630.7
I (fib
no. 677
cop. 8
UNIVERSITY OF
ILLINOIS LIBRARY
AT URBANA-CHAMPAIGN
AGRICULTURE
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Farm Lease Practices
in East-Central Illinois
BY FRANKLIN J. RE1SS
u n
CONTENTS
PAGE
The Survey Sample 4
Characteristics of Farm Leases 6
LEASE ARRANGEMENTS 10
Share Rents 10
Seed Costs 12
Fertilizer Costs 14
Harvesting Costs 16
Spraying Costs 19
Cash Rents 21
Items Special to Livestock-Share Leases 25
Landlord's share of livestock expenses 27
Ownership of machinery and equipment
under livestock-share leases 30
Management Participation 34
Characteristics of Written Leases 37
Reimbursement Guarantees 39
Rights Reserved 41
Value of Landlord's Buildings 43
Labor and Repairs on Improvements 43
The Farm Residence 44
Personal Information 49
Lease Changes Desired 52
Summary and Conclusions 54
A list of tables is on page 56.
Urbana, Illinois September, 1961
Publications in the bulletin series report the results of investigations made
or sponsored by the Experiment Station
1-
Farm Lease Practices
in East-Central Illinois
FRANKLIN J. REISS'
EAST-C KNTRAL ILLINOIS is characterized by a cash-grain type of farm-
ing, by highly productive and high-valued land, and by a high rate
of tenancy. Slightly over one-half of all farms in the area are operated
by full tenants while another one-fifth of the farms are operated by
part owners who own part and rent part of the land they operate. In
some counties of east-central Illinois about 75 percent of all farmland
is operated under lease. Farm leases, therefore, are important in the
economic environment of both landlords and tenants in this area.
This publication is a report on a survey of farm lease practices con-
ducted in 22 counties of east-central Illinois. Questionnaires were
mailed to a selected sample of tenants and landlords in the winter of
1958-59, and most of the answered questionnaires were returned by
the end of February.
The object of the report is to provide information to help landlords
and tenants develop lease agreements and working relationships which
will (a) give each party opportunity for the development and use of
his resources and (b) provide for an equitable sharing of the income
produced by the use of these resources. Share leases, under modern
agriculture, have become complex instruments that are not easy to
evaluate, either from the standpoint of their fairness or from the stand-
point of the economic incentives they contain which affect the efficiency
and volume of farm production.
Landlords seek the labor and machine services of tenants. Tenants
seek the use of land and land improvements owned by landlords. In
one sense we can speak of this interaction as a market, the farm-rental
market. All too often, however, this market is characterized by incom-
plete or inadequate information on the part of one party or the other,
or both, concerning prevailing prices and market supplies. The
"prices," of course, are seldom expressed in simple, cash figures but
are found as a composite of the many and varied sharing arrange-
ments which make up share leases in this area.
'FRANKLIN J. RKISS, Associate Professor, Department of Agricultural
Economics.
4 BULLETIN No. 677 [September,
THE SURVEY SAMPLE
Just as there are wide variations in lease practices and lease terms,
there are also wide variations in the characteristics of farms under
tenant operation. In order to get a representative sample of the leases
and rental arrangements used in the area, a random selection of land-
lord and tenant names was made by taking the name from every
eighteenth tract on the county ASC rolls. If the eighteenth tract was
that of an owner-operator, the name was omitted and the next one was
chosen by proceeding down the list another eighteen tracts. The names
of the landlords and tenants were alternated to yield a sample list con-
taining approximately equal numbers of each.
The results of this procedure are summarized in Table 1. A total
of 2,606 questionnaires were mailed out, approximately half of them
going to landowners. Of the total number of questionnaires mailed
out, 154 proved ineffective for the reasons given in the table. Of those
presumably delivered, 464 were completed and returned by tenants and
329 by landlords. This was a very gratifying response of almost 1 out
of 3 on the basis of the effective number of questionnaires mailed out.
This response to a single mailing can be interpreted as a measure of the
interest in and need for farm lease practices information in the area.
The questionnaire, covering almost eleven 81/2 by 1 1 mimeograph pages,
was by no means an easy one to complete. It called for details in the
lease agreement and details on the farm operation as well as personal
information on both parties.
Since the purpose of the study was to observe and report farm
leasing practices, the unit of observation was a single leasehold and
the contractual relationship between owner and tenant on this tract
of land. Because some landowners own more than one rental property
and some tenants rent tracts from more than one owner, each respond-
ent was requested to report on only one leasehold. A random procedure
Table 1. Description of Sample and Rates of Response
Total number of questionnaires mailed out 2 ,606
Total number of nonusable questionnaires" 154
Effective number of questionnaires sent out 2 ,452
Number of completed questionnaires 793
From tenants 464
From landlords 329
Percent usable returns 30 . 43
Percent usable returns based on effective questionnaires 32 .34
A few questionnaires were not delivered because of incomplete or incorrect addresses:
a few were returned blank or incomplete: a few were not properly classified as landlord
or tenant; and, in a number of cases, tne addressee was deceased or retired.
1961]
FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS
was specified to make the choice of which leasehold would be the basis
for their response. The wide range in the size of rented tracts reported
suggests that our randomizing techniques were successful. The geo-
graphical location of the leaseholds reported is shown in Fig. 1. The
Location of the leaseholds by county. Each dot () represents one usable
questionnaire reporting on one farm lease. The numbered sections indicate
the state economic areas as denned by the bureau of the census. (Fig. 1)
6 BULLETIN No. 677 [September,
isolated responses from the periphery of the 22-county area, including
one from Indiana, are a product of our random selection techniques.
CHARACTERISTICS OF FARM LEASES
What a farm lease is
Farm ownership may be visualized as the holding of a bundle of
rights in farmland. The various rights which make up this bundle may
be thought of as separable from the bundle. For example, the right to
possess and use land may be temporarily transferred by the owner to
a second party. The legal agreement or contract, written or unwritten,
which testifies to this transfer is a farm lease. When written, to be a
legally valid document this contract or lease must contain at least five
essentials: (1) It must designate the parties to the lease; (2) it must
accurately describe the real property in which the rights of possession
and use are to be transferred; (3) it must specify the term of this
transfer, that is, the date that it is to begin and the date on which it is
to end; (4) it must specify the rent or consideration which is to be paid
for this transfer of rights; and (5) it must carry the signatures of the
two parties, indicating their acceptance of its contents.
Functions of a lease
Perhaps the major function of a lease on farmland is to separate
the rights of possession and use from the total obligations of owner-
ship. Thus, a farm lease makes it possible for a tenant farmer to be
the operator of an adequate acreage of farmland without meeting the
capital and other requirements for owning that land.
Another important function of a lease is to specify the terms and
conditions which surround the transfer of rights in real property. That
is, it should record the rights and the privileges, the duties and obliga-
tions, and the commitments of each party under the contractual rela-
tionship. The lease should contain any restrictions on the tenant's
right of use and possession, the conditions under which these rights
may be revoked and the agreement terminated, and protections for both
parties against default by the other party.
Types of leases
Three major and two minor types of farm leases are generally
recognized in Illinois. Contrary to the English scene from which much
of our tenure law has derived, cash leases are a minor type in Illinois
and certainly a minor type in east-central Illinois. The second minor
1961}
Table 2. -
FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 7
Distribution of Usable Questionnaires, by Type of Lease
and Respondent
Size of
ownership
tract
Number of questionnaires by type of lease
Respondent
Crop-
share
Crop-
share-
cash
Live-
stock-
share
Cash
Labor-
share
and
others
Total
(acres)
Under 120
Tenant
Landlord
72
56
42
17
1
1
2
2
1
1
118
77
120 to 200
Tenant
Landlord
53
46
121
71
14
20
3
2
2
4
193
143
201 or over
Tenant
Landlord
26
14
88
60
34
33
2
3
2
153
109
Subtotal
Tenant
151
251
49
7
6
464
Subtotal
Landlord
116
148
54
4
7
329
Grand total
Number
Percent
267
34
399
50
103
13
11
1
13
2
793
100
type is variously designated and includes what are commonly called
labor-share leases, profit-sharing agreements, and father-son farm op-
erating agreements. Both of these minor types were represented in
our sample and in the response to our mail questionnaires. However,
they were present in such small numbers accounting for less than
3 percent of our total response that they have been dropped from
further analysis. A complete distribution by type of lease and type of
respondent is given, by size of farm, in Table 2.
The major lease types in Illinois are (1) crop-share, (2) crop-
share-cash, and (3) livestock-share. The first two are similar except
for some form of supplemental cash rent. Both usually give the land-
owner the same share of crops grown as the rent for the farm, but the
crop-share-cash leases include a cash rent payment in addition to the
rent share of the crops. This cash rent is most frequently a payment
per acre on tillable land used for hay and pasture, crops which do not
readily lend themselves to a share rent. Supplementary cash rents may
include cash payments for acreages in nontillable pasture. Supple-
mentary cash rents may also be applied to the acreage occupied by the
farmstead. However, there is a small but growing tendency to apply a
direct cash rent, instead of a supplementary acre rent, to the farmstead
or to the farm buildings.
8 BULLETIN No. 677 [September,
Livestock-share leases extend the practice of giving a share rent to
include part or all of the livestock enterprises. Although they are not
intended to be legal partnerships, these leases have many of the char-
acteristics of partnerships. They usually call for an equal sharing of
returns from all crop and livestock enterprises. To balance off the
tenant's labor input, the landlord contributes more items of equipment
and some operating capital. He usually shares equally with the tenant
in purchased feed and in other livestock expenses.
