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Crop Share vs Cash Rent

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Sep 14, 2022 | 21:23 1 Looking to switch from Crop Share to Cash Rent on our land. We pay a 1/3 Fert and Chemical and Insurance. The Crop Share is ran through a Company. Does anyone know if cash rent can be ran through a company also? There is 2 share holders in the company and a few expenses paid out of the company also. (Taxes,Power,Insurance on the buildings)Our renter is a large farm and doesn’t want the hassle of 6-1/4’s of crop share. If anyone had some intel it would be great. Reply With Quote
Sep 14, 2022 | 21:33 2 If you have plans of selling any of the land in the future, I believe there are tax implications relating to capital gains exemption. If you are crop share you can claim to be a bona fide farmer, if cash rent you are not. But there are some folks on here who are much more knowledgeable about taxes than I am. Reply With Quote
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  • jazz's Avatar Sep 14, 2022 | 21:47 3 Cash rent is passive income so it’s going to be taxed harder inside a corporation I would think. Reply With Quote
    Sep 14, 2022 | 21:51 4 The land is all owned in joint personal names if that helps any. Reply With Quote
    Sep 14, 2022 | 21:53 5 Any decent farm should be able to work out a crop share on 6 quarters. The reason they want cash rent is because it is cheaper for them.

    Might be time for a new renter. Reply With Quote
    Sep 14, 2022 | 22:11 6 Cash rent agreements can be structured in such a way that the landowner can maintain his farming status for tax advantages. Shared management agreements and such seem to satisfy CRA. Talk to your accountant, there are a number of structural scenarios that can achieve this. Reply With Quote
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  • blackpowder's Avatar Sep 14, 2022 | 22:41 7 Absolutely. Bigger numbers need more knowledgeable accountants. And there are various ways.
    Custom farming for landlord with his income equalling going cash rent for example.
    True Crop sharing I would say, depending on the individuals of course, is a thing of the past. I hate it with a passion.
    Depending on % too.
    Consider yourself at the poker table.
    We know we get 2 pots, lose 2 pots and fold or break on 6 other hands out of 10. We pay to play every hand.
    MNP has studies that correlate.
    Now consider paying a % of every hand.
    You need the whole pot on the winning years to cover the blind in the losing years.
    My last % deal, the owner couldn't make less than $75 and made as high as $170 and that was 8 years ago! (We are in a stable crop area).
    You think about paying 20-25% of gross on a break even year.
    I will never willingly do crop share ever again. Unless no more than 20% and no more storing grain seperate!
    And also, the longer you're out of the game, the more of a pain in the ass you are as the times change.
    There's a reason southern cotton sharecroppers were all poor. Reply With Quote
    Sep 15, 2022 | 00:17 8 The other problem with crop share ( as an owner) is that its essy to hide a load or 2 of crop and your crop maybe only did 40 ... while tbe other fields did 60. Its easy for the farmer to screw the landowner... Reply With Quote
    blackpowder's Avatar Sep 15, 2022 | 03:30 9 Agreed. Without trust you have nothing.
    Ask any retailer, it starts with nickels before it goes to dollars.
    But....
    If the landowner needs to count every penny, it leads to resentment in honest men. I have a list of examples.
    Also, ask a grain buyer. Things get creative on that end too.
    You want a grain check in your name for a percentage? So I pay all drying and trucking on your grain???? And you can't understand why your grain got sold in the lowest price contract?????
    Go get a f k n permit book. Reply With Quote
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  • blackpowder's Avatar Sep 15, 2022 | 03:49 10 U haven't lived as a sharecropper until you use his 20 bpa 1200 bushel bins and scrambled to find seperate homes or better, bag it at your full expense for the rest. For someone who hasn't spent one dime in decades.
    One guy I almost put a 10,000 b pile on his lawn. I literally had no where else.
    Go get your own one ton and Scoop a Second.
    Stay current or stay home.
    Calling someone a sharecropper is an insult. Reply With Quote
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  • blackpowder's Avatar Sep 15, 2022 | 03:52 11
    Quote Originally Posted by goalieguy847 View Post
    The other problem with crop share ( as an owner) is that its essy to hide a load or 2 of crop and your crop maybe only did 40 ... while tbe other fields did 60. Its easy for the farmer to screw the landowner...
    Around here it's come down to grain cart scale totals. Reply With Quote
    Sep 15, 2022 | 06:17 12 I have a neighbour who crop shared from a guy up the road who sat out in his truck all night to make sure every load was going back into his yard.
    Some real trust there!!
    To top it off he was 80.
    Maybe he took out coffee and donuts. Reply With Quote
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  • Sep 15, 2022 | 06:27 13
    Quote Originally Posted by poorboy View Post
    Any decent farm should be able to work out a crop share on 6 quarters. The reason they want cash rent is because it is cheaper for them.

