Oral farm leases will automatically be renewed for the next september 1 growing season in South Dakota, unless a letter of intent to terminate or amend the existing lease is granted by September 1, says Burton Pflueger, SDSU Extension Farm Financial Management Field Specialist. A report on the USDA`s latest survey of private grazing rates, published in the March issue of BEEF magazine – www.beef-mag.com — shows that pasture rents continue to rise. South Dakota State University Extension has developed a free downloadable fact sheet that details reflections on the development of grazing leases. Michael Fritz, Mercator Research LLC, Monona, WI, and publisher and publisher of Farmland Investor Letter, reports that the strongest pasture markets are in South Dakota, California and Nebraska, where rates have increased by an average of 10.3%, 7.1% and 6.7% respectively for a value of 2.50% last year. The full report is available at beef-mag.com/cowcalfweekly/pastureland-survey-lease-rates/. Burton Pflueger, SDSU`s extension economist, has written „Pasture Lease Agreements“ (ExEx5071), a seven-page document that provides a background and insight into the evolution of these agreements. The document does not address the IRS processing or legality of such leases, but it does provide an overview of the process. These include sections on the pasture rental market, price volatility, different methods for indicating rent, rent calculation, alternative land use value, alternative feed costs for livestock, profit share and variable rents. It also contains other sources of information, advice on how to determine rental prices and the importance of documents written in the forge of a lease. The automatic renewal date was changed a few years ago from November 1 to September 1 to protect tenants who plant fall seed plants such as winter wheat. Sometimes farmers and homeowners forget about this change, especially where there is no fall seed or when the agreement applies to grasslands.
„It should also be noted that any lease of more than one year must be a written lease if it is to be valid. An oral agreement of two years or more cannot be enforced by the courts,“ explains Mr. Pflueger. It is best to have all the land leases in writing. A written lease agreement can avoid many misunderstandings if one of the parties becomes unable to act or forgets the details of the agreement. These rules apply to both the tenant and the landowner. Pflueger asserts that the only exception is that one party does not respect the terms of the original agreement. He adds that any landlord or tenant who wishes to terminate or modify an existing oral contract must notify the other party before September 1. All leases were developed by Extension Farm Management specialists in the Central North region.