The distribution of lease types, as indicated by our completed ques-
tionnaires (Table 2), may be compared with the distribution reported
in the 1954 census of agriculture. The area studied in this project
includes approximately the same counties as those designated by the
census as economic areas 6a and 6b, the exceptions being that areas
6a and 6b include Christian and Shelby counties on the south and do
not include Grundy and Kankakee counties on the north (see Fig. I). 1
Out of the 20,000 farms that the 1954 census reported as full tenant
operated in these areas, 3 percent were all-cash leases, 62 percent were
share leases with some cash rent, 21 percent were crop-share leases
only, 10 percent were livestock-share leases, and 3 percent consisted of
other types of tenancy arrangements. By way of contrast, our sample
contains proportionately more crop-share leases and fewer crop-
share-cash leases. However, this difference can be explained by noting
that the census distribution did not include the leases covering the
rented portion of part-owner farms, while these leases were recognized
by our sample. The prevalence of crop-share leases on small tracts
(less than 120 acres) indicates that such leases may be employed in
proportionately greater frequency by part-owner operators who rent
such tracts to enlarge their scale of operations.
Because of the small number of cash, labor-share, pnd other leases,
the analysis reported in this publication will be limbed to the three
major lease types crop-share, crop-share-cash, and livestock-share.
The data for each of these lease types are subdivided into three groups
according to the size of the leaseholds: under 120 acres, 120 to 200
acres, and 201 acres or more (see Table 3) except for the livestock-
share lease analysis, which is limited to those tracts 120 acres or larger.
Because of these restrictions, the remainder of this report will be based
on a total of 767 questionnaires.
'Leases-type areas are closely related to but not identical with economic
areas. Christian and Shelby counties lie in a lease transition zone between cen-
tral and southern Illinois, while Grundy and Kankakee counties are within the
crop-share-cash lease area of east-central Illinois. See Fig. 1, page 9, of Illinois
Circular 781, Farm Leases for Illinois.
1961]
FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS
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10 BULLETIN No. 677 [September,
Size of leasehold and size of operating units
The average size of the tracts studied in this survey was 193 acres
(Table 3) . However, over half of the operators who participated in this
survey were farming land other than that included in the leaseholds
reported in our questionnaire. If the extra land farmed by these
operators is taken into account, then, on the average, each tenant
farmed an additional 114 acres which he either owned or rented from
one or more other landlords. Thus the total size of the average oper-
ating unit represented by the tenant operators in our sample was 307
acres.
Further details concerning characteristics of the leaseholds, the
tenants, and the landlords will be reported in the latter part of this
analysis after the examination of the share of various costs and returns
each party received or contributed.
LEASE ARRANGEMENTS
The frequency with which given arrangements for sharing costs and
returns were found to have been used is reported in the tables begin-
ning with Table 4. Unless it is otherwise indicated, the percentages for
each given item are based not upon the total number of leases in each
type but upon the number of completed questionnaires which answered
the question on that item. For example, according to Table 2 there were
267 crop-share leases. The first column in Table 7 reports that 18 per-
cent of the crop-share leases called for the landlord to pay one-half of
the cost of combining grain sorghum. The 18 percent in this case
applies not to all of the 267 crop-share leases but only to the 50 of them
which reported that a provision had been made concerning this cost.
In effect, on this particular item we were dealing with a sample of 50
crop-share leases because most of the farms did not grow grain
sorghum and the item therefore did not apply to most of the leases.
The information reported suggests that if any of the other 217 of the
267 crop-share tenants had grown grain sorghum, about 18 percent of
them might have required the landlord to pay half of the combining
cost. Similar qualifications and interpretations apply to all items in
which the number reported is less than the number of such leases in
the study.
SHARE RENTS
The 22-county area studied in this report is fairly homogeneous in
soil quality and productivity. In addition, one can expect an even
higher degree of homogeneity in rented land because it is well estab-
1961]
FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS
11
lished that the poorer, cheaper land tends to remain in the hands of
owner-operators. Therefore, one would expect a high degree of uni-
formity in rent shares on rented land in this area. Table 4, reporting
the share of harvested crops received by the landowner, shows that
this is true.
Livestock-share leases showed the highest degree of uniformity in
rent shares, with virtually no exception to the 50-50 sharing of all
crops, including forage crops. The pattern of 50-50 sharing was well
maintained among the other leases in the case of corn, but not so
completely in the case of soybeans and small grains.
A supplementary analysis was performed on the 92 questionnaires
that reported lease arrangements with a two-fifths rent share on one
or more of the grain crops (the supplementary analysis can, in part,
be checked against Table 4). The analysis showed that these leases fell
Table 4. Share of Harvested Crops Received by Landlord
Item
Crop-
share leases
Crop-share-
cash leases
Livestock-
share leases
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Rent share of corn
One-half
94.7
248
12
2
262
240
18
4
262
187
21
4
212
196
21
3
220
84
5
6
33
128
98.2
1.5
.3
91.7
7.8
.5
87.2
12.5
.3
86.4
13.4
.2
37.0
.3
.9
61.8
392
6
1
399
363
31
2
396
266
38
1
305
336
52
1
389
119
1
3
199
322
99.0
1.0
98.9
1.1
98.8
1.2
100.0
96.6
1.1
2.3
100
1
101
94
1
95
79
1
80
96
96
85
1
2
88
Two-fifths
4.6
Other
7
Total
Rent share of soybeans
One-half
91.6
Two-fifths
6.9
Other
1.5
Total
Rent share of wheat
One-half
88.2
Two-fifths
9.9
Other
1.9
Total
Rent share of oats
One-half
89 1
Two-fifths .
95
Other
1.4
Total
Rent share of hay
One-half
65.6
Two-fifths
3.9
Other
4.7
None
.. 25.8
Total..
12 BULLETIN No. 677 [September,
into three groups. Twenty-two, 1 or almost a fourth, of the 92 leases
called for rent shares of two-fifths on the corn crop. The remaining
70 leases provided for half -share rents on corn and, primarily, for
two-fifths shares on one or more of the small grains and soybeans.
Twenty-one of the 70 called for half shares on corn, soybeans, and
wheat with a two-fifths share limited to the oat crop.
Two basic distinctions can be drawn between these three groups.
First, where the lease called for a two-fifths rent share on corn, the
soils were generally less productive than average, the majority being
either timber soils or sands and sandy loams. Twelve of the 22 lease-
holds in this group were located in Mason county. Second, the 21
leases which limited the two-fifths rent share to the oat crop were on
good soils. Probably these were attempts to equalize the sharing of
inputs and returns for this particular crop.
The remaining 49 leases with a half share for corn and a two-fifths
share for small grains and soybeans were again a reflection of lower
productivity in the soils on these farms. Many were reported as being
timber soils, gumbo, light clay, tight subsoils, or sandy loams. Many
of the leaseholds in this group were located in Sangamon and Moultrie
counties.
The pattern of sharing such costs as seed and combining on tracts
which commanded a two-fifths rent share differed from those on which
a half-share rent prevailed. These differences in cost sharing will be
discussed under the appropriate headings.
SEED COSTS
It is customary, under each of the three major types of share
leases, for the landlord to share equally in the cost of crop seeds. This
is particularly true for the livestock-share leases, under which 97 per-
cent of the landlords paid half the seed costs for corn (Table 5). Under
both the crop-share and the crop-share-cash arrangement, from nearly
13 to 23 percent of the landlords paid none of the cost of seed corn,
soybean seed, or seed wheat. This nonparticipation can be explained, in
part, by the fact that the landlord was receiving only a two-fifths
share of the crop as his rent. For example, among the 22 leases which
provided for a two-fifths rent share on corn, two of the landlords
paid a two-fifths share on the seed corn and three paid one-half, but 17
1 The analysis of leases with y$ rent shares included 3 questionnaires received
after the main analyses had been prepared ; hence Table 4 shows slightly fewer
leases on i/s shares for both corn and soybeans than are cited in the text.
1961]
FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS
13
paid nothing. A similar arrangement prevailed with soybeans and
wheat.
The oat crop showed the greatest departure from the general rule
of equal sharing in the cost of grain crops seed. Only 62 percent of
Table 5. Share of Seed Costs Paid by Landlord
Crop-
Crop-share-
Livestock-
share
leases
cash
leases
share
leases
ItAtn
Per-
Num-
Per-
Num-
Per-
Num-
cent
ber
cent
ber
cent
ber
Seed corn
All
3.2
8
1.3
5
1.0
1
One-half
80.7
205
85.6
333
97.0
97
Other arrangements
.4
1
.3
1
None
15.7
40
12.8
50
2.0
2
Total
254
389
100
Soybean seed
All
5.3
13
2.9
11
1.3
1
One-half
79.7
197
81.3
309
97.4
74
Other arrangements
.4
1
.3
1
None
14.6
36
15.5
59
1.3
1
Total
247
380
76
Seed wheat
All
6.9
14
2.9
8
1.4
1
One-half
73.5
150
73.2
199
95.8
69
Other arrangements
.5
1
.7
2
None
19.1
39
23.2
63
2.8
2
Total
204
272
72
Seed oats
All
6.3
13
3.0
11
One-half
62.1
128
45.6
167
96.9
95
Other arrangements
1.0
2
.8
3
None
30.6
63
50.6
185
3.1
3
Total
206
366
98
Alfalfa seed
All
29.4
57
21.2
76
9.2
9
One-half
63.4
123
72.1
258
90.8
89
Other arrangements
.3
1
None
7.2
14
6.4
23
Total
194
358
98
Other legume and grass seed
All
32.6
70
19.9
75
9.2
9
One-half
61.4
132
73.1
275
90.8
89
Other arrangements
None
6.0
13
1.6
5.3
6
20
Total
215
376
98
Seed treatment
All
12.7
26
11.9
42
4.1
4
One-half
65.7
134
71.6
252
94.9
93
Other arrangements
.5
1
.3
1
None
21.1
43
16.2
57
1.0
1
Total
204
352
98
14 BULLETIN No. 677 [September,
the crop-share and 46 percent of the crop-share-cash landlords (Ta-
ble 5) paid one-half of the cost of seed oats.
