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Cover crops should be included in farm leases

By Staff | Jul 16, 2018



As the popularity in raising cover crops grows, producers need to take into account how to tie those practices into their farm leases.

During an Iowa Learning Farms webinar, Charles Brown, farm management specialist with Iowa State University Extension and Outreach, provided his insight on the benefits of cover crops as well as some advice on how to include those into a farm lease agreement.

Brown owns and operates a farm in Wapello County, where he is in his fifth year of growing cover crops.

“Cover crops in Iowa have really taken off the last few years,” he said. “In 2017, there were 760,000 acres that were planted into cover crops. It seems like a lot, but we need more acres if possible.”

A big challenge coming up starting this year and over the next couple years is a decrease in commodity prices.

“It also puts some tighter budgets out there for grain producers especially,” he said. “So trying to work around those expenses putting cover crops in and making it fit into the budgets is kind of a challenge for some people.”

Farm lease assistance

When deciding on a farm lease, whether or not they include cover crops, Brown said it’s important to ensure they are written agreements.

ISU Extension offers some assistance in this process through its Ag Decision Maker website.

A lease form can be found on that site, with both long- and short-forms available.

Brown said that can be downloaded and used as a guide for putting a lease together.

He added, through that site, producers and land owners can look by districts and see what overall averages for land rent is in their area. These amounts are averages gathered through surveys and information received from farmers, farm lenders, land owners and farm management professionals.

The new 2018 cash rent rates have also been released.

There were some increases, at $3 to $4 an acre in some areas of the state. Those particular areas saw fairly good yields in 2017, where other parts of the state’s cash rent values remained the same.

“We really didn’t see a lot of fluctuation in cash rents in 2018,” Brown said.

What do you need to think about when you put together a farm lease?

Almost every farm in Iowa, Brown said, has a conservation plan on file at the county’s Farm Service Agency (FSA) office.

“If you have good, flat, non-erodible land, there may not be a conservation plan,” said Brown. “If there is, in a lease, it should state that this farm needs to be farmed according to the conservation plan. That conservation plan is intended for the person farming that ground and how it can be farmed. If it is not farmed according to that plan, then there can he some ramifications.”

Those ramifications could mean, as a producer, you may not be eligible for any disaster payments and also may not be eligible for crop insurance at the subsidy rate.

“You can still buy crop insurance, but you will pay for the full rate and not the subsidized rate on that,” Brown said.

He added it’s important, as a land owner, that you receive production records each year.

“This is important for a couple of reasons,” he said. “It gives the land owner an idea of the productivity of the farm ground for one thing, but also with new the farm bill coming up – by next year for sure, and with the last farm bill that we had – the land owner really needed to know what the production was on that farm land and which farm program to sign up for and what yields to use to calculate the payments on the those fields.”

“If the tenant had not produced those production records for the land owner, the landlord had no idea what the production was,” Brown added. “He was left with the county yield for his production records.”

Not only is it very important the land owner receives a copy of their land’s production records, but also a copy of the soil tests that have been performed.

“It gives an idea of how the tenant is taking care of that land,” Brown said. “What fertilizer has been applied and what is happening with the P and K and the organic matter on that farm. Landlords may also request a copy of the fertilizer invoices, just to get an idea of what fertilizer is being applied to those fields.”

Whatever is requested and provided, Brown suggested it all should be put into writing.

“I get a lot of arguments that I help mediate and that is because of verbal leases,” he said. “The landlord thinks something should be done. The tenant is not doing it. If it’s not in writing, you can’t hold the tenant in to doing that.”

Written leases, Brown said, reduce arguments, misunderstandings and build better relationships.

They’re are also important when it comes to death.

“With the landlord or the tenant, either one could have something happen and pass away in the middle of the year,” he said. “If it happens to the landlord, how are their heirs going to know what’s happening with the farm operation if there isn’t a written lease? Is it crop share? Is it cash rent? Who pays for what?”

The same goes for on the tenant side.

“If the tenant passes away, his heirs need to know when are payments due and again, what kind of agreements have been made,” he said. “Putting those leases in writing eliminates and resolves some of those problems.”

Cover crops and leases

Who pays for seeding the cover crops – the landlord or the tenant?

“I think a lot of land owners are offering to pay for a certain amount of the cost for that cover crop seed and I think that they probably should if it is going to improve the quality of land, keep the soil on the land,” Brown said, “I think there is not reason they shouldn’t share in some of the cost of the cover crops.”

On the other side, if the tenant begins to see improvements on yields, there is also reason for him to help share in the costs.

Sharing of costs, Brown said, basically comes down to the cost of the seed and an extra pass to get the seed established on the ground.

In some cases, rather than the land owner paying for the cost of the cover crop seed, they may opt to reduce the cash rent or other shared costs.

“But again, put that in the lease so the people know what is going to happen with it,” he said.

Brown said Perdue University has put together a lease insertion to include cover crops, sort of an addendum to your regular lease.

“It will spell out the dates you are going to plant cover crops, acres that are going to be used and some of the compensation that is going to be between the land lord and the tenant,” he said. “But again, it reduces it into writing so that you have something to identify what is going to happen with those cover crops and lease arrangements.”

There are also other tools that can be used to help include cover crops into your farm lease. Brown said the Nature Conservancy offers some assistance on an addendum for cover crops onto your lease as well as the Ag Decision Maker.

Benefits of cover crops

“Anything we can do to stem soil erosion, I think, is something that needs to be done,” said Brown. “In my fields, after heavy rains, you don’t see any soil washing off of those fields. I’m not going to say it’s 100 percent eliminated, but is helping.”

Helping to slow soil erosion is not only a huge benefit – it is also a water quality issue.

“Cover crops by themselves aren’t going to solve the problems,” he said. “It’s cover crops, no-till, buffer strips, terraces, bioreactors; all of those things are going to be needed to help eliminate soil run off, loss of fertilizer and to improve the water quality we have in Iowa.”

But he said there are some cons that can accompany cover crops, especially initially with a potential of increased costs.

“The seeds costs is probably the major one,” he said. “And that depends on what cover crop seeds you use.”

Could there be some reduced costs with long term usage of cover crops?

“I think the answer is yes,” said Brown. “As we learn to manage that better, there could be some reduced costs.”

Reduced costs could be in the form of a reduction of inputs needed due to improved soil organic matter, improvement in soil structure and bacteria in the soil that will help take nutrients and feeds them back to the roots.

“Does improved soil organic matter happen in one or two years? Probably not,” Brown said. “It takes a long time to improve soil organic matter, but as you see those roots into the soil, you will start seeing improvement in soil conditions, especially soil structure. What I am seeing in my fields is the soil is easy to get good seed-to-soil contact. Structure supports the weight better, so I don’t see the compaction I used to get.”

“And where water used to stand, the water no longer stands in those places,” he added. “The soil has a root system and water drains that much faster.”

Brown said he is also seeing an improvement in the conservation of water.

In 2017, they faced dry conditions in Wapello County, but noticed his crops didn’t suffer as much as some of his neighbors.

“I think that soil is cooler,” he said. “You have that cover on the soil so you don’t have the evaporation you do normally, so it can conserve water.”

With the potential of improved soil fertility due to improved organic matter this could increase land value.

“I don’t think this is going to happen overnight, but I think, down the road, if you have soils with better organic matter, better productivity, it does and can add to the land value and people will pay more for that,” he said.

Increase in yields is another benefit to cover crops that may not be seen immediately.

“But I think down the road, it’s certainly a possibility,” Brown said. “I would say, in my experience the past five years, I have not seen a yield decrease. My yields have been up to par as they were before. But again, I have reduced soil erosion.”

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