Welcome to the Land Leasing Tools Menu Page
The Land Leasing Tools are a set of worksheets that allow you to examine various types of leasing arrangements. Landlords and tenants can look at their costs and determine if the leasing arrangement is suitable for them. The Crop Share Calculator calculates the appropriate crop share split for a landlord and tenant and analyses the projected net incomes.
Developed by Rob Gamble
Finance and Business Structures Program Lead OMAFRA, Guelph email: rob.gamble@omafra.gov.on.ca
January 1, 2002
asing Tools Menu Page
allow you to examine various types of leasing arrangements.
mine if the leasing arrangement is suitable for them. The Crop Share
for a landlord and tenant and analyses the projected net incomes.
LandLord Ownership Costs Worksheet
Number of Acres 100 Total Per-Acre Value Rate or Life Per-acre Annual Charge
Value per Acre of Land 1,800 Interest x 4.0% $ 72.00 Property Tax x 0.5% $ 9.00 Value of Land Improvements 10 x 6.0% $ 0.60 Equipment Associated with land 0 Depreciation / 10 $ Interest x 5.0% $ Repairs x 1.0% $ Insurance x 0.25% $ Buildings 0 Depreciation (value / #of yrs) / 20 $ Interest x 5.0% $ Repairs x 1.0% $ Insurance x 0.1% $ Other Items 0 / Depreciation (value / #of yrs) 25 $ Fences x 5.0% $ Water System x 1.0% $ Total Desired Return per acre $ 81.60 Total Desired Return $ 8,160.00 Attention Landlords! Landlords will seldom receive enough cash rent to cover total ownership costs. Consequently, this method may result in an extremely high value; but the method does give the landlord a basis for setting the “asking price” in cash-rent negotiations.
Crop Revenue
Number of Acres Expected Yield per acre Price per tonne or bushel (or other unit) Crop Revenue Per Acre ( B x C ) Government Payments per Acre Total Revenue per Acre - Add ( D + E ) Total Revenue from Each Crop ( A x F ) Total Number of Acres Average Revenue per Acre ( Add Col. 1, 2 &3 on row G, then divide by H )
Column 1
Column 2
Column 3
Row
Corn Soybeans Wheat 120 60 45 145 45 45 $ 3.20 $ 6.50 $ 3.75 464.00 292.50 168.75 464.00 292.50 168.75 55,680.00 17,550.00 7,593.75 225 $ 359.22 Corn Soybeans 49.00 37.00 78.15 13.20 28.00 42.00 15.00 21.00 16.20 19.00 16.00 6.45 8.50 Wheat 28.00 47.00 5.00 12.60 18.00 6.55
A B C D E F G H
I
Variable Expenses for Crops (Reference OMAFRA Crop Budgets)
Seed Fertilizer Herbicide Insecticide Machinery Fuel Machinery Repairs and Maintenance Crop Insurance Marketing Fees Drying Custom Work Trucking Storage Consulting and hired labour Operating Interest Other Expenses Total Variable Expenses per acre (Add each column) Contribution Margin (Gross Margin) per acre ( F - J) Total Variable Expenses ( A x J ) Average Variable cost per acre ( Add Col. 1, 2 & 3 on Row L, then
divide by H, total number of acres )
8.00
7.00
16.00 8.00 15.00 263.60 200.40 31,632 $ $ 203.10 156.11
5.35 138.25 154.25 8,295
4.10 128.25 40.50 5,771 J K L
M
N O P Q R S T U
Average Contribution Margin ( I - M )
Fixed Costs
Machinery Value Investment per Acre ( O divided by H ) Desired Interest rate return on machinery investment Interest on average investment (P divided by 2) x Q Depreciation ( P x .10 ) Insurance ( P x .0025 ) Other Fixed Costs per acre Total Fixed Costs per acre ( Add R + S + T + U ) $ 120,000 533.33 7% 18.67 53.33 1.33 $ 73.33 0.5 9.00 4.50 5.0% 17.96 22.46
V
W X Y Z AA
Labour and Management Costs
Number of Hours of Labour per acre Dollars per hour for labour (yours or hired) Labour expense per acre ( W x X ) Operators Management Charge (suggested 5.0 to 8.0% ) Management Expense ( I x Z ) Total Labour and Management Costs ( Y + AA )
Total Production Costs (M + V + BB)
$ 298.90 $ 60.32
BB CC
Amount Available to Cover Rent Payments ( I - CC)
Scenario A - Adjust for Price
Base Rent Price adjustment per Base Price Base Rent Yield adjustment per bu. Above the base line yield of: Base Rent Base Yield (bu) Base Price Base Gross Adjustment of Adjust for every Scenario A
Base Rent with an Adjustment for the Price Price /bu Bushels per acre
$ $ $ $ $ $
100.00 3.25 per 0.10 7.00 100.00 4.00 40 bu.