The cost of legume and grass seed was either shared 50-50 by the
landlord and tenant or borne entirely by the landlord. The extent of
participation by the landlord in legume and grass seed costs may have
been related to the level of cash rent or to the share arrangement on
the hay crop. Our analysis has not revealed the existence or extent of
this possible relationship. Sharing in seed costs introduces an oppor-
tunity of sharing in management. Table 16 reports this sharing
between tenant and landlord.
FERTILIZER COSTS
Since fertilizers are a variable expense with equal benefit to land-
lord and tenant under a 50-50 sharing of crops, the standard rule
for sharing fertilizer costs is for each party to share the cost in the
same proportion as he shares the crop. Hence, a 50-50 sharing of fer-
tilizer costs was almost universal for mixed fertilizers, anhydrous
ammonia, and liquids, as reported in Table 6. Where the oats crop is
shared in a different proportion than the other crops are, the sharing of
the fertilizer costs may be an exception because of the carryover effect
of the fertilizer used on oats.
The instances in which either tenant or landlord pays for all of the
fertilizer cost may be caused (a) by lack of knowledge or appreciation
of the value of fertilizer by the other party or (b) by agreements to
offset some other costs. Neither, however, is a recommended practice.
Application costs generally are the tenant's responsibility, but they were
shared equally in 93 percent or more of the cases on anhydrous am-
monia or liquid fertilizers applied by custom operators.
Primarily because of their long-term effects, limestone and rock
phosphate reveal a different pattern of cost sharing from that for the
annual fertilizers. Soilsmen estimate that these materials may have an
average useful life of approximately eight years. Common practice in
farm accounting is to charge them off over a period of five years.
Because of this long-term effect, tenants have hesitated to invest in
these materials without some guarantee either of continued tenure,
which would allow them to reap the benefits of such investment, or
of reimbursement for the unused value if and when they left the farm.
There is some reason to believe that, as time goes on, more and more
leases will require a proportionate sharing, 50-50 or 40-60, of these
fertility costs. At present, over half of the landlords are supplying
all of the limestone or rock phosphate.
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 15
Table 6. Division of Soil Treatment Expenses, Landlord's Share
Item
Crop-
share leases
Crop-share-
cash leases
Livestock-
share leases
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Limestone
All
.. . 60 7
150
86
11
247
129
90
10
229
68
117
6
191
13
197
9
219
5
149
5
159
3
106
4
113
50.5
39.5
10.0
40.5
48.4
11.1
23.3
71.6
5.1
2.7
92.5
4.8
2.1
97.5
.4
1.6
96.8
1.6
193
151
38
382
150
179
41
370
69
212
15
296
9
306
16
331
5
236
1
242
3
177
3
183
66.3
32.6
1.1
53.2
42.6
4.2
34.8
60.9
4.3
2.2
97.8
1.3
97.4
1.3
1.9
98.1
63
31
1
95
50
40
4
94
24
42
3
69
2
88
90
1
74
1
76
1
53
54
One-half
. . . 34 8
Other arrangements ....
45
Total
Rock phosphate
All
. . . 56 3
One-half
. . 39 3
Other arrangements. . . .
4.4
Total
Potash
All
. . . 35 6
One-half
. . . 61 3
Other arrangements. . . .
3.1
Total
Mixed fertilizer
All
5 9
One-half
.. . 90
Other arrangements. . . .
4.1
Total
Anhydrous ammonia
All
3 1
One-half
, . . 93 8
Other arrangements. . .
31
Total
Liquid fertilizer
All
2.7
One-half
. . 93 8
Other arrangements. . . .
35
Total
One of the other arrangements reported (Table 6), which avoids
the need for a reimbursement guarantee, is one under which the land-
lord pays for the limestone or rock phosphate and under which the
tenant pays his share of the annual cost as a cash payment to the land-
lord each year. For this purpose, a five-year life is generally used.
Thus, the tenant pays to the landlord one-fifth of his one-half share,
or one-tenth of the total, every year for five years. In the meantime,
the tenant is free to leave the farm without any need for reimburse-
ment.
The residual effect of potash is between that of the annual fertilizers
and that of the long-term materials limestone and rock phosphate.
16 BULLETIN No. 677 [September,
From one-fourth to one-third of the landlords paid for all of the
potash applications as a single material, presumably as build-up
applications.
HARVESTING COSTS
It is customary for landlords on share leases to share in the har-
vesting costs of small grains. However, as Table 7 indicates, there is
considerable variation in the way this practice is carried out. Varia-
tions were found even among the livestock-share leases, which in this
instance departed from the almost complete 50-50 sharing of costs.
One alternative to a direct sharing of harvesting costs is an ar-
rangement under which the landlord pays a cash sum to the tenant
in lieu of an actual share of the cost (see landlord's payments per acre,
Table 7). Such cash sums usually approximate one-half of the normal
custom rate. Under this arrangement, the tenant is free either to use
his own equipment to harvest the crop or to hire this work done.
Should a crop-share or crop-share-cash landlord pay toward the
combining cost of soybeans? Table 7 does not appear to give a con-
clusive answer. However, only 37 to 42 percent of the landlords did
not participate in this cost. Also, among those that did not participate
were 51 1 leaseholds, or a total of about 8 percent of these two types
of leases together, on which the landlord did not share in the combining
cost because he received only a two-fifths share of the crop.
A similar adjustment must be made in interpreting the figures for
wheat and oats. In the latter case, there were 87 farms among those
reporting crop-share and crop-share-cash leases on which the landlord
did not participate in the combining cost because his rent share was
two-fifths instead of the customary one-half. When these adjustments
are made, we would conclude that a substantial majority of the land-
owners do share in combining costs. Since there is no compelling
reason, other than that of overall equitability, why a landlord actually
should or should not share in these costs, this might well be a bargain-
ing point and an opportunity for offsetting other contributions which
the landlord may make.
Only a few landlords participated in corn-picking costs, but a
technological change toward field shelling or corn combining is bring-
ing with it a change in cost sharing. In effect the shelling cost is
being transferred from a farmstead to a field operation. We cannot
be certain that our respondents interpreted the question on field shell-
ing or corn combining as we had intended. Probably a high proportion
1 See footnote on page 12.
1961] FARM LEASE PRACTICES m EAST-CENTRAL ILLINOIS 17
Table 7. Share of Harvesting Expenses Paid by Landlord
Item
Crop-
share leases
Crop-share-
cash leases
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Livestock-
share leases
Per-
cent
Num-
ber
Combining soybeans
All 4 1 .5 2 2.1 2
One-half 52.6 124 52.1 195 53.2 50
Landlord pays less than
11.75 per acre 1.3 3 2.9 11 2.1 2
Landlord pays #1.75 per acre
or more 8 3.8
Other arrangements 2.5 6 3.5 13 2.1 2
None 42.4 100 37.2 139 37.3 35
Total 236 374 94
Combining wheat
All 51 1.3 1
One-half 47.3 96 44.8 129 51.3 40
Landlord pays less than
#1.75 per acre 1.0 2 2.1 6 1.3 1
Landlord pays #1.75 per acre
or more 1.0 2.4 7 3.8
Other arrangements 1.5 3 2.8 8 2.6 2
None 48.7 99 47.9 138 39.7 3j_
Total 203 288 78
Combining oats
All 51 .52 1.1 1
One-half 36.4 74 36.5 134 52.2 48
Landlord pays less than
#1.75 per acre 1.5 3 1.1 4 1.1 1
Landlord pays #1.75 per acre
or more .5 1 1.6 6 2.2
Other arrangements 1.5 3 2.8 10 1.1 1
None 59.6 121 57.5 211 42.3 39
Total 203 367 92
Combining grain sorghums
All 00 4.5 1
One-half 18.0 9 19.0 16 22.8 5
Landlord pays less than
#1.75 per acre 00 00 00
Landlord pays #1.75 per acre
or more 1.2 1
Other arrangements 4.5
None 82.0 41_ 79.8 ^7 68.2
Total.. 50 84 22
Combining clover seed
All
.8
1
1.2
3
1.8
1
One-half
40.5
51
47.2
117
50.8
29
Landlord pays less than
#1.75 per acre
.4
1
1.8
1
Landlord pays #1.75 per acre
or more
.8
2
Other arrangements
None
58.7
74
1.6
48.8
4
121
1.8
43.8
1
25
Total
126
248
57
(Table continued on next page)
18
BULLETIN No. 677
[September,
Table 7. Share of Harvesting Expenses Paid by Landlord (Continued)
Item
Crop-
share leases
Crop-share-
cash leases
Livestock-
share leases
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Corn picking
All
.9
2
13
201
216
59
5
66
.3
4.7
95.0
2.3
40.7
7.4
49.6
4.3
69.8
1.3
24.6
.9
31.6
.9
66.6
2.3
6.8
90.9
3.6
5.9
90.5
3.5
3.5
93.0
3.4
3.4
93.2
1
17
342
360
5
88
16
107
216
16
259
5
91
7.7
92.3
1.9
63.5
34.6
2.1
90.6
2.1
5.2
88.0
2.2
9.8
64.9
2.7
32.4
63.6
36.4
69.2
30.8
60.0
3.3
36.7
7
84
91
1
33
18
One-half
6.0
Other arrangements
None
. . 93 . 1
Total
Field shelling or corn
combining
All
One-half
.. 45.4
Other arrangements
3.8
None
.. 50.8
Total
130
3
164
3
50
220
3
62
2
59
126
6
40
46
4
31
35
1
3
34
38
3
32
35
52
2
87
2
5
Shelling corn from crib
All
1.4
One-half
.. 74.5
Other arrangements
1.4
None
.. 22.7
Total
371
3
100
3
211
96
81
2
9
Hay baling
All
2.4
One-half
.. 49.2
Other arrangements
1.6
None
.. 46.8
Total
317
3
9
120
132
3
5
76
84
3
3
80
86
3
3
82
88
92
24
1
12
37
7
4
11
9
4
13
18
1
11
30
Hay chopping
All
One-half
.. 13.0
Other arrangements
None
.. 87.0
Total
Hay pelleting
All
One-half
.. 11.4
Other arrangements
None
.. 88.6
Total
Green chopping
All
2.6
One-half
7.9
Other arrangements
None
.. 89.5
Total
Silo filling
All
One-half
86
Other arrangements
None
.. 91.4
Total
(Table concluded on next page)
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 19
Table 7. Share of Harvesting Expenses Paid by Landlord (Concluded)
Item
Crop-
share leases
Crop-share-
cash leases
Livestock-
share leases
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Hauling landlord's grain
to market
All
7.8
17
36
4
160
217
1
7
62
70
7.8
8.6
4.7
78.9
1.6
15.7
82.7
28
31
17
285
361
2
20
105
127
16.5
29.7
1.1
52.7
4.2
33.3
62.5
15
27
1
48
91
1
8
15
24
One-half
.. 16.6
Other arrangements. . . .
