Agriculture is a leading contributor to the economy in Minnesota. According to the State of Minnesota Department of Labor and Industry, the agricultural industry provides more than 147,000 jobs and more than $57 billion in revenue. Minnesota is one of the top five states in the country for agricultural production and ranks eighth for livestock production. There are more than 74,000 farms in Minnesota, comprising slightly more than 26 million total acres. The most popular crops on Minnesota farms include corn, soybeans, hay, wheat, potatoes, peas, oats, and beets. Farms are also home to livestock production including cattle, chickens, and turkeys, along with milk production.
Advantages of Leasing Farmland in Minnesota
If you own farmland, there are some advantages to leasing all or portions of your property. If you do not utilize all of your land, you still need to maintain it. Leasing it for farmland ensures that your property will remain in good, usable condition. You can earn some additional income when you lease portions of your farm, making it the ideal way to protect your bottom line. In addition to leasing your land for agricultural purposes, you may choose to lease land for the purpose of hunting. This can be a good option if your land is particularly appealing to hunters.
When you lease your land, you will guarantee yourself an income. The lease of a portion of your property can be an attractive choice when you are considering downsizing or getting close to retirement. You can often receive a portion of the crop proceeds as part of the terms of your lease. You may opt to include the use of some buildings on your acreage, such as barns and silos, along with equipment in some cases.
What is the Going Rate for Farm Leases in Minnesota?
Before you agree to lease your property, you will need to do some research to determine the value of the land for agricultural use. The values fluctuate, so you should always review the most current information available. Several factors will influence the value of farmland in Minnesota. Some of these include location, size, soil quality, and type of use. Demand or need impacts the value of farmland. Taxes on farmland also help to determine the price that you should charge for a lease.
A good place to start a review of farmland value is the United States Department of Agriculture (USDA). The USDA provides details about the value of cropland in Minnesota. In Minnesota, farmland real value averaged $3,160 per acre in 2019. Cropland has a value of four times that of land used for pastureland, which directly influences rental. In 2019, the average cropland rental rate was about $140 per acre while pasture rental rates were approximately $13 per acre.
Considerations Before Leasing Farmland
Leasing farmland can be a great way to gain income on your farm, but you need to avoid the pitfalls of negotiating a poor lease. An experienced attorney will assist in drafting a lease that protects your rights and ensures the best income for your property. Leasing farmland can be complicated, so it is essential to consider all of your potential liabilities and address them in the lease. To reduce your risk, seek the help of a lawyer with experience handling farmland leases and transactions in Minnesota. Contact Moen Sheehan Meyer, Ltd. online or call us at (608) 784-8310 for a free initial consultation.