Experts Highlight Key Factors Shaping Lease Agreements in 2025

By Andi Anderson

Cash rent agreements for farmland are becoming more complex as landlords and tenants balance productivity, equipment costs, and fair lease terms.

A recent Purdue Commercial AgCast episode featured Michael Langemeier, director of Purdue’s Center for Commercial Agriculture, and Jim Jansen from the University of Nebraska–Lincoln Extension, who discussed the factors shaping rental agreements for irrigation, pasture, and hay ground.

For irrigated land, Jansen emphasized the “three P’s”—pivot, pump, and power. He explained that rental rates must account not only for land productivity but also for equipment upkeep, insurance, and depreciation.

In Nebraska and Indiana, maintenance costs and storm damage risks have pushed insurance premiums higher. Leases often discount cash rent if tenants provide equipment or “sweat equity,” such as performing minor repairs.

When it comes to pasture leases, the experts highlighted the “big three”: fencing, water supply, and weed control. Rental agreements vary between per-acre rates and cow-calf pair rates, with Nebraska averaging about $70 per pair per month.

Jansen noted that services like weed spraying or fence repair must be clearly defined to prevent disputes. Stocking rates, livestock numbers, and land conditions also play critical roles in determining fair value.

For hay ground, market prices and yield estimates are key. Using USDA hay auction data, the experts recommended calculating rental rates based on yield (tons per acre) and local hay values.

A one-third, two-thirds crop share or a 50-50 split is often used to determine equitable agreements, with discounts applied when landowners invest in inputs like fertilizer or herbicide.

Both speakers stressed the importance of written leases to protect both parties. Resources such as Ag Lease 101 offer templates and guidance for drafting agreements that specify maintenance responsibilities, payment adjustments, and terms for unforeseen events like drought or equipment failure.

“Farmers and landowners need clear communication and fair terms,” Jansen said. “A good lease protects both sides and ensures long-term sustainability.”

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