Reviewing your lease arrangements is key in calculating input costs in face of high input costs.
With prices and input costs fluctuating, people need to review their lease arrangements and adjust for the year ahead, says Craig Dobbins, a Purdue University Extension agricultural economist.
“Determining fixed cash rent in the current environment is a difficult task and will likely require multiple discussions between landlords and tenants,” says Dobbins, who specializes in farm leases and business arrangements. “It's a matter of being able to put yourself in the other's shoes and understanding the kinds of costs and risks that are being taken by all parties involved.
“As long as people keep communicating with each other, they will eventually find a number that is agreeable and equitable,” adds Dobbins. “You just have to keep talking and try to understand the other person's perspective. However an agreement is not reached in all cases, and the land sometimes changes hands.”
Many factors influence the amount of cash rent that is paid, says Dobbins. See Purdue for more information on the factors and methods on determining cash rent.