New to hay. Is this a fair deal?

   / New to hay. Is this a fair deal? #1  

weedpharma

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I have a paddock of approx 5 acres that is currently just weed. A neighbour is considering growing pumpkins on the paddock next season (October). We have agreed that if he does, he will plough the area, grow pumpkins and then level and seed for hay. I then get the hay. No money changes hand.

I feel that this is fair enough as I get the paddock improved plus the hay. He gets the land for his pumpkins.

The land has been weeds for about 20+ years and there is no water (he has that organised).

Just curious as to what others think.

Weedpharma
 
   / New to hay. Is this a fair deal? #2  
One way to think about this is to first consider the cash rent that you could obtain on the paddock. You can look up the average cash rent for your county here: USDA/NASS QuickStats Ad-hoc Query Tool. There's a lot of variation in cash rents within counties, so the rent you could obtain may be higher or lower than the county average.

Next, you could look at the "value" of the services your neighbor is providing. A quick and dirty way to do this is to use custom farming rates. Here's a report showing the average and range of custom rates in Iowa: https://www.extension.iastate.edu/publications/FM1698.pdf.* You could compute an estimate of your costs if you had custom operators prepare and seed the paddock for hay. The neighbor will presumably fertilize and lime the paddock according to a soil test. You should obtain a residual value from the lime if liming is required.

Compare the potential cash rent to the estimated value of your neighbor's services. I suspect you are coming out ahead on the deal.

The standard recommendation is that all lease/rental agreements should be in writing. But if you know and trust your neighbor, a handshake should suffice in this situation.

Steve

* Custom rates are reported for a few other states. Try a Google search for your state.
 
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   / New to hay. Is this a fair deal? #3  
Or you could just consider yourself lucky that someone is willing to improve the ground and the look of the property and still you reap the benefit of the hay later on .And a few free pumpkins is always a good thing !
 
   / New to hay. Is this a fair deal? #4  
I think it's a perfect deal if it makes you both happy !

Rich
 
   / New to hay. Is this a fair deal?
  • Thread Starter
#5  
A fair deal is one where both people are happy.

Weedpharma
 
   / New to hay. Is this a fair deal? #7  
sounds like a plan but there should be an exchange of money.

find out what it costs to disc and seed from a third party. (my guess $1000? lets use that for the example)

THe way I would do it, the agreement is written up as you listed, but with the exchange of $1000. He pays you $1000 to plant pumpkins, you pay him $1000 to disc and plant hay.

this way if he disappears after pumpkins (a distinct possibility) you still have the $1000 to get the land disc and seeded. That way you arnt left holding the bag while he cashed in his pumpkins and never comes back.....

you could also take your $1000 after the pumpkins are sold so he isnt left floating 1000 for that period of time, the point is you want something to hold over his head to get him to come back and finish the deal.
 
   / New to hay. Is this a fair deal? #8  
Throw some roundup on before he works it while you have the chance .
 
   / New to hay. Is this a fair deal? #9  
Throw some roundup on before he works it while you have the chance .

Not a bad idea at all. The landowner should spring for the Roundup and application, IMHO. He is way ahead on the no-cash barter deal as proposed.
 
   / New to hay. Is this a fair deal?
  • Thread Starter
#10  
Thanks to all for their feedback. At this time I am happy enough with this deal. I will explain why.

This is a paddock that I have had just sitting for 20 yrs. I have to do firebreaks and it just gets more weeds each year. I want to make it useful but cannot justify the cost of ploughing etc. This way it is done for me and yes he will make money out of my land. He has been growing pumpkins for a couple of years on another neighbours block. I am prepared to take him at his word. The worst that can happen is that I get left with a paddock needing to be levelled and seeded, in effect what I need to do now. I am not actually out of pocket, only lost a small amount of fertility.

Weedpharma
 
 
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