1.9
None
. . 73 7
Total
Fuel in crop dryers
All
1 4
One-half
. . 10
Other arrangements. . . .
None
. . 88.6
Total
of those who responded by indicating that the landlord paid half of
the cost of field shelling were referring to shelling only.
In many cases the landlord on a crop-share or on a crop-share-cash
farm did not participate in the costs of hay baling, chopping, and
pelleting because he received a cash rent rather than a share rent on
the hay crop.
There has been some change in the practice of having the tenant
haul the landlord's grain to market at no cost to the landlord (Table 7).
Almost a fourth of the crop-share landlords were reported as paying
one-half or all of such costs. One reason for this change is the higher
cost involved in hauling such grain to Commodity Credit Corporation
storage bins. Other reasons are longer hauls to more distant markets,
and combined costs for custom shelling and hauling.
SPRAYING COSTS
The use of chemical spray materials for weed, insect, and brush
control is another technological change which is profoundly affecting
farm lease arrangements. A general question associated with the use
of these materials is: What elements of cost should be shared and
how ? Table 8 indicates in summary form how the leases in east-central
Illinois provided for sharing these costs.
One important consideration in determining how to share these
costs is the answer to the question: Who receives the benefit? Insofar
20
BULLETIN No. 677
[September,
as these practices increase yields, the benefits are shared according to
the way the crop is shared. However, insofar as they are substitutes
for other costs, such as mechanical control of weeds, they may benefit
Table 8. Share of Spraying Expenses Paid by Landlord
Item
Crop-
share leases
Crop-share-
cash leases
Livestock-
share leases
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Pre-emergence spray on corn
All
.8
53.7
45.5
4.6
37.2
58.2
2.2
22.8
.7
74.3
3.8
61.4
.6
34.2
2.7
39.8
57.5
17.9
32.5
49.6
10.6
20.0
69.4
1
65
55
121
9
73
114
1.5
53.5
1.0
44.0
3.8
33.5
1.6
61.1
.8
19.7
.8
78.7
3.9
62.5
1.2
32.4
1.1
41.5
.5
56.9
14.8
32.9
1.4
50.9
3.9
22.7
1.3
72.1
3
107
2
88
200
12
107
5
195
3.5
82.5
14.0
3.2
71.3
2.1
23.4
2.7
41.1
2.7
53.5
2.5
87.7
1.2
8.6
1.5
63.1
4.6
30.8
27.9
57.4
14.7
15.1
26.4
1.9
56.6
2
47
8
57
3
67
2
22
One-half ....
Other arrangements
None
Total
Weed spray chemicals
All
One-half
Other arrangements
None
Total
196
3
31
1
101
136
6
97
1
54
158
3
45
65
113
21
38
58
117
9
17
59
85
319
2
47
2
188
239
10
160
3
83
256
2
78
1
107
188
31
69
3
107
210
6
35
2
111
154
94
2
30
2
39
73
2
71
1
7
81
1
41
3
20
65
19
39
10
68
8
14
1
30
53
Weed spray application
All
One-half
Other arrangements
None. . . . ....
Total
Insect spray chemicals
All
One-half
Other arrangements
None
Total
Insect spray application
All
One-half
Other arrangements
None
Total
Brush control chemical
All
One-half
Other arrangements
None
Total
Brush control application
All
One-half
Other arrangements
None
Total . .
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 21
the tenant more than the landlord. Pre-emergence sprays combine
both of these effects. When properly used, there may be an actual
yield increase over mechanical control of weeds, while at the same
time there is an obvious substitution for such mechanical control.
Thus, it seems quite appropriate that over half of all the leases re-
ported a 50-50 sharing on the pre-emergence chemical. However, the
costs of other weed sprays (both the cost of the chemical and of the
application) were not so generally shared between landlord and tenant.
Insect spray chemicals showed a higher proportion (from over 61
to nearly 88 percent) of 50-50 sharing because there is very little, if
any, cost substitution effect in the use of these materials. Depending on
which type of lease they held, from 42 to 69 percent of the landlords
also shared in the application costs of sprays for insect control.
Brush control is largely a question of maintaining the capital value
of the farm, but while traditionally the tenant is expected to keep
brush under control, landlords recognize that in the competition for
labor on crops and livestock, this is a task that is often neglected.
Table 8 indicates that over half of them paid for half or for all of
the chemical used for brush control and that a substantial proportion
also contributed something to the application costs.
CASH RENTS
Under the crop-share-cash leases, the crop sharing is supplemented
by a cash rent on hay, pastureland, and buildings. Of the three types
of leases studied in this survey, 267 were crop-share, 399 were crop-
share-cash, and 103 were livestock-share (see Table 2). Thus the
crop-share-cash leases amounted to more than half the total number.
Perhaps even more important, there were half again as many crop-
share-cash leases as there were crop-share leases. The cash rents paid
under crop-share-cash leases are analyzed in Table 9. Please note that
the percentages given in Table 9 do not compare supplementary cash
rent leases with crop-share or with livestock-share leases but merely
indicate the relative frequency with which a given cash rent was paid
among those who paid a supplementary cash rent.
On certain soils, good husbandry requires that a certain proportion
of tillable land be devoted to forage crops for erosion control purposes
and for improvement in soil tilth and water-holding capacity. A cash
rent on the acreage in these crops thus represents a return to land above
the erosion control and other benefits received from such crops. As a
22
BULLETIN No. 677
[September,
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1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 23
result of this return to land, the cash rent paid is lower than the value
of the rent share of the grain crops which at other times are grown on
this land. However, when a share rent is paid on grain crops and a
cash rent is paid on hay and pastureland, this cash rent tends to be well
below the normal competitive rent that would be paid for the same
acreage under an all-cash lease. It is lower because under the crop-
share-cash lease the rent for the more profitable grain acreage is col-
lected separately (as a crop-share rent), while under an all-cash lease
the rent per acre is an average for all uses of the land. However, if
acreages of forage crops are grown in excess of those required by
good husbandry, they compete with the more profitable crops such as
corn, soybeans, and wheat for the use of the land, and such usage
results in a lower return to the land. In such cases, a landlord is
justified in charging a higher and more competitive rent on the excess
acreage.
The rather wide range in cash rent on tillable hay and pastureland
reported in Table 9 might indicate a fairly wide range in the degree to
which forage crops are competitive with grain crops on these farms.
However, there is a strong probability that much of the observed
difference in cash rents is due to the extent to which customary rents
have been followed or disregarded. Most of the cash rent can be
accounted for at the $5, $6, $8, and $10 per acre levels. Leaseholds
over 200 acres in size showed a bi-modal distribution at $5 and $10
per acre while those under 120 acres showed an apparent concentration
around $8 per acre.
Cash rents on nontillable pastureland had similar characteristics to
the rents on tillable land, but at a slightly lower level. Rents of $5 and
$6 per acre were predominant.
The cash rents on buildings and farmstead reveal a changing and
somewhat controversial picture. The most common rent in this cate-
gory is figured simply by applying the same rate per acre that is
applied either to the tillable hay and pasture or to the nontillable hay
and pasture, to the acreage in the farmstead. At best, this results in
only a nominal compensation for structural improvements on the farm
and is generally viewed as rent on an acreage of land which might
otherwise be yielding a direct crop return to the owner.
Relatively few leases call for a direct cash rent on buildings or
other structural improvements. Where such a rent is charged, it is
usually in the form of a lump sum such as $100 or $150. This is
sometimes referred to as a privilege rent.
24
BULLETIN No. 677
[September,
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Number of tenants related 1
Percent paying cash rent
Tillable hay or pasture
Nontillable pasture. . .
Buildings or farmstead
Number of tenants not relal
Percent paying cash rent
Tillable hay or pasture
Nontillable pasture. . .
