lease changes.) But before provisions are eliminated, the landlord and tenant should remember that one of the functions of a written lease is to anticipate possible developments and to state how to handle such problems if they actually do develop.



Other North Central Regional publications in this series are:

NCR-75, "Fixed and Flexible Cash Rental Arrangements for your Farm"

NCR-1O7, "Livestock Share Rental Arrangements For Your Farm"

NCR-148, "Irrigation Crop Share and Cash Rental Arrangements For Your Farm"

The following NCR lease forms are also available:

NCR-77, "Crop Share or Crop Share/Cash Farm Lease"

NCR-76, "Cash Farm Lease (With Flexible Provisions)"

NCR-108, "Livestock Share Farm Lease"

NCR-106, "Irrigation Crop Share or Crop Share/Cash Farm Lease"


Illinois                          Dale Lattz
Indiana                           George Patrick
Iowa                              William Edwards
Kansas                            Michael R. Langemeier
Kentucky                          Richard Trimble
Michigan                          Ralph E. Hepp
Minnesota                         Richard 0. Hawkins
Missouri                          Norlin A. Hein
Nebraska                          Larry L. Bitney
North Dakota                      Harlan Hughes
Ohio                              Bernie Erven
Oklahoma                          Ross Love
South Dakota                      Burton Pflueger
Wisconsin                         Bruce Jones
SEA-Extension                     Buel Lanpher
Farm Foundation                   Walter J. Armbruster
Administrative Advisor            David Petritz, Purdue University

North Central Regional Extension Publications are prepared as a part of the Cooperative Extension activities of the 12 North Central State land grant universities in cooperation with the Science and Education Administration, USDA. The following states cooperated in making this publication available:

Iowa State University                    University of Nebraska
Ames, IA 50011                           Lincoln, NE 68583

*Kansas State University                 North Dakota State University
Manhattan, KS 66506                      Fargo, ND 58105

Michigan State University                Ohio State University
East Lansing, MI 48824                   Columbus, OH 43210

University of Missouri                   South Dakota State University
Columbia, MO 65211                       Brookings, SD 57007

 * Publishing state

Crop Share or Crop Share/Cash Farm Lease

This form can provide the landlord and tenant with a guide for developing an agreement to fit their individual situation. This form is not intended to take the place of legal advice pertaining to contractual relationships between the two parties. Because of the possibility that a farm operating agreement may be legally considered a partnership under certain conditions, seeking proper legal advice is recommended when developing such an agreement.

This lease is entered into this ________ day of __________________, 19_____, between

______________________________, landlord, of ___________________________________


______________________________    spouse, of ___________________________________

hereafter known as "the landlord," and                         (address)

______________________________    tenant, of _____________________________________


______________________________    spouse, of ______________________________________
hereafter known as "the tenant."                               (address)


The landlord hereby leases to the tenant, to occupy and use for agricultural and related purposes, the following described property: ______________________________________________________ ______________________________________________________ ______________________________________________________

consisting of approximately ______________ acres situated in ___________________________ County (Counties),

_______________________________(State) with all improvements thereon except as follows: _______________________________________________________ _______________________________________________________ _______________________________________________________


A.Time period covered. The provisions of this agreement shall be in effect for ________ year(s), commencing on the _____ day of _____________________ 19_____. This lease shall continue in effect from year to year thereafter unless written notice of termination is given by either party to the other at least _________ days prior to expiration of this lease or the end of any year of continuation.

B.Review of lease. A written request is required for a general review of the lease or for consideration of proposed changes by either party, at least ________ days prior to the final date for giving notice to terminate the lease as specified in IIA.

C.Amendments and alterations. Amendments and alterations to this lease shall be in writing and shall be signed by both the landlord and tenant.

D.No partnership intended. It is particularly understood and agreed that this lease shall not be deemed to be nor intended to give rise to a partnership relation.

E.Transfer of property. If the landlord should sell or otherwise transfer title to the farm, he will do so subject to the provisions of this lease.

