Leasing price per acre?

Asked September 19, 2017, 3:11 PM EDT

Kevin Comiskey <umpquakevin@gmail.com>

11:26 AM (35 minutes ago)
We fully own an EFU farm in Umpqua, (ten minutes west of Sutherlin on Garden Valley Road at Ft. MacKay, bordering on the Main Umpqua River). The 16-acre field we are talking about is fenced, flat, river-bottom land, already irrigated with Main Branch water rights and with a direct access road to the highway.

The field has lain fallow for about five years, with sheep occasionally being run on it to keep the grass down. It has not been certified organic, but could be.

A lavender farmer closeby wants to lease part of this pasture for a lavender field. She would like to pay $100/acre for 5 acres (to begin with), for ten years with an option to continue in 5-year increments. (We have no farm equipment or capital to invest in this.)
Our taxes for this piece of land are $1800/year.

Although this is exactly the crop and endeavor we would like to see in the field, she is intending to have events such as a yearly "lavender festival" and U-Pick days, and classes, such as wreath-making, in the field. (She is agreeing that all events must be cleared with us first. That is fine.

We want to have a formal lease with the abilities to amend later, and deeply want to accomodate these farmers; my question is this:

  • Is $100/acre a fair community-standard price for Capability Class I farmland, or should we hold out for a percentage of the gross after a few years of her getting established? Or get more an acre, considering how valuable this land is for growing and selling?

Douglas County Oregon small farm issues

4 Responses

Hi Kevin,
It's difficult to determine lease prices. One good way to determine a price is to look at comps in the Capitol Press or on the Oregon Farm Link website and talk to farmers and foresters in the immediate area.

There are many factors that play into the rate, and so many farmers will do a variable cost lease, where you charge a percentage (10%) of the lease cost, then set the floor price that you'll need to cover your expenses such as taxes (e.g. $300/acre) and the ceiling cost so you don't penalize the farmers for being successful ($1,000/acre).

Rates vary a lot depending on the amount of crop infrastructure (i.e. established perennials), physical infrastructure (i.e. barns, irrigation wells), soil quality, irrigation rights, access, intended use (i.e. annual crops vs. berries or nursery crops) etc..

Here are some ballpark figures from the Willamette Valley (unfortunately we don't have figures for the Umpqua region) :

Irrigated land with capability class 1 or 2 for annual crops is often leased for $200-$400/ac/yr

Irrigated land with capability class 1 or 2 for perennial crops is often leased for $200-$500/ac/yr or more

Oregon Farm Link has a great resource page with information about land leasing : http://oregonfarmlink.org/search-resources/agricultural-leasing-resources/

Hi! Yes, I saw that response on the other person's question. Hard to get anything specific from the farmers around here--- even the nice guy who rented our field for many years----since they are the lessees, not the landowners. :)
I will look up an explanation of a "variable cost lease", as I don't understand your example.

Thanks!

The variable cost lease is a model of cash rent where the renter would pay a base fee plus a percentage of any income from the crop grown on the property (not to exceed the cap). This publication has a good explanation of different types of cash leases. https://www.agmanager.info/sites/default/files/NCFMEC-01.pdf See section three for more information on what they call flexible cash leases.

Depending on your financial situation you may want to consider calculating the cash rent rate so that it covers your property taxes.
I hope this helps,


Thank you so much, Sara. This response, and the additional links, helped a lot.
--Kevin