Buildings or farmstead
racts 120 acres or more
Number of tenants related
Percent paying cash rent
Tillable hay or pasture
Nontillable pasture. . .
Buildings or farmstead
Number of tenants not relal
Percent paying cash rent
Tillable hay or pasture
Nontillable pasture. . .
Buildings or farmstead
s|i
f|||l
-S'oo.EE
cd cy cu o "^
- _ _ -
u, V 41 CU 3
Data used to estimate buildin
H H
H
<3
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 25
From data provided by our respondents, estimates of the value of
landlord's buildings were calculated on 412 crop-share and crop-
share-cash leases. Table 10 indicates, as would be expected, that tracts
under 120 acres in size had few or no buildings on them. About one-
third of the 412 leaseholds were held by persons related to the land-
lord, and, according to Table 10, a smaller proportion of such tenants
pay cash rents, particularly on buildings. There was very little differ-
ence in the level of cash rent per acre on the leaseholds with high
building investments as compared to those with lower building invest-
ments. However, the proportion of tenants who were paying supple-
mental cash rent showed a definite increase as the level of building
investment went up. This indicates that tenants and landlords are
searching for acceptable means whereby a landlord may be compen-
sated for providing superior structural improvements on rented land.
One can make a logical case for a separate cash rent on the farm
residence because it is strictly a consumption item and does not yield a
direct return in which the landlord may share as do farm service
buildings, fences, feed storage, and the fixed equipment associated with
livestock enterprises. Traditionally, it has been held that a superior
residence will attract a superior tenant. This has some truth in it, but
it isn't always true that the best farms have the best residences.
ITEMS SPECIAL TO LIVESTOCK-SHARE LEASES
Up to this point, the discussion has been on leases in general or on
crop-share or crop-share-cash leases in particular. In this section we
shall look at share arrangements peculiar to livestock enterprises and
livestock-share leases.
The basic pattern of livestock-share leases in east-central Illinois is
a 50-50 division of ownership of animals in the major livestock enter-
prises on the farm, plus a similar sharing in cost items related to these
enterprises. Table 11 reports on the sharing of ownership of livestock
under livestock-share leases. This table does not indicate the size of
the enterprise involved, but we may confidently assume that enterprises
in which the landlord does not share are usually minor ones. For
example, one, two, or three dairy cows kept for home consumption
purposes are not likely to be shared by the landlord. The same is
true of small poultry enterprises. It is interesting, however, that
Table 11 indicates a much higher proportion of sharing in all livestock
26
BULLETIN No. 677
[September,
Table 11. Landlord's Share in Ownership of Livestock
on Livestock-Share Farms
Acres
120 to 200
201 or over
Total
Item
Per-
cent
of
leases
Num-
ber
of
leases
Per-
cent
of
leases
Num-
ber
of
leases
Per-
cent
of
leases
Num-
ber
of
leases
Dairy cows
All
6
9
15
1
12
1
2
16
10
5
15
15
5
20
7
7
14
1
5
7
13
1
7
8
1
3
1
13
18
3.3
46.7
50.0
3.0
84.9
12.1
10.8
73.0
16.2
1.9
79.6
18.5
8.3
66.7
25.0
60.0
40.0
45.5
54.5
2.8
25.0
72.2
1
14
15
30
1
28
4
33
4
27
6
37
1
43
10
54
2
16
6
24
9
6
15
5
6
11
1
9
26
36
2.2
44.5
53.3
4.1
81.6
2.0
12.3
7.7
71.2
21.1
1.3
78.4
20.3
5.3
60.5
34.2
3.6
50.0
46.4
31.6
68.4
3.7
22.2
1.9
72.2
1
20
24
45
2
40
1
6
49
4
37
11
52
1
58
15
74
2
23
13
38
1
14
13
28
6
13
19
2
12
1
39
54
One-half
... 40.0
None
... 60.0
Total
Beef cows
All
6.2
One-half
... 75.0
Other arrangements
6.3
None
... 12.5
Total
Feeder cattle
All
One-half
... 66.7
None
... 33.3
Total
Sows and gilts
All
One-half
... 75.0
None
... 25.0
Total
Feeder pigs purchased
All
One-half
... 50.0
None
... 50.0
Total
Ewes
All
7.7
One-half
... 38.5
None
... 53 8
Total
Feeder lambs
All
One-half
... 12 5
None
.. 87 5
Total
Hens
All
5.6
One-half
... 16.6
Other arrangements
5.6
None
... 72 2
Total
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 27
enterprises on the farms over 200 acres in size. Where the landlord
does not share in the ownership and the returns from a given livestock
enterprise, the lease usually provides for a volume restriction on such
enterprises or a limited amount of undivided farm-grown feed that
may be allocated to such uses. 4-H calf or gilt projects may well be
included in this category.
Landlord's Share of Livestock Expenses
Expenses which are directly chargeable to livestock enterprises in-
cluded in the livestock-share arrangement are usually shared equally.
Table 12 indicates such sharing with very few exceptions. Again, this
table indicates more nearly equal sharing on those leaseholds over 200
acres in size.
Landlords are reluctant to share in labor costs, even under livestock-
share leases. Table 12 indicates, however, that 14 out of 84 leases did
provide for the landlord to pay one-half or some other proportion on
labor hired to work on livestock-share farms. Many others indirectly
accepted some responsibility in this area by sharing in the cost of the
machinery needed to reduce labor costs. This sharing is discussed in
the next section (see page 30).
Other costs traditionally shared between landlord and tenant on
livestock-share leases are reported in Table 13. Tractor and truck fuel,
once shared equally between landlord and tenant to substitute for the
equal shares in horse feed which was formerly the fuel for power, is
no longer universally shared under livestock-share leases. Only about
1 in 5 farms provided for a share arrangement on these costs.
Electricity costs on the other hand can be more directly associated
with the livestock enterprises through the use of electricity in pumping
water, grinding feed, operating milking machines and milk coolers,
heating pig brooders, and so on. Table 13 indicates that nearly one-
half of the livestock-share leases in east-central Illinois provide for
some sharing of the electricity cost. Feed-grinding costs, indicated
separately at the bottom of Table 13, are still more frequently shared.
Here, however, one must keep in mind that landlords who did not
share in feed grinding as a cash expense may have shared in this cost
through a contribution in the form of an ownership share in the feed-
grinding equipment.
28
BULLETIN No. 677
[September,
Table 12. Landlord's Share of Current Livestock Expenses
Under Livestock- Share Leases
Acres
120 to 200
201 or over
Total
Item
Per-
cent
of
leases
Num-
ber
of
leases
Per-
cent
of
leases
Num-
ber
of
leases
Per-
cent
of
leases
Num-
ber
of
leases
Livestock feed purchased
One-half
. . 91 2
31
2
1
34
24
1
1
26
32
2
34
30
2
2
34
11
1
2
14
4
1
5
4
1
5
4
22
26
100.0
98.0
2.0
97.0
3.0
95.4
4.6
94.6
5.4
80.0
20.0
53.8
46.2
12.1
5.2
8?. 7
66
66
49
1
50
64
2
66
62
3
65
35
2
37
12
3
15
7
6
13
7
3
48
58
97.0
2.0
1.0
96.1
1.3
2.6
96.0
2.0
2.0
92.9
2.0
5.1
90.1
2.0
7.9
80.0
5.0
15.0
61.1
38.9
13.1
3.6
83.3
97
2
1
100
73
1
2
76
96
2
2
100
92
2
5
99
46
1
4
51
16
1
3
20
11
7
18
11
3
70
84
Other arrangements
5.9
None
2.9
Total
Breeding fees
One-half
. . 92 2
Other arrangements
3.9
None
3.9
Total
Veterinary fees
One-half
. . 94 . 1
Other arrangements
5.9
None
Total
Disinfectants, serums,
sprays, etc.
One-half
.. 88.2
Other arrangements
5.9
None
5.9
Total
Registration fees
One-half
78.6
Other arrangements
7 1
None
. . 14.3
Total
DHIA fees
One-half
80.0
Other arrangements
. . 20.0
None
Total
Milk hauling
One-half
80.0
Other arrangements
None
. . 20
Total
Hired labor on livestock
One-half
15.4
Other arrangements
None
. . 84.6
Total
1961]
FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS
29
Table 13. Landlord's Share of Other Current Expenses
Under Livestock-Share Leases
Acres
120 to
200
201 or over
Total
Item
Per-
Num-
Per-
Num-
Per-
Num-
.
cent
ber
cent
ber
cent
ber
of
of
of
of
of
of
leases
leases
leases
leases
leases
leases
Tractor fuel
All
3.2
2
2.1
2
One-half
21.9
7
17.5
11
19.0
18
Other arrangements
None
78.1
25
79.3
50
78.9
75
Total
32
63
95
Tractor oil and grease
All
3.1
2
2.1
2
One-half
15.6
5
15.4
10
15.5
15
Other arrangements
None
84.4
27
81.5
53
82.4
80
Total
32
65
97
Truck fuel
All
3.2
2
2.2
2
One-half
10.3
3
14.5
9
13.2
12
Other arrangements
None
89.7
26
82.3
51
84.6
77
Total
29
62
91
Electricity
All
6.5
2
10.8
7
9.4
9
One-half
25.8
8
21.5
14
22.9
22
Other arrangements
12.9
4
12.3
8
12.5
12
None
54.8
17
55.4
36
55.2
53
Total
31
65
96
Telephone
All
7.4
2
9.4
6
8.8
8
One-half
7.8
5
5.5
5
Other arrangements
3.1
2
2.2
2
None
92.6
25
79.7
51
83.5
76
Total
27
64
91
Repairs on landlord's
machinery and equipment
All
40.9
9
43.7
21
42.9
30
One-half
13.6
3
25.0
12
21.4
15
Other arrangements
2.1
1
1.4
1
None
45.5
10
29.2
14
34.3
24
Total
22
48
70
Feed grinding
All
3.4
2
2.4
2
One-half
53.8
14
61.0
36
58.8
50
Other arrangements
None
46.2
12
35.6
21
38.8
33
Total
26
59
85
30 BULLETIN No. 677 [September,
Ownership of Machinery and Equipment
Under Livestock-Share Leases
The need to offset high labor costs on livestock-share farms has led
many landlords to contribute part or all of the capital items such as
machinery and equipment associated with the shared-livestock enter-
prises. Table 14 indicates the extent to which livestock-share landlords
participate in the ownership not only of livestock machinery and equip-
ment but of general farm machinery and equipment as well. Again,
this table indicates a greater degree of participation and a greater
tendency toward equal sharing on the part of landlords on leaseholds of
201 acres or over.