F.Right of entry. The landlord reserves the right for himself, his agents, his employees, or his assigns to enter the farm at any reasonable time to: a) consult with the tenant; b) make repairs, Improvements, and Inspections; and c) (after notice of termination of the lease is given) do plowing, seeding, fertilizing, and any other customary seasonal work, none of which Is to interfere with the tenant In carrying out regular farm operations.

G.No right to sublease. The landlord does not convey to the tenant the right to lease or sublet any part of the farm or to assign the lease to any person or persons whomsoever.

H.Binding on heirs. The provisions of this lease shall be binding upon the heirs, executors, administrators, and successors of both landlord and tenant In like manner as upon the original parties, except as provided by mutual written agreement.

I.Landlord's lien for rent and performance. The landlord's lien provided by law on crops grown or growing shall be the security for the rent herein specified and for the faithful performance of the terms of the lease. If the tenant fails to pay the rent due or fails to keep the agreements of this lease, all costs and attorney fees of the landlord in enforcing collection or performance shall be added to and become a part of the obligations payable by the tenant hereunder.

J.Additional provisions.



A.General provisions. The land described In Section 1 will be used in approximately the following manner. If It is impractical in any year to follow such a land use plan, appropriate adjustments will be made by mutual written agreement between the parties.

  1. Cropland
   a) Row crops               __________ acres
   b) Small grains            __________ acres
   c) Legumes                 __________ acres
   d) Rotation pasture        __________ acres

  2. Permanent pasture:       __________ acres

  3. Other: _________________  _________ acres
            _________________  _________ acres
  4. Total                     _________ acres

B.Restrictions. The maximum acres harvested as silage shall be _________ acres unless it Is mutually decided otherwise.

The pasture stocking rate shall not exceed:


  _____________________   __________ acres/animal unit

  _____________________   __________ acres/animal unit

  _____________________    __________ acres/animal unit

     (1000 pound mature cow is equivalent to
                one animal unit.)

Other restrictions are:


C.Government programs. The extent of participation in government programs will be discussed and decided on an annual basis. The course of action agreed upon shall be placed in writing and be signed by both parties. A copy of the course of action so agreed upon shall be made available to each party.


A.General agreement. The tenant agrees to pay as rent for the use of the land the share of crops shown in Table 1 of this section. The tenant also agrees to furnish all labor, machinery, and cash operating expenses except for landlord's share (percent and/or dollar charge per unit) indicated in Table 1.

Table 1-Landlord's Share (% and/or $) of Crops and Crop Expenses

                                  Corn  |       |  Grain | Small |          |  Hay,   |
                                 example|  Corn | sorghum| grain | Soybeans | ________|
SHARE OF CROPS                     50%
   Materials                       50%
   Application                     50%
    Materials                      50%
    Materials                      50%

 Seed                              50%
 Lime, rock phosphate*            100%
 Harvesting (per ac.)           $12.00
 Drying                            50%
  Delivery to:
    Storage/ bu.
    Market/bu.                   $ .10
* Lime, rock phosphate, and other fertilizers having more than one
year life paid by the tenant should be recorded in the compensation
table in Section V-C-2.

B.Other crop-share-cash agreements.

1.Operating expenses. Additional agreements relative to the sharing of expenses are as follows:


2.Storage, landlord's crop. At the landlord's request, the tenant agrees to store as much of the landlord's share of the crops as possible, using storage space reserved by the landlord and not to exceed ________ percent of the storage space not specifically reserved.

3.Delivery of grain. The tenant agrees to deliver the landlord's share of crops at a place and at a time the landlord shall designate, not over __________ miles distant at the charge shown in Table 1 of this section. Additional agreements are:


4.Cash rent on non-shared items. The tenant agrees to pay cash rent annually for the use of the following non-shared items.

Table 2-Amount of Annual Cash Rent (Complete at beginning of lease)


 Pasture  ........................ $__________

 Hayland: ________________________ $__________

          ________________________ $ _________

 Farmstead:  Dwelling............. $__________

            Service bldgs......... $__________

 Timber and waste................. $__________

 Total cash rent.................. $___________

 Payment of cash rent:  The tenant agrees to pay
 cash rent as follows:

 $_______ on or before _____ day of _____ (month)

 $______ on or before _____ day of _____ (month)

 $_______ on or before _____ day of _____ (month)

 $________ on or before _____ day of _____ (month)

If rent is not paid when due, the tenant agrees to pay interest on the amount of unpaid rent at the rate of ________ percent per annum from due date until paid.

