Land Rental Agreement Saskatchewan
marekbilek.cz - 11.12.2020Leasing works in many ways for many farmers. Young farmers, in particular, find many advantages in renting land. The authors of Saskatchewan Agriculture`s Land Rental Arrangements (2018) argue that leasing is really a way to „finance“ a land base. They also point out that it is more cost-effective to spend money on inputs and machinery when resources are limited, which is often the case for new and young farmers. The investment of limited resources in the Land can limit working capital and thus reduce the efficiency of the operation. Leasing allows farmers to gradually enter the area. Click here to download the harvest lease „Ultimately, the land contract must allow the farmer to make a profit so that it cannot be an emotional decision,“ Gervais says. „It needs to be part of a bigger strategy and be made objective.“ Landowners want to attach it to the value of the land at rent, regardless of the productivity of the land, because they consider a simple percentage of return on investments. It is up to the farmer to know the productivity of the country and whether the rent is worth it. In recent years, land ownership has been very profitable, and not just for investors.
Retirees who may have sold and invested the capital choose to keep their land and lease it. But lenders do not yet have to accept insurance as collateral, and this is another less obvious risk of leasing land. It was only last spring that Tim Hammond saw farmers oppose the expected annual rent increases of the 50,000 hectares he manages for investors at Tim Hammond Realty in Biggar, Sask. But today, a new kind of tension has developed, as the path of land management changes. We have focused on escalating land prices, as farms try to consolidate hectares. Perhaps more worrying, however, is the shortage of land, farmers who, beyond the few hectares that are actually put up for sale, and who are increasingly turning to leasing homeowners, have expectations about the return on their investment. This is especially true for young farmers who are trying to enter a market with few opportunities to buy land. Sullivan points out that in the United States, half of the land is leased and many farms are 100% leased in Europe. He sees that Canada is moving in the same direction, which means that young farmers will need a new way of accessing credit, perhaps by using insurance as collateral. „The FCC Farmland Values Report shows that there are generally fewer (country) transactions,“ says Gervais. Demand has slowed somewhat, but I think it is more a question of supply, because the profitability of land ownership relative to investment. Since January, Hammond has put more land on the market, with values maintained. Leasing or buying, it includes pressure on farmers; „Every day you look at this half-section across the street and you know it`s only put up for sale every 25 years.
You will do everything you can to get it. That`s why there`s a high-end and a low-end in distribution. Sometimes it`s more for one person than another, and that would be equal to the rental price. The rental rate is important for cash flow, but catch-22 for producers is knowing that these hectares will never be available again. Despite a possible loss of a certain amount of cash rent, a producer may decide to take over these hectares in order to complete part of the farm`s strategic plan, spread or replace fixed costs.