Acre
Scenario B - Adjust for Yield Only
Scenario C - Adjust for Both Price and Yield
$ $ $ $ $ 100.00 40 7.00 280.00 0.50 per Acre 1.50 change in gross B
Base Rent with an Adjustment for theYield Bushels per acre
Gross Revenue
$ $ $ $ $
6.50 7.00 7.50 8.00 8.50
35 227.50 245.00 262.50 280.00 297.50 C
40 260.00 280.00 300.00 320.00 340.00
Base Rent with an Adjustment for Price Yield (Gross Value) Bushels per acre
$ $ $ $ $
6.50 7.00 7.50 8.00 8.50
35 83.75 100.00 116.25 132.50 148.75
40 83.75 100.00 116.25 132.50 148.75
45 83.75 100.00 116.25 132.50 148.75
50 83.75 100.00 116.25 132.50 148.75
35 80.00 80.00 80.00 80.00 80.00
40 100.00 100.00 100.00 100.00 100.00
45 120.00 120.00 120.00 120.00 120.00
50 140.00 140.00 140.00 140.00 140.00
35 82.50 88.33 94.17 100.00 105.83
40 93.33 100.00 106.67 113.33 120.00
Tenants Position - Net After Rent
Base Rent with an Adjustment for the Price Base Rent with an Adjustment for theYield
Base Rent with an Adjustment for Price an
$ $ $ $ $
6.50 7.00 7.50 8.00 8.50
35 143.75 145.00 146.25 147.50 148.75
40 176.25 180.00 183.75 187.50 191.25
45 208.75 215.00 221.25 227.50 233.75
50 241.25 250.00 258.75 267.50 276.25
35 147.50 165.00 182.50 200.00 217.50
40 160.00 180.00 200.00 220.00 240.00
45 172.50 195.00 217.50 240.00 262.50
50 185.00 210.00 235.00 260.00 285.00
35 145.00 156.67 168.33 180.00 191.67
40 166.67 180.00 193.33 206.67 220.00
Tenants Position - Percentage of Gross Income from Crop
Base Rent with an Adjustment for the Price Base Rent with an Adjustment for theYield
Base Rent with an Adjustment for Price an
$ $ $ $ $
6.50 7.00 7.50 8.00 8.50
35 63.2% 59.2% 55.7% 52.7% 50.0%
40 67.8% 64.3% 61.3% 58.6% 56.3%
45 71.4% 68.3% 65.6% 63.2% 61.1%
50 74.2% 71.4% 69.0% 66.9% 65.0%
35 64.8% 67.3% 69.5% 71.4% 73.1%
40 61.5% 64.3% 66.7% 68.8% 70.6%
45 59.0% 61.9% 64.4% 66.7% 68.6%
50 56.9% 60.0% 62.7% 65.0% 67.1%
35 63.7% 63.9% 64.1% 64.3% 64.4%
40 64.1% 64.3% 64.4% 64.6% 64.7%
evenue
45 292.50 315.00 337.50 360.00 382.50
50 325.00 350.00 375.00 400.00 425.00
Rent with an Adjustment for Price and Yield (Gross Value) Bushels per acre
45 104.17 111.67 119.17 126.67 134.17
50 115.00 123.33 131.67 140.00 148.33
nt with an Adjustment for Price and
45 188.33 203.33 218.33 233.33 248.33
50 210.00 226.67 243.33 260.00 276.67
nt with an Adjustment for Price and
45 64.4% 64.6% 64.7% 64.8% 64.9%
50 64.6% 64.8% 64.9% 65.0% 65.1%
Flexible Cash Rent Calculator - Percentage of Crop Method
Crop Price Cash Expenses: Cash Rent Comparison Base Percentage of Crop Base Yield per Acre $3.32 $300.00 $120 16% 100 Landlord Number of Bushels per Bu. per acre per acre bu. per acre
Tenant Yield % of Crop Revenue % of Crop Number of Revenue Net Cash Tenants Net bushels from Crop Bushels from Crop Income if per acre Cash Rent 100 16% 16 $53 84% 84 $279 -$21.12 -$88.00 105 16% 17 $56 84% 88 $293 -$7.18 -$71.40 110 16% 18 $58 84% 92 $307 $6.77 -$54.80 115 16% 18 $61 84% 97 $321 $20.71 -$38.20 120 18% 22 $72 82% 98 $327 $26.69 -$21.60 125 18% 23 $75 82% 103 $340 $40.30 -$5.00 130 18% 23 $78 82% 107 $354 $53.91 $11.60 135 18% 24 $81 82% 111 $368 $67.52 $28.20 140 20% 28 $93 80% 112 $372 $71.84 $44.80 145 20% 29 $96 80% 116 $385 $85.12 $61.40 150 22% 33 $110 78% 117 $388 $88.44 $78.00 155 22% 34 $113 78% 121 $401 $101.39 $94.60 160 24% 38 $127 76% 122 $404 $103.71 $111.20 165 24% 40 $131 76% 125 $416 $116.33 $127.80 170 26% 44 $147 74% 126 $418 $117.66 $144.40 175 27% 47 $157 73% 128 $424 $124.13 $161.00 180 28% 50 $167 72% 130 $430 $130.27 $177.60 The above chart compares the return of variable share to a cash rent per acre Cash Expenses include inputs, machinery operation at custom rates, drying, crop insurance. Net cash is tenants return after cash expenses. Cash Rent Return is return after cash expenses.
Cash vs Variable Share Rent
$200 $180 $160 $140 $120 $100 Gross Margin $80
$60
$40 $20 $0 -$20 -$40 -$60 -$80 -$100 -$120 100 105 110 115 120 125 130 135 140 145 150 155 160 165 170 175 180
Corn Yield Bu./Acre
Variable Share
Share Crop Calculator
Section A - Landlord Investment
Total Value Rate (%) or Life (Yrs) 90 1,800 4.0% 0.5% 10.00 12 4% Total Amount Per Acre Charge Tenant Share
Number of Acres
Value of Land (exclude personal) & Investment Interst Rate Property Tax Per Year (optional Calculation using %
of investment)
6,480.00 810.00 0.00 0.00 $ 7,290.00 $
72.00 9.00 0.00 $ 0.00 0.00 0.00 81.00 $
Value of Land Improvements/acre & the Life Span Value of Landlords Equipment Used Depreciation Average Interest Other Expense Total
0.00 0
-
-
Section B - Tenant or Landlord Crop Revenue
Corn Number of Acres Expected Yield per acre Price per tonne or bushel (or other unit) Total Expected Yield Gross Crop Revenue Government Payments Total Revenue per Acre Detailed Crop Expenses Seed Fertilizer Herbicide Insecticide Machinery Fuel Machinery Repairs and Maintenance Crop Insurance Marketing Fees Drying Custom Work Trucking Storage Consulting and hired labour Operating Interest Other Expenses Other Expenses ( Land Improvements) Total Variable Expenses per acre Total Variable Crop Expenses Fixed Expenses Soybeans Wheat Crop 4 Combined 90 0 0 0 90 110 45 45 0 3.33 $ 6.50 $ 3.75 9,900 32,967 $ $ $ $ 32,967 $ $ $ $ 366.30 366.30 $ Soybeans 37.00 13.20 42.00 16.20 16.00 8.50 Wheat 28.00 47.00 5.00 12.60 18.00 6.55 Weighted Average 53.80 56.00 23.00 0.00 0.00 0.00 8.60 0.00 33.53 50.00 16.76 0.00 0.00 0.00 0.00 0.00 0.00 241.69 Total Per Acre Amount Charge Crop 4
$ $ $
25,030 278.11
Section C - Tenant or Landlord Crop Expenses
Corn 53.80 56.00 23.00 0.00 0.00 0.00 8.60 0.00 33.53 50.00 16.76 0.00 0.00 0.00 0.00 241.69 21,752 Tenant Share $ 53.80 $ 56.00 $ 23.00 $ $ $ $ 8.60 $ $ 33.53 $ 50.00 $ 16.76 $ $ $ $ 241.69
7.00
5.35
4.10
Value of Tenant Equipment and Total Acres Cropped Investment per Acre Allocated to this Crop Depreciation Average Interest Insurance Total Fixed Costs Labour and Management Labour Charge (hours per acre x rate per acre) Management Charge Total Cropping Expenses (excluding investments expense) All Costs Including all investment costs
138.25 128.25 Total Value Rate (%) or Life 100,000 (Yrs) 1,000 100 10.00 7.0% 0.25%
900.00 315.00 22.50 1,237.50
$ $ $ $ $
10.00 3.50 0.25 13.75 255.44 336.44
$ $ $ $ $ $ $
10.00 3.50 0.25 13.75 255.44 255.44
0 hrs/ac @ $ 9.00 0.0% of total investment
Percent Crop Share
75.9%
Section D - Tenant or Landlord Net Income or Crop Share Percentage Cash Rental
Crop Revenue per Acre Total Crop Expenses (exclud. Section A) Net Income Per Acre Landlords Required Income (from Section A) Tenants Net Income after Landlords Required Per Acre $ 366.30 $ 255.44 $ 110.86 $ 81.00 $ 29.86 Total 32,967 22,990 9,977 7,290 2,687
$ $ $ $ $
Crop Share
Landlord
Per Acre Total Expenses to be Shared $ Percentage Share 24.1% Revenue $ 88.19 Landlord & Tenants portion of shared of expenses $ Cash Expenses for Crop (excludes investment and depreciation) $ 9.00 Cash Income from Crop Share (after shared expenses) 79.19 Total Expenses including land and machinery investment $ 81.00 Net Income (after all expenses include invest.costs) $ 7.19 Total $ $ $ $ $ $ $ 7,937 810 7,127 7,290 647
Tenant
Per Acre $ 75.9% $ 278.11 $ $ 245.44 $ 32.67 $ 255.44 $ 22.67 Total $ $ $ $ $ $ $ 25,030 22,090 2,940 22,990 2,040
Crop Revenue
Combined
Tenant Share
Net Income
110.86
Landlord Share
$ $ $ $ $ $
72.00 9.00 81.00
$ $ $
7,937 88.19
Landlord Share $ $ $ $ $ -
$ $ $
-
$ $ $
81.00
24.1%
Shared
Landlord Share
Pasture Rent Calculator
LandLord Pasture Ownership Costs - Worksheet 1
Rate or Life Cost Per Total Acre Pasture Cost
Number of Acres Land Value Per Acre Value of Land (bare land excluding personal portion) Average Return on Investment from land Property Tax Per Year (use actual if available) Value of Land Improvements per acre Other Investments (Current Value) Fences Handling Facilities Other Total Depreciation - number of years of remaining life Average Interest (use 1/2 rate to obtain the average) Repairs Insurance Labour and Management Labour Charge Number of hours per acre Management - % of Capital Managed Total Pasture Ownership Cost Stocking rate - Acres Required for 1 Head Pasture Ownership Cost on a per Head Basis ( Line D x Line E) $ $
100 900 90,000 3.0% 1.0% 0 3,000 1,000 4,000 25 into 3.5% 2.0% 0.25% 9.00 0.25 1.0% 2.5 $ 128.88 $ $ 2.25 9.40 $ $ 225.00 940.00 D E F X X X 4,000 4,000 4,000 4,000 $ $ $ $ 1.60 1.40 0.80 0.10 $ $ $ $ 160.00 140.00 80.00 10.00 B C X X X 90,000 90,000 $ 27.00 $ $ 9.00 $ 2,700.00 $ $ 900.00 A
$ 51.55
$ 5,155.00
Livestock Owner’s Net Return - Worksheet 2
Animal investment Animal purchase weight (lbs) Purchase Price per pound Purchase Price per Animal Livestock costs (as percentage of animal investment) Average Interest (interest required for only 1/2 year) Veterinary, insurance, & misc. Marketing, trucking Death loss Total Livestock Costs Breeding livestock costs Labor and management Labour - number of hours per head hrs 0.5 per hd 4% 3% 2% 1% x x x x $ 910.00 $ 910.00 $ 910.00 $ 910.00 $ $ $ $ $ $ 36.40 27.30 18.20 9.10 91.00 B C $ $ 650 1.40 910.00 A
Value of Labour per hour Management (% of value of animal ) Total labour and management Total Per Animal Costs TOTAL ANIMAL COSTS PER HEAD Revenue from Sale Weight of Animal (lbs) Sale price per pound Net returns per head (line G - line F) Stocking rate - Acres Required for 1 Head
$
15.00 1.0% x $ 910.00
$ $ $ $
7.50 9.10 16.60 107.60 D E F
$ 1,017.60 855 $ 1.20 2.5 $ 3.36 $ 1,026.00 $ 8.40
G H I J
Maximun You Can You Afford to Pay for Rent per Acre (line H x line I)
Calulating a Pasture Share Price
Landlord Cost per head (line F of worksheet 1) Livestock Owners cost per head (line E of worksheet 2) Total Costs per Head Landlord's Percentage of Costs Livestock Owners Percentage of Costs Division of Net Return Based on the Percentage of Costs Revenue per annimal (line G of worksheet 2) Minus purchase price ( line A of worksheet 2) Net Returns Landlords share ( Line A x line C ) Livestock Owners share ( Line B x line C ) $ 1,026.00 $ $ $ $ 910.00 116.00 63.22 52.78 C $ $ $ 128.88 107.60 236.48 54.5% 45.5% A B