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This NebGuide discusses the advantages and disadvantages of cash leasing cropland. It also provides guidelines for setting a fair cash rental rate.
Each year, more than 4 million acres of Nebraska cropland are leased under a cash lease arrangement. A cash lease involves the landowner conveying use of the cropland and associated management responsibilities to the tenant operator in exchange for a negotiated amount of cash. The cash payment is usually made in two installments, half at the beginning of the crop season and half at the end.
Under a typical cash lease, the tenant operator receives all the crop income (including farm commodity program payments), pays all the crop expenses, and makes all crop management decisions. The landowner is responsible for the property taxes on the land and facilities included with the land (buildings, irrigation equipment), although (s)he may not be responsible for insuring or replacing these facilities if they are no longer serviceable.
The use of cash leasing cropland varies across Nebraska; however, its popularity has increased in recent years as both landowners and tenant operators have opted for cash leasing over crop share leasing. Approximately 40 percent of the cropland leases and leased acreage in Nebraska were estimated to be cash rented in 1996.