    Might be time for a new renter.
    Better yet farm it yourself
    Or pay to get it custom farmed
    The problem with share crop is that it’s too expensive for the farmer
    Our expenses went up 35-100% on everything!
    Your taxes might of went up 5-10%
    Yet your income as share crop income has doubled or tripled
    Last edited by caseih; Sep 15, 2022 at 06:54.
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  • Sep 15, 2022 | 07:00 14
    Quote Originally Posted by blackpowder View Post
    U haven't lived as a sharecropper until you use his 20 bpa 1200 bushel bins and scrambled to find seperate homes or better, bag it at your full expense for the rest. For someone who hasn't spent one dime in decades.
    One guy I almost put a 10,000 b pile on his lawn. I literally had no where else.
    Go get your own one ton and Scoop a Second.
    Stay current or stay home.
    Calling someone a sharecropper is an insult.
    yep some of these landowners have lost touch with reality Reply With Quote
    Sep 15, 2022 | 08:07 15 A young lad down the road I talked too just picked up 3 1/4 "s from a 80 year old. He had not received any rent money the last 3 years and was just looking to get enough to cover his living expense.
    There is likely a reason some of the old boys have to park in the field during harvest. But if you park behind the new service truck and other shinny trucks at the end of the field nobody will see you anyway. Reply With Quote

  • ajl
    Sep 15, 2022 | 08:24 16 My landlords, who rent their land to an STO, receive rent in advance of the season. My advice to the OP would be to do something similar as in find a smaller op that can accommodate your needs. The BTO has stated that your land is not that important to them so they can be spared the hassle. I will grant that watching X9's harvest your crop is much cooler than the older machine that I use. Got some good crop this year so planning an upgrade but will not be to an X9. To the 80 year old that did not get rent for a few years, maybe it is time to sell? 5% on a GIC beats that.
    Last edited by ajl; Sep 15, 2022 at 08:28.
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    Sep 15, 2022 | 08:26 17 The best crop share / cash rent deal we did was fair for both . 1/2 the going cash rent on similar land and 10% crop share.
    They get a guaranteed amount to cover tax’s and more, while we did not give up way to much in excessive crop share so we could still cover expenses on our side with less risk
    But very few want to be bothered with thinking differently Reply With Quote

  • blackpowder's Avatar Sep 15, 2022 | 08:30 18 furrow.
    And after several years, how did it compare to cash??
    Fair to both usually means close to going rate cash.
    U have a rare landowner.
    That arrangement here, would be $160 + . Again right on top cash.
    Long term deals redone every so often are at max $110.
    You're going to need that $50
    Last edited by blackpowder; Sep 15, 2022 at 08:34.
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    Sep 15, 2022 | 08:43 19 Make sure to give your kids a good deal on the rent !

    You can always charge Monette more if your kid don:t want it !

    Rez land is cheaper because it comes with RISK !
    Last edited by wiseguy; Sep 15, 2022 at 08:45.
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  • Sep 15, 2022 | 08:59 20 And don't be speading sulfur or buying canola seed in fall before you've paid the Rent !

