With the 2015 harvest season coming to an end it’s time to start planning for 2016. As you do, consider whether you might be a good fit for a cash rent option.
First, some background. In 2013, DNR began offering a cash option to dryland agriculture lessees. Historically, this option was offered only on leases with small acreage or non-cereal grain crops. After much research, DNR has developed a formula that incorporates the 3-year average price of wheat at Portland and a 10-year production average (when available).
The 3-year average price is calculated using the USDA published average coast price of soft white, dark northern spring, club, hard red winter, and barley. Other commodities are obtained from USDA Washington State Agri-Facts.
To calculate the rent per acre, the USDA average price is then reduced by the off-coast price at the nearest elevator. The price is then multiplied by the 10-year farm production average and the cropshare percentage for the agronomic zone. The result is divided by the crop rotation for the lease.
Example of cash rent calculator used by DNR:
Benefits to the Lessee
The cash rent option provides a lessee with additional marketing options for the crop and — 100 percent of the crop can be insured. The cash rent also entitles the lessee to 100 percent of any farm program payments. In addition, the cash rent option provides lessees more freedom in choosing an elevator and storage of their crops.
If you are interested in learning more about the cash rent option contact your local DNR land manager.
By Ryan Cloud, DNR Southeast Region Land Manager