2005 Northern District Farmland Leasing Survey

Farm Business Management Update, June/July 2005

By Keith Dickinson, (Keith.Dickinson@vt.edu), Extension Agent, Farm Business Management, Northern District

During the winter and late spring of 2005, the Virginia Cooperative Extension Farm Business Management Program surveyed farmers and farmland owners in 14 counties* (Albemarle, Caroline, Culpeper, Fluvanna, Greene, King George, Loudoun, Louisa, Madison, Nelson, Orange, Prince William, Rappahannock, and Spotsylvania) located in the Northern Extension District. A total of 139 usable surveys were returned, representing 12,792 leased acres across the region. The information obtained from these surveys is intended to be used as a teaching tool for local extension agents in assisting tenants and landlords in establishing leases for their farming operations. Landowners and farm operators can use the results as a starting point for the negotiations of leasing rates. The results should not be used as a guide for "setting" the leasing rate for a given location.

The results of this survey show that a majority of farm leases in the Northern Extension District are oral leases (62%). Written leases were more common in Loudoun & Prince William counties (42%), and least common in Albemarle & Fluvanna Counties (12%).

The results of the leasing survey are presented in several tables. To acquire more survey responses for a given area, adjoining counties were combined in groups of two. Averages for two-county areas are given. Averages are also given for the entire district. Results for counties where too few surveys were received and for surveys where the county was not identified are included in the district-wide averages but are not included in regional averages.

How to Interpret Information in the Leasing Rate Tables

For each category of land type (pasture, good cropland, average cropland, and whole farm), the following information is presented.

• Number of Responses: The total number of survey responses used in calculating the average leasing rate for that region.
• Weighted Average Leasing Rate: The average leasing rate for each region was calculated by dividing the total dollars spent per acre per year by the total acres leased per year for a given region.
• Minimum Rate: The lowest rate paid per acre per year for that region. Note: respondents who indicated that they did not pay/receive any rent for land were not included in the average rate, are summarized in another table).
• Maximum Rate: The highest rate paid per acre per year for that region. Statistical outliers have been removed.
• Median Rate: The median is the rate that is in the middle of all of the rates given for that region; that is, half the rates are above the median, and half have rates that are below. The median takes the number of responses into account, where the weighted average does not.

Table 1: Northern District Pasture Rental Rates (Cattle)

Region	Number of Responses	Weighted Average Leasing Rate (per acre Ð per year)	Minimum	Maximum	Median
Loudoun & Prince William	10	$22.63	$10.00	$33.21	$22.50
Spotsylvania & King George	Insufficient Data
Orange & Louisa	10	$18.30	$2.50	$35.00	$16.00
Madison & Greene	18	$18.44	$6.00	$50.00	$20.00
Albemarle & Fluvanna	7	$10.28	$4.00	$24.67	$13.33
Northern District	54	$17.66	$2.50	$50.00	$20.00
Responses indicating that pastures were part of a horse boarding lease were excluded from these results, due to the differences in services being provided by the landowner.

Often landlords and tenants include terms for specific services to be provided by either party, as a term of the lease agreement, in addition to cash/land terms. Table 2 summarizes the percentage of pasture leases in this survey for which the services listed were provided. In addition to the services which were surveyed, several respondents indicated that mowing/brush-hogging services were commonly provided by the tenant.

Table 2: Non-Cash Services Included in Pasture Leases (percent of pasture leases)

	Tenant Ð Provided Services			Landlord Ð Provided Services
Region	Weed Control	Fertilizer	Minor Fence Repair	Herbicide	Fertilizer	Fencing Supplies
Loudoun & Prince William	34%	28%	34%	3%	7%	17%
Spotsylvania & King George	Insufficient	Data
Orange & Louisa	45%	55%	25%	0%	18%	23%
Madison & Greene	61%	81%	71%	3%	10%	23%
Albemarle & Fluvanna	33%	56%	67%	11%	33%	22%
Northern District	39%	51%	46%	5%	13%	19%