    And have some honor for the previous Farmer don't go disking sloughs before the last agreemnent is even up ! Reply With Quote

  • Sep 15, 2022 | 09:02 21
    Quote Originally Posted by blackpowder View Post
    furrow.
    And after several years, how did it compare to cash??
    Fair to both usually means close to going rate cash.
    U have a rare landowner.
    That arrangement here, would be $160 + . Again right on top cash.
    Long term deals redone every so often are at max $110.
    You're going to need that $50
    Had a rare landowner, they have since passed
    Now it mostly cash , some crop share left .
    Yup on good years close to cash , but risk is less
    We have not had many good years heat lately
    This year decent yes . Reply With Quote
    Sep 21, 2022 | 08:26 22 50 x 18 = 900 an acre x 1/3 share = $ 297 an acre !

    change from cash rent to share rent !
    Last edited by wiseguy; Sep 21, 2022 at 08:30.
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    blackpowder's Avatar Sep 21, 2022 | 08:43 23 Haven't seen thirds here since eighties. Quarter too much of gross.
    Fifth closer to cash here. Reply With Quote

  • Sep 21, 2022 | 10:57 24
    Quote Originally Posted by wiseguy View Post
    50 x 18 = 900 an acre x 1/3 share = $ 297 an acre !

    change from cash rent to share rent !
    give yer*** head a shake
    canola inputs are close to $500, machinery costs and parts through the roof, plus $297 1/3 share
    nothing for the guy doing all the work and taking all the risk ??????????????????
    are you high? or just being sarcastic?
    if you're serious , good luck finding anyone simple enough to agree to it!
    Last edited by caseih; Sep 21, 2022 at 10:59.
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    Sep 21, 2022 | 11:05 25
    Quote Originally Posted by blackpowder View Post
    Haven't seen thirds here since eighties. Quarter too much of gross.
    Fifth closer to cash here.
    Third crop share normally included 1/3 of cash expenses off 1/3 gross landowner's income...or;

    1/4 share of gross with no cash expenses ... has been the norm for many...or;

    or 1/3 gross income to farming partner... with all cash expenses paid by landowner to assure farming status with CRA... the farming partner pays the expenses and then farmer subtracts them from the 2/3rds gross, then paying the remainder to landowner.... after all farming cash expenses and grain sales complete for that crop year. Trust is required for these arrangements to work...by landowner of farmer especially...

    Cheers Reply With Quote
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  • blackpowder's Avatar Sep 21, 2022 | 11:12 26 Agree Tom but glad to see those days behind me. Reply With Quote
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  • Sep 21, 2022 | 11:43 27 Problem nowadays Tom is that some older landlords can’t comprehend the massive increase in inputs and that can be an issue and a headache not worthwhile for the renter to explain when costs used to be $100 / ac that are now over triple even on modest farms . Reply With Quote
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  • Sep 21, 2022 | 11:47 28 Crop share was common when CWB quota and summerfallow were the norm.
    If you were on 1/2 SF or even 1/3 SF with very little cash inputs the appeal of not paying the landlord 1/2 or 1/3 of the time but having the additional quota made it the most popular.

    I'm surprised when I hear it mentioned today.
    Can't see any appeal for the tenant. Reply With Quote
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  • Sep 21, 2022 | 12:26 29
    Quote Originally Posted by wiseguy View Post
    Increase of inputs ain't the landlord's problem !

    I feel it's better to get a better deal on canola seed and fertilizer than Jew on the rent !

    I dont pre buy fertilizer before the rents paid !
    It sure is heck is when they are paying a share of expenses if you are in that type of arrangement .
    But that’s for those to worry about . Reply With Quote
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  • Sep 21, 2022 | 12:48 30
    Quote Originally Posted by wiseguy View Post
    Saw a guy out here ruin his whole farm by chiseling on the rent when he was to stupid to realize he was getting every break under the sun !

    Probably would of inherited the land some day !

    Strange things happen when it comes to land !
    Good thing is here no one even mentioned chiseling rent on this thread Reply With Quote