5.Pasturing. The tenant will prevent damage to cropland and growing crops by livestock.

6.Home use. The tenant and landlord may take for home use the following kinds and quantities of jointly owned crops:


7.Buying and selling. The landlord and tenant will buy and sell jointly owned property according to the following agreement:


8.Division of property. At the termination of this lease, all jointly owned property will be divided or disposed of as follows:



In order to operate this farm efficiently and to maintain it in a high state of productivity, the parties agree as follows:

A.The tenant agrees:

1.General maintenance. To provide the unskilled labor necessary to maintain the farm and its improvements during his tenancy in as good condition as it was at the beginning. Normal wear and depreciation and damage from causes beyond the tenant's control are excepted.

2.Land use. Not to: a) plow pasture or meadowland, b) cut live trees for sale or personal use, or c) pasture new seedings of legumes and grasses in the year they are seeded without consent of the landlord.

3. Insurance. Not to house automobiles, motor trucks, or tractors in barns, or otherwise violate restrictions in the landlord's insurance policies without written consent from the landlord. Restrictions to be observed are as follows:


4.Noxious weeds. To use diligence to prevent noxious weeds from going to seed on the farm. Treatment of the noxious weed infestation and cost thereof shall be handled as follows:


5.Addition of improvements. Not to: a) erect or permit to be erected on the farm any nonremovable structure or building. b) incur any expense to the landlord for such purposes, or c) add electrical wiring, plumbing, or heating to any building without written consent of the landlord.

6.Conservation. Control soil erosion as completely as practicable; keep in good repair all terraces, open ditches, inlets and outlets of tile drains; preserve all established water courses or ditches including grassed waterways; and refrain from any operation or practice that will injure such structures.

7.Damages. When he leaves the farm, to pay the landlord reasonable compensation for any damages to the farm for which he, the tenant, is responsible. Any decrease in value due to ordinary wear and depreciation or damages outside the control of the tenant are excepted.

8.Costs of operation. To pay all costs of operation except those specifically referred to in Sections IV, V-A-4, and V-B.

9.Repairs. Not to buy materials for maintenance and repairs in an amount in excess of $______________ within a single year without written consent of the landlord.

B.The landlord agrees:

1.Loss replacement. To replace or repair as promptly as possible the dwelling or any other building regularly used by the tenant that may be destroyed or damaged by fire, flood, or other cause beyond the control of the tenant or to make rental adjustments in lieu of replacements.

2.Materials for repairs. To furnish all material needed for normal maintenance and repairs.

3.Skilled labor. To furnish any skilled labor tasks which the tenant himself is unable to perform satisfactorily. Additional agreements regarding materials and labor are:


4.Reimbursement. To pay for materials purchased by the tenant for purposes of repair and maintenance in an amount not to exceed $________ in any one year, except as otherwise agreed upon. Reimbursement shall be made within _______ days after the tenant submits the bill.

5.Removable improvements, Let the tenant make minor improvements of a temporary or removable nature, which do not mar the condition or appearance of the farm, at the tenant's expense. He further agrees to let the tenant remove such improvements even though they are legally fixtures at any time this lease is in effect or within _______ days thereafter, provided the tenant leaves in good condition that part of the farm from which such improvements are removed. The tenant shall have no right to compensation for improvements that are not removed except as mutually agreed.

6.Compensation for crop expenses, To reimburse the tenant at the termination of this lease for field work done and for other crop costs incurred for crops to be harvested during the following year. Unless otherwise agreed, current custom rates for the operations involved will be used as a basis of settlement,

C.Both agree:

1.Not to obligate other party. Neither party hereto shall pledge the credit of the other party hereto for any purpose whatsoever without the consent of the other party. Neither party shall be responsible for debts or liabilities incurred, or for damages caused by the other party.