Table 3: Northern District Cropland Rental Rates

Good Cropland*
Region	Number of Responses	Weighted Average Leasing Rate (per acre Ð per year)	Minimum	Maximum	Median
Loudoun & Prince William	4	$53.91	$30.00	$75.00	$47.50
Spotsylvania & King George	8	$51.23	$9.25	$90.00	$37.50
Orange & Louisa	7	$32.05	$6.25	$75.00	$50.00
Madison & Greene	7	$23.86	$10.00	$33.33	$25.00
Albemarle & Fluvanna	4	$19.17	$12.50	$23.81	$19.73
Northern District	32	$41.18	$6.25	$90.00	$30.00
*Good Cropland was defined as having Class 1 or 2 soils
Average Cropland*
Region	Number of Responses	Weighted Average Leasing Rate (per acre Ð per year)	Minimum	Maximum	Median
Loudoun & Prince William	7	$18.95	$1.00	$60.00	$20.00
Spotsylvania & King George	5	$20.57	$15.00	$30.00	$20.00
Orange & Louisa	3	$13.95	$10.00	$15.00	$10.00
Madison & Greene	6	$13.15	$6.00	$30.00	$18.00
Albemarle & Fluvanna	4	$19.07	$8.00	$86.67	$22.50
Northern District	28	$18.38	$1.00	$86.67	$20.00
*Average Cropland was defined as having Class 3,4 or 5 soils and included responses identified as hay land

Table 4: Northern District Whole Farm Rental Rates

Region	Number of Responses	Weighted Average Leasing Rate (per acre Ð per year)	Minimum	Maximum	Median
Loudoun & Prince William
Spotsylvania & King George
Orange & Louisa	7	$21.78	$6.80	$50.00	$17.00
Madison & Greene	6	$21.87	$12.50	$30.00	$25.00
Albemarle & Fluvanna
Northern District	24	$18.93	$6.80	$50.00	$18.99
Whole Farm leases were defined as those that included use of an entire farm unit, including buildings, cropland and pastures. The types of farms being rented as whole farms included in these results were cattle farms, crop farms, or crop and forage farms. Dairy farms and horticultural farms were excluded from these results due to the differences in infrastructure needs for those types of farms. There were insufficient responses for a separate categorization for these types of farms.

Land is occasionally leased without the exchange of cash. The reasons for a non-cash lease vary from situation to situation. Often times these are small tracts of land, neighbor to neighbor, or intra-family transactions, where there is little incentive or desire to exchange cash. In other cases, non-cash services, such as fence maintenance, brush-hogging/mowing, and farm road repairs are used in the place of cash. A few respondents reported receiving hay for their horses, in lieu of cash rent for the balance of the land used by the tenant. Several respondents also cited the qualification for use-value taxation as sufficient incentive for leasing land. Table 5 summarizes the percentage of total land by use category, which was leased at no charge, as reported in the survey.

Table 5: Northern District Land Leased at No Cash Charge

Land Category	Acres leased at no charge	Percent of total in category
Pasture	231	5
Good Cropland	92	3
Average Cropland	377	27
Whole Farms	453	10
Total all categories	1153	8

The term of a lease is very important. Longer leases allow justification for tenants to provide higher levels of capital investment on a piece of leased property, such as lime, fences, and other improvements. Shorter leases allow for greater flexibility on the part of both the tenant and the landlord to terminate a lease arrangement in a shorter period of time.

Table 6: Length of Farm Leases in Northern District

Pasture	Average Length	4 years
	Minimum	1 month
	Maximum	25 years
	Median	1 year
Good Cropland	Average Length	3 years
	Minimum	1 year
	Maximum	25 years
	Median	1 year
Average Cropland	Average Length	1 year
	Minimum	1 year
	Maximum	5 years
	Median	1 year
Whole Farms	Average Length	3 years
	Minimum	1 year
	Maximum	12 years
	Median	1 year

For more information on the topic of farm leasing in the Northern District, contact your local extension office or Keith Dickinson, Extension Agent for Farm Business Management, who is based in the Culpeper Extension Office, at (540) 727-3434, Keith.Dickinson@vt.edu.

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