Acres & Assets | Preparing for Next Year's Farm Lease: Understanding Notification Dates and Considerations

As the 2023 crop season moves into the home stretch towards harvest, it is actually the appropriate time to think about 2024.  For landowners and tenants, thinking about next year’s farm lease is one of the key considerations to give some thought to well in advance of spring planting.  And if either party is thinking about making changes to the leasing arrangement or terms for the coming year, by law and by practice, there are reasons and specific timeframes to initiate those discussions.

Most states have legally defined times that an owner or tenant of a farm is required to give notice to the other party if they are terminating or changing the leasing terms.  Cropland leases typically run from March 1 to February 28th and for some states, November 1st is the legal notification date.  Written leases normally have termination or notification date language which needs to be followed by owner and tenant.  Lacking written terms, public rental laws and requirements of the state where the farm is located take precedence.  Iowa has one of the earliest official notification dates for farmland leases if changes are to be made and that is September 1.

The early notification date prior to Midwestern harvest makes good business sense in addition to the legal requirements.  When I farmed, I was already making plans in August for the following year’s crop including reviewing soil tests, planning fertilizer applications and what type if any after harvest fall tillage was to be done.  I also was planning any repairs to terraces or waterways along with any new improvements that had to wait until the crop was harvested.  Knowing if I was going to rent the farm in the fall for the next year was the first step in setting the stage for a successful and productive season.

As a landowner, the early notification time and negotiations for next year prompts consideration of the lease terms and needs of the farm.  As a professional farm manager representing the landowner, preharvest was a great time for me to not only talk with the tenant about crop prospects and harvest plans, but it was the time to discuss potential changes in the leasing arrangement.  The early discussion provided time and flexibility to work through changes and differences.  I always respected the farmers I worked with and wanted to build a good relationship with them for the benefit of the owner and they as the tenant.  The last thing I wanted to do was surprise them at the last minute with lease discussions.

Many farms are rented through verbal leases in which the terms were agreed to in the past and either carry over year to year or are talked about and changes made without anything put in writing.  If a landowner wants to make changes to or terminate a verbal leasing arrangement, the September 1 date is most appropriate even if not legally required by a state.  

Even though some states have later notification dates surrounding farm leases, I believe it makes good business sense to always opt for earlier than later.  For instance, in Illinois, the official termination notification date for a written farm lease is November 1st.  As a farmer and a farm manager, that date is too late to be fair to both parties of the lease.  Harvest is usually done by then and the farmer has started preparations on the farm for next year.  It is much better to know ahead of time than after the fact if there are changes to be made.  

There are variations to notification dates and these normally are based on the type of crop grown.  In Kansas and other winter wheat states, it is more common for leasing discussions for the next crop year’s lease to be held in May before summer harvest of the current crop.  The reasons for the earlier date are similar to those delineated above, just that the growing season of the crop is different than the more widely grown corn and soybeans.

Early discussions about next year’s leasing can include keeping the terms the same, changing the amount of cash rent, changing the type of arrangement (crop share to cash rent, fixed cash rent to flexible cash rent, etc), putting in terms to foster soil health practices, delineating how carbon credits, if any, are handled, and any cost sharing arrangements for planned farm improvements. These and more can be brought up by either the landowner or tenant.

Being mindful of notification dates in farm leasing not only meets legal requirements, but more importantly, it fosters a better relationship between farmer and landowner which helps make a more productive farm for both.