Field machinery is largely the responsibility of the tenant; how-
ever, a significant number of landlords are providing some ownership
interest in such items as tractors, trucks, cornpickers, and combines.
Frequently such an ownership share may be the result of a tenure
transition in which the operatorship passes from father to son and
the father retains an investment in some of these items, thereby easing
the capital burden of the young operator.
In many ways it is preferable for the landlord to provide capital
items whose annual costs are part of his contribution rather than for
him to participate in such operating costs as labor or tractor fuel.
Certain types of machinery and equipment may not only add to the
landlord's input, but, to the extent that they are labor saving, they
also reduce the tenant's labor input, thereby working in two directions
at once to achieve an equitable balance of contributions.
The landlord's ownership contribution is naturally greater on those
items in Table 14 that are more directly related to jointly owned live-
stock enterprises. Self-feeders, feed bunks, water tanks, water heaters,
and hog waterers may either be owned jointly or provided entirely
by the landlord. The water system, on the other hand, is an installation
that becomes attached to the real estate and usually is the landlord's
contribution. Silo unloaders and barn cleaners may still be regarded
as convenience items and, where they are found, are provided largely
by the tenant. However, on equipment of this kind, the tenant should
have permission to remove the installation and take it with him at the
end of his lease, or he should be given a reimbursement guarantee on
his remaining cost in it.
1961}
FARM LEASE PRACTICES m EAST-CENTRAL ILLINOIS
31
Table 14. Landlord's Share in Ownership of Machinery and Equipment
Under Livestock-Share Leases
Acres
120
to 200
201 or over
Total
Item
Per-
Num-
Per-
Num-
Per-
Num-
cent
ber
cent
ber
cent
ber
of
of
of
of
of
of
leases
leases
leases
leases
leases
leases
Tractor
All
1.6
1
1.1
1
One-half
... 3.6
1
7.8
5
6.5
6
Other arrangements
... 3.6
1
7.8
5
6.5
6
None
... 92.8
26
82.8
53
85.9
79
Total
28
64
92
Truck
All
3.4
2
2.4
2
One-half
... 4.0
1
11.9
7
9.5
8
Other arrangements
... 4.0
1
6.8
4
6.0
5
None ,
. ... 92.0
23
77.9
46
82.1
69
Total
25
59
84
Cornpicker
All
1.6
1
1.1
1
One-half
... 6.9
2
6.3
4
6.5
6
Other arrangements
4.8
3
3.3
3
None
... 93 . 1
27
87.3
55
89.1
82
Total
29
63
92
Picker-sheller
All
3.0
1
2.1
1
One-half
9.1
3
6.2
3
None
... 100.0
15
87.9
29
91.7
44
Total
15
33
48
Combine
All
1.6
1
1.1
1
One-half
... 14.8
4
12.9
8
13.5
12
Other arrangements .....
1.6
1
1.1
1
None
, . . . 85 . 2
23
83.9
52
84.3
75
Total
27
62
89
Grain dryer
All
12.5
3
9.1
3
One-half
.... 11.1
1
8.3
2
9.1
3
None
, ... 88.9
8
79.2
19
81.8
27
Total
9
24
33
Baler
All
7.1
3
4.7
3
One-half
.... 13.6
3
23.8
10
20.3
13
Other arrangements. ...
None
. ... 86.4
19
4.8
64.3
2
27
3.1
71.9
2
46
Total
22
42
64
Chopper
All
10.5
2
8.1
3
8.9
5
One-half
.... 10.5
2
24.3
9
19.6
11
Other arrangements. . . .
None
. ... 79.0
15
5.4
62.2
2
23
3.6
67.9
2
38
Total
19
37
56
(Table continued on next page)
32
BULLETIN No. 677
[September,
Table 14. Landlord's Share in Ownership of Machinery and Equipment
Under Livestock-Share Leases (Continued)
Acres
120
to 200
201 or over
Total
Item
Per-
Num-
Per-
Num-
Per-
Num-
cent
ber
cent
ber
cent
ber
of
of
of
of
of
of
leases
leases
leases
leases
leases
leases
Feed grinder
All
8.0
2
23.5
12
18.4
14
One-half
32.0
8
37.3
19
35.5
27
None
60.0
15
39.2
20
46.1
35
Total
25
51
76
Self-feeders
All
14.3
3
22.2
12
20.0
15
One-half
57.1
12
48.2
26
50.7
38
None
28.6
6
29.6
16
29.3
22
Total
21
54
75
Feed bunks
All
42.3
11
42.6
26
42.5
37
One-half
42.3
11
44.3
27
43.7
38
None
15.4
4
13.1
8
13.8
12
Total
26
61
87
Water tanks
All
41.9
13
45.3
29
44.2
42
One-half
38.7
12
40.6
26
40.0
38
None
19.4
6
14.1
9
15.8
15
Total
31
64
95
Water heaters
All
34.6
9
28.6
18
30.3
27
One-half
42.3
11
44.4
28
43.8
39
None
23.1
6
27.0
17
25.9
23
Total
26
63
89
Hog waterers
All
26.1
6
28.3
17
27.7
23
One-half
43.5
10
50.0
30
48.2
40
None ,
30.4
7
21.7
13
24.1
20
Total
23
60
83
Water system
All
88.0
22
86.4
51
86.9
73
One-half
4.0
1
8.5
5
7.1
6
None
8.0
2
5.1
3
6.0
5
Total
25
59
84
Irrigation system
All
50.0
5
65.0
13
60.0
18
One-half
10.0
1
10.0
2
10.0
3
None
40.0
4
25.0
5
30.0
9
Total
10
20
30
Electric fence
All
26.9
7
33.9
20
31.8
27
One-half
34.6
9
33.9
20
34.1
29
None
38.5
10
32.2
19
34.1
29
Total
26
59
85
(Table continued on next page)
1961}
FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS
33
Table 14. Landlord's Share in Ownership of Machinery and Equipment
Under Livestock-Share Leases (Continued)
Acres
120
to 200
201 or over
Total
Item
Per-
Num-
Per-
Num-
Per-
Num-
cent
ber
cent
ber
cent
ber
of
of
of
of
of
of
leases
leases
leases
leases
leases
leases
Crop sprayer
All
10.5
2
21.2
11
18.3
13
One-half
... 21.0
4
17.3
9
18.3
13
Other arrangements
... 5.3
1
1.9
1
2.8
2
None
. . . 63 . 2
12
59.6
31
60.6
43
Total
19
52
71
Manure spreader
All
13.8
4
13.6
8
13.7
12
One-half
. .. 20.7
6
23.7
14
22.7
20
None
. .. 65.5
19
62.7
37
63.6
56
Total
29
59
88
Manure loader
All
8.3
2
11.3
6
10.4
8
One-half
... 16.7
4
15.1
8
15.6
12
None
... 75.0
18
73.6
39
74.0
57
Total
24
53
77
Fertilizer drill
All
5.9
1
14.9
7
12.5
8
One-half
... 11.8
2
12.8
6
12.5
8
Other arrangements
... 5.9
1
2.1
1
3.1
2
None
. .. 76.4
13
70.2
33
71.9
46
Total
17
47
64
Fertilizer attachments
All
... 5.9
1
4.5
2
4.9
3
One-half
... 11.8
2
9.1
4
9.8
6
Other arrangements
2.3
1
1.7
1
None
. .. 82.3
14
84.1
37
83.6
51
Total
17
44
61
Movable grain elevator
All
33.3
6
20.4
11
23.6
17
One-half
... 5.6
1
11.1
6
9.7
7
Other arrangements
3.7
2
2.8
2
None
... 61.1
11
64.8
35
63.9
46
Total
18
54
72
Built-in grain elevator
All
56.2
9
48.6
17
51.0
26
One-half
2.8
1
2.0
1
None
... 43.8
7
48.6
17
47.0
24
Total
16
35
51
Silo unloader
All
25.0
3
15.8
3
One-half
... 28.6
2
10.5
2
None
... 71.4
5
75.0
9
73.7
14
Total
7
12
19
(Table concluded on next page)
34
BULLETIN No. 677
[September,
Table 14. Landlord's Share in Ownership of Machinery and Equipment
Under Livestock-Share Leases (Concluded)
Acres
Item
120 to
200
201 or over
Total
Per-
cent
of
leases
Num-
ber
of
leases
Per-
cent
of
leases
Num-
ber
of
leases
Per-
cent
of
leases
Num-
ber
of
leases
Barn cleaner
All
11.1
1
2
6
9
2
5
7
1
5
6
2
1
6
9
10
1
7
18
10
6
5
21
30.0
70.0
20.0
10.0
70.0
22.2
11.1
66.7
28.6
7.1
64.3
52.9
14.7
32.4
59.6
28.9
11.5
3
7
10
2
1
7
10
2
1
6
9
4
1
9
14
18
5
11
34
31
15
6
52
21.1
10.5
68.4
23.5
5.9
70.6
13.3
13.3
73.4
26.1
8.7
65.2
53.9
11.5
34.6
56.2
28.8
15.0
4
2
13
19
4
1
12
17
2
2
11
15
6
2
15
23
28
6
18
52
41
21
11
73
One-half
... 22.2
None
... 66.7
Total
Milk cooler
All
28.6
One-half
None
. . . 714
Total
Bulk milk tank
All
One-half
. . . 167
None ...
