Once the base crop cost triggers are established, consider a flex payment of roughly 33% of the difference between the final gross crop revenue minus the base crop cost estimate.
* Corn example: A farm produces a 168 bushel per acre actual dry weight corn yield and the average cash price during the year for harvest delivery is $5 per bushel (168 x $5 = $840 per acre). Subtract from this amount the base crop cost estimate of $771 per acre to get $69 per acre difference. The flex payment would thus be 33% of this amount, or an additional $23 per acre on all corn acres. This could be paid in addition to any unpaid portion of the base rent in early December since both the price and yield is known.
* Soybean example: A farm produces a 48 bushel per acre actual soybean yield and the average cash price is $11 per bushel (48 x $11 = $528 per acre). The actual revenue falls below the base crop cost estimate of $548 per acre, so there would be no flex payment on soybean acres, in this example.
Websites with flexible cash farm lease information
Check out the following websites for assistance in helping you put together a workable, flexible cash farm lease for 2014.
* ISU Extension Flexible Farm Lease Arrangements publication and Decision Tool. You can find these on the ISU Ag Decision Maker site.
* ISU Polk County Farm Management Flexible Cash Farm Leases. Look for webcast, handout and examples. You can find them at the Polk County Extension website