2.Capital improvements. Costs of establishing hay or pasture seedings, new conservation structures, improvements (except as provided in Section V-B-5), or of applying lime and other longlived fertilizers shall be divided between landlord and tenant as set forth in the following table. The tenant will be reimbursed by the landlord either when the improvement is completed, or the tenant will be compensated for his share of the depreciated cost of his contribution when he leaves the farm based on the value of the tenant's contribution and depreciation rate shown in the following table. (Cross out the portion of the preceding sentence which does not apply.)

Rates for labor, power, and machinery contributed by the tenant shall be agreed upon before construction is started.

3.Mineral rights. Nothing in this lease shall confer upon the tenant any right to minerals underlying said land, but same are hereby reserved by the landlord together with the full right to enter upon the premises and to bore, search, and excavate for same, to work and remove same, and to deposit excavated rubbish, and with full liberty to pass over said premises with vehicles and lay down and work any railroad track or tracks, tanks, pipelines, power lines, and structures as may be necessary or convenient for the above purpose, The landlord agrees to reimburse the tenant for any actual damage he may suffer for crops destroyed by these activities and to release the tenant from obligation to continue farming this property when development of mineral resource interferes materially with the tenant's opportunity to make a satisfactory return.


Any differences between the parties as to their several rights or obligations under this lease that are not settled by mutual agreement after thorough discussion, shall be submitted for arbitration to a committee of three disinterested persons, one selected by each party hereto and the third by the two thus selected. The committee's decision shall be accepted by both parties.

Compensation for Improvements Table

                                        Proportion to be
				      contributed by tenant
                         Estimated                           Total value of
 Type of     Date to be  total cost        Unskilled        tenant's contrib. Rate of annual
improvement  completed   (dollars)  Material labor   Mach.     (dollars) *     depreciation
                                       %       %      %
                         $                                    $
                         $                                    $
                         $                                    $
                         $                                    $
                         $                                    $
*To be recorded when improvement is completed,

Executed in duplicate on the date first above written:

____________________________    ________________________________
      (tenant)                             (landlord)

____________________________    ________________________________
   (tenant spouse)                    (landlord spouse)

STATE OF_________________________________
COUNTY OF_________________________________

    On this _______________________________ day of
________________________________ A.D., 19_____, before me, the
undersigned, a Notary Public in said State, personally appeared and
____________________________________, to me known to be the identical
persons named in and who executed the foregoing instrument, and
acknowledged that they executed the same as their voluntary act and

                                       Notary Public

RR 6/94

1 Crop share rental income is excluded from self-employment income unless the landlord "materially participates" in the production of agricultural products or production management. Material participation is necessary to build a Social Security base and may be necessary if current use valuation is to be used for federal estate tax purposes. Material participation may cause Social Security payments to be decreased for persons eligible for Social Security payments.

2 If the landlord materially participates the rent will be self-employment income counting towards building a Social Security base, but also may exceed the earnings allowed for retirement. However, the income may allow qualifications for the use value method of valuing the estate.

The original NCR Extension Publication 105 was written in 1981 by Don D. Pretzer, Assistant Director, Extension Agriculture and Natural Resources, Kansas State University, with assistance from ad hoc committee members Myron Bennett, University of Missouri, and Ken H. Thomas, University of Minnesota. Revised by Larry N. Langemeier, professor and extension agricultural economist, farm management studies, Kansas State University, 1989.

For single copies of this and other North Central Regional Publications, write to: Publications Office, Cooperative Extension Service, in care of the university listed above in your state. If they do not have copies or if your state is not listed above, contact the publishing state.

Programs and activities of the Cooperative Extension Service are available to all potential clientele without regard to race, color, set national origin, or handicap.

In Cooperation with NCR Educational Materials Project.

Issued in furtherance of Cooperative Extension work Acts of Congress of May 8 and June 30, 1914. in cooperation with the U.S. Department of Agriculture and Cooperative Extension Services of Illinois, Indiana. Iowa. Michigan. Minnesota. Missouri Nebraska. North Dakota, Ohio, South Dakota. and Wisconsin. Walter It. Woods. Director of Cooperative Extension Service. Kansas State University, Manhattan. Kansas 66506.