83 3
Total
Milking machine
All ... ...
22 2
One-half
. . . 11.1
None
. .. 66.7
Total . .
Movable poultry house
All
55.6
One-half
5.5
None
. .. 38.9
Total
Hog houses
All
47.6
One-half
. . . 28 6
None
. . 23 8
Total
MANAGEMENT PARTICIPATION
The customary rent shares of one-half, two-fifths, and one-third
which prevail in Illinois grew out of the traditional sharing under
which the landlord furnished the farm and the fixed improvements on
it and the tenant furnished the necessary labor, power, and machinery.
Two developments, the technological revolution and the availability of
professional farm management services, have given a new prominence
to management as a factor in the share arrangements on rented land
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 35
in Illinois. Table 15 indicates the distribution, under livestock-share
leases, of decision making between landlord and tenant as related to
five major areas in which management decisions are necessary.
Questions about the organization and volume of business are most
frequently matters of mutual decision. Interestingly, buying feeder
stock is more frequently a mutual decision than is the question of
when and where to sell fat stock. According to Table 15, in one-fifth
of the cases the latter decision is made entirely by the tenant. The
difference observed here may be due to the fact that the range of
alternatives may be smaller in the matter of marketing fat stock.
Over 50 percent of the respondents reported that decisions relating
to feeding practices were of mutual concern. Where the tenant was
given a free hand to decide such questions, it may have been as much
Table 15. Management Participation Under Livestock-Share Leases
Size of rented tracts
Item i9nt^?nn 201 Total
Decision on kind of livestock to keep
Percent of leases
Landlord or manager decides
2.9
4.7
4.1
Joint decision, landlord has final say
. 5.9
9.4
8.2
Joint decision, mutual agreement
. 70.6
70.3
70.4
Joint decision, tenant has final say
. 5.9
4.7
5.1
Tenant decides
14.7
10.9
12.2
Decision on volume of livestock to keep
Landlord or manager decides
5.9
3.1
4.1
Joint decision, landlord has final say
8.8
7.8
8.2
Joint decision, mutual agreement
70.6
68.8
69.4
Joint decision, tenant has final say
5.9
6.2
6.1
Tenant decides
8.8
14.1
12.2
Decision on when and where to buy feeder stock
Landlord or manager decides
1.9
1.2
Joint decision, landlord has final say
3.6
9.4
7.4
Joint decision, mutual agreement
82.1
60.4
67.9
Joint decision, tenant has final say
3.6
9.4
7.4
Tenant decides
10.7
18.9
16.1
Decision on when and where to sell fat stock
Landlord or manager decides
1.6
1.1
Joint decision, landlord has final say
. 3.3
9.5
7.5
Joint decision, mutual agreement
. 76.7
57.2
63.4
Joint decision, tenant has final say
11.1
7.5
Tenant decides
20.0
20.6
20.5
Decision on feeding practices to use
Landlord or manager decides
1.6
1.0
Joint decision, landlord has final say
6.4
4.2
Joint decision, mutual agreement
. 60.6
50.8
54.2
Joint decision, tenant has final say
. 12.1
9.5
10.4
Tenant decides
. 27.3
31.7
30.2
36
BULLETIN No. 677
[September,
a matter of having chosen a good and capable operator and having
given him a vote of confidence as any lack of interest on the part of
the landlord.
Management related to crop production follows the same general
pattern in that decisions related to organization and volume of business
are most likely to be matters of mutual concern (Table 16). Thus
participation in decisions is most nearly equal on questions on the basic
Table 16. Management Participation Related to Crop Production,
by Type of Lease
Item
Crop-
Crop-
share-
Live-
stock-
Total
cash
share
Decision on basic cropping system to follow
Percent of leases
Landlord or manager decides
3.7
6.4
7.4
5.6
Joint decision, landlord has final say
7.0
10.2
9.5
9.0
Joint decision, mutual agreement
64.9
56.9
67.4
61.0
Joint decision, tenant has final say
7.0
8.3
5.2
7.5
Tenant decides
17.4
18.2
10.5
16.9
Decision on acres of major crops each year
Landlord or manager decides
3.4
4.6
4.2
4.1
Joint decision, landlord has final say
7.6
9.4
7.4
8.5
Joint decision, mutual agreement
61.6
58.4
68.4
60.9
Joint decision, tenant has final say
8.0
7.8
9.5
8.1
Tenant decides
19.4
19.8
10.5
18.4
Decision on kind and amount of fertilizer to
be applied each year
Landlord or manager decides
4.2
4.8
3.1
4.4
Joint decision, landlord has final say
8.0
9.7
12.4
9.5
Joint decision, mutual agreement
50.6
56.2
59.8
54.8
Joint decision, tenant has final say
11.7
9.4
11.3
10.4
Tenant decides
25.5
19.9
13.4
20.9
Decision on number of corn cultivations
Landlord or manager decides
1.3
.8
1.0
1.0
Joint decision, landlord has final say
.8
1.3
3.1
1.4
Joint decision, mutual agreement
20.3
16.7
27.1
19.3
Joint decision, tenant has final say
19.9
20.4
25.0
20.9
Tenant decides
57.7
60.8
43.8
57.4
Decision on planting date of major crops
Landlord or manager decides
.8
1.0
.6
Joint decision, landlord has final say
.8
1.0
5.1
1.5
Joint decision, mutual agreement
20.2
19.2
30.6
21.0
Joint decision, tenant has final say
21.4
19.4
19.4
20.1
Tenant decides
57.6
59.6
43.9
56.8
Decision on variety and kind of seed to use
Landlord or manager decides
1.7
.8
2.1
1.3
Joint decision, landlord has final say
3.3
2.1
4.1
2.8
Joint decision, mutual agreement
31.4
33.2
47.4
34.5
Joint decision, tenant has final say
14.6
16.0
14.4
15.3
Tenant decides
49.0
47.9
32.0
46.1
(Table concluded on next page)
1961]
FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS
37
Table 16. Management Participation Related to Crop Production,
by Type of Lease (Concluded)
Item
Crop-
Crop-
share-
Live-
stock-
Total
cash
share
Decision on spraying for insect control
Percent of leases
Landlord or manager decides
.5
.6
.5
Joint decision, landlord has final say
.5
2.2
2.2
1.7
Joint decision, mutual agreement
25.9
26.5
38.0
27.9
Joint decision, tenant has final say
19.3
17.5
16.3
17.9
Tenant decides
53.8
53.2
43.5
52.0
Decision on acreage for seeding and for stand
over of soil building and forage crops
Landlord or manager decides
4.8
6.4
5.1
5.7
Joint decision, landlord has final say
10.1
12.3
11.2
11.4
Joint decision, mutual agreement
52.2
50.4
64.3
52.9
Joint decision, tenant has final say
9.2
8.5
7.1
8.6
Tenant decides
23.7
22.4
12.3
21.4
Decision on whether government programs
are followed
Landlord or manager decides
5.2
8.5
8.2
7.4
Joint decision, landlord has final say
8.5
10.6
8.2
9.6
Joint decision, mutual agreement
66.8
65.6
72.4
67.0
Joint decision, tenant has final say
6.7
5.2
5.1
5.6
Tenant decides
12.8
10.1
6.1
10.4
Arrangements for salvaging down corn
Tenant picks up, divided equally
5.2
11.4
7.7
Tenant pays cash rent,
gleaned by livestock
.5
3.2
1.8
Tenant gets all
15.0
19.1
14.9
Livestock glean, divided equally
.3
58.3
8.8
Other arrangements
2.8
.6
1.2
Not gleaned
13.1
13.8
1.1
11.7
No arrangements
63.4
51.6
40.6
53.9
cropping system, acres of major crops each year, the kind and amount
of fertilizer each year, and participation in government programs. The
highest degree of landlord's management participation, of course, occurs
under livestock-share leases.
The few arrangements reported concerning salvaging of down corn
suggests that here is an item on which tenants and landlords may avoid
disagreement and misunderstanding by reaching a satisfactory method
of handling the problem before they are actually confronted with it.
CHARACTERISTICS OF WRITTEN LEASES
Slightly less than one-half of the leaseholds in our sample were
represented by written leases. The lowest proportion (27 percent) of
written leases occurred among the crop-share leases (Table 17). Only
38 BULLETIN No. 677 [September,
Table 17. Characteristics of Written Leases, by Type of Lease
Croo Crop- Live-
Item i ' share- stock- Total
cash share
Percent of all leases
Farms having written leases 27.2 59.7 51.4 47.4
Age of written lease, years
Percent of all written leases
2 or less
40.3
34.7
18.0
33.5
3 to 7
36.1
36.0
56.0
38.8
8to 12
13.9
13.4
18.0
14.1
13 to 17
6.9
9.6
4.0
8.3
1 8 or more
2.8
6.3
4.0
5.3
Automatic renewal clause in lease
65.2
61.7
79.6
64.9
Months notice to terminate lease
12.5
9.8
4.3
9.5
1
2.1
1.3
2
10.7
13.9
2.2
11.5
3
21.4
19.1
4.3
17.2
4
5.4
3.1
6.6
4.1
5
3.6
1.5
4.3
2.4
6
35.7
40.7
63.1
43.2
7 to 11
8.9
5.7
10.9
7.1
12 or more
1.8
4.1
4.3
3.7
Term of lease, years
1
84.1
81.4
75.0
81.0
2 to 4
8.7
7.7
12.5
8.6
5
5.8
8.6
12.5
8.6
6 or more
1.4
2.3
1.8
Source of printed lease form
Farm adviser, vocational agriculture
teacher, University of Illinois
38.2
30.1
38.5
33.0
Production Credit Association,
Farmers Home Administration, bank.
12.7
20.5
15.4
18.1
Lawyer
20.0
13.6
12.8
14.8
Printer, book store, drug store
10.9
14.8
15.4
14.1
Landlord or agent
14.6
20.5
17.9
18.9
Tenant or other individual
3.6
.5
1.1
Attorney employed to draw up lease
27.1
21.8
27.5
23.7
51 percent of the livestock-share leases were in writing, but perhaps
the relatively large number of father-son tenancies in this group
accounts for some of the oral agreements.
Almost two-thirds of the written leases contained some form of
automatic renewal clause. Such clauses stipulate that if either party
fails to give notice to terminate the lease prior to a stated number of
days before the end of the lease year, the agreement will automatically
continue for another full year. The most common notice period pro-
vided was six months. This was particularly true for livestock-share
leases. Approximately one-third of the written crop-share and
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 39
crop-share-cash leases provided for two- or three-month notice periods.
The British tenure system by law requires a 12-month notice period
to terminate any lease, while in east-central Illinois slightly less than
4 percent of the written leases carried such a notice period.
One-year leases dominate the picture with 4 out of every 5 written
leases being for a 1-year term. However, among the livestock-share
leases one-eighth carried a 5-year term and another one-eighth had
terms of 2 to 4 years. An automatic renewal clause in the lease together
with a notice period of ample length appears to be a satisfactory
assurance of continued tenure for most tenants. Some landlords
follow the practice of writing one-year leases without any renewal
provisions or without any notice period for termination. However,
they also follow the practice of writing a new lease for the succeeding
year, approximately six months before the termination of the current
year. Longer term leases would increase the security of tenure for
tenants but would also introduce an element of rigidity into the land
rental and purchase markets.
Printed lease forms prepared by the University of Illinois ap-
parently enjoy wide acceptance. One-third of the printed lease forms in
use in the east-central Illinois area were obtained directly from Univer-
sity of Illinois sources. Other sources listed in Table 17 are known
to employ and distribute the University lease forms. A written farm
lease can be a complicated document. Tenants and landlords are well
advised to obtain the services of a competent attorney to check and
protect their legal interests. At the same time other sources may be
consulted for reliable information concerning the economic and tech-
nical aspects of farming which should enter into a good lease agreement.
REIMBURSEMENT GUARANTEES
A good farm lease can serve as a financing device in bringing
capital to the farm business. We have already noted that one of the
major functions of the farm lease is to relieve the operator of the full
real estate capital requirement. Livestock-share leases go beyond this
point and relieve the operator of a substantial amount of operating
capital requirement. However, under many farm tenancies either be-
cause of the financial circumstances of the landlord or of the economic
limitations of the leasehold itself, the owner may be unable or unwilling
to provide all of the customary improvement capital. Under these
circumstances tenants frequently are willing and able to furnish such
capital provided they are given adequate reimbursement guarantees.
40 BULLETIN No. 677 [September,
The reimbursement guarantees summarized in Table 18 are limited to
the written leases and therefore cover only about one-half of our
sample. Oral promises of reimbursement at the termination of the
tenancy were reported by a number of tenants and landlords without
written leases. Reliance upon such oral promises is not recommended
because they are not legally enforceable and cannot guarantee that both
parties will be alive when a claim for reimbursement becomes necessary.
An open invitation at the end of our questionnaire gave tenants
and landlords an opportunity to indicate changes they would like to
see in their lease agreements. One of the most frequently repeated
requests among tenants was that for written leases with adequate re-
imbursement guarantees, particularly on fertilizers applied in amounts
in excess of the current year's requirement. According to Table 18,
only 17 percent of the written leases in our sample carried such guaran-
tees on fertilizers other than limestone (see also page 14). Tenants are
often willing to make certain structural improvements at their own ex-
pense particularly those which yield no direct return to the landlord,
such as livestock shelter and feed storage on crop-share or crop-
share-cash leaseholds, provided they are given adequate and equitable
guarantees of reimbursement, or removal permission. While the Amer-
ican practice has not gone beyond a reimbursement of actual cost
less accumulated depreciation, the English tenure system has adopted
a slightly different basis for compensating a tenant. The British base
the compensation upon an appraised valuation of the improvement in
terms of its value to the average incoming tenant, or, as we might say,
its value to the farm. Such a basis for compensation or reimbursement
not only appears to be fair to both parties, but offers an added measure
of protection to both parties.
Table 18. Percent of Written Leases Containing Reimbursement
Guarantees to Tenant, by Type of Lease
Crop-share - Total
Percent of all written leases
Limestone .................... 32.3 31.2 40.0 32.6
Other fertilizers ............... 14.8 14.7 28.9 16.6
Fences ....................... 5.7 8.3 8.1 7.7
Buildings .................... 4.2 14.0 21.6 13.3
Fall plowing .................. 29.8 34.6 46.3 35.3
Fixtures in residence ........... 6.8 28.4 31.8 25.5
Legume seedings .............. 31.1 25.9 51.2 30.6
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 41
Table 19. Rights Reserved by Tenant and Landlord, by Type of Lease
Item
Crop-
share
Crop-
share-
cash
Live-
stock-
share
Total
By the tenant
To farm additional land
Percent of all written leases
83.6 65.9 59.4 70.7
80.0 58.2 40.0 63.2
28.8
40.2 50.4 32.9 44.9
75.0 75.9 74.0 75.4
14.6 10.9 3.0 10.5
81.4 81.9 85.5 82.2
76.6 81.2 79.4 79.6
76.6 80.7 79.0 79.2
77.8 80.5 80.6 79.7
To do off-farm work
To claim given animals or progeny of given
animals at termination of livestock lease
To remove hay, silage, straw,
etc. at end of lease
To remove movable improvements
made at his own expense
Option to buy farm
By the landlord
Right of entry for mineral development . . .
Rights of entry, after notice to terminate
lease,
To do field work
To sow crops
To spread fertilizer
RIGHTS RESERVED
At the beginning of this publication (page 6), it was noted that a
farm lease is a document which transfers certain rights in land from
the owner of the land to a second party, to be held by him for a limited
period of time. Since the major rights so transferred are those of
possession and use, it is important to specify any limitation on this
general body of surface rights. Table 19 indicates some important
limitations on the general rights of possession and use in the form of
rights of entry retained by the landlord. Except for the right of entry
for mineral development, these rights of entry reserved by the landlord
may not become operative until after notice has been given to terminate
the tenancy. This is a particularly crucial period since the notice to
terminate destroys any former mutual interest in the real property.
Rights reserved by the tenant fall into two general categories, those
related to the use of his time and those related to settlement procedures
at the end of the lease. As we have already noted, if the size of the
leasehold is too small to provide full time employment for the tenant,
it becomes important for him to retain the right to farm additional
land or to take on some kind of off -farm employment. Such rights
were actually reserved in approximately two-thirds of the cases. The
remaining list of tenant items in Table 19 deals with settlement pro-
cedures at the end of the lease. This list is by no means exhaustive,
42
BULLETIN No. 677
[September,
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1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 43
and a number of other items could be added that should be decided
between tenant and landlord, not at the termination of the lease, but at
the beginning when the contractual relationship is being developed.
VALUE OF LANDLORD'S BUILDINGS
The questionnaire used in this study requested information on the
size or capacity, plus condition, of all major farm buildings, including
the tenant's residence. From the information thus reported, an estimate
of value was calculated using a schedule of values per unit and condi-
tion level (Table 20). Only records with complete information were
used in making these calculations. It should be noted that Table 20
reports landlords' investment only. Structural improvements provided
by the tenant under reimbursement guarantees were not included.
As would be expected, the landlord's investment in buildings and
other structural improvements is strongly related to the size of the
leasehold. Over 40 percent of the tracts under 120 acres (66 out of
128 for crop-share leases and 17 out of 59 for crop- share-cash; see
Tables 3 and 20) had no buildings at all, and, of those that did report
buildings, the large majority had an investment of less than $5,000. On
leaseholds of 201 acres or more, the majority of the landlords' building
investments ranged from $10,000 to $20,000 with the exception of the
livestock-share leases, in which case the majority exceeded $20,000.
On a per-acre basis, the livestock-share leases exhibited a bi-modal
distribution with one concentration in the range of from $50 to $75 per
acre and the other in the range of $100 per acre or over.
LABOR AND REPAIRS ON IMPROVEMENTS
If it once was customary for the tenant to provide labor on building
repairs, it no longer appears to be true, according to the data reported
in Table 21. Perhaps the competition from field work on the larger
farms or the skills associated with making structural repairs and
improvements have forced landlords into maintaining improvements
at their own expense. Construction costs on new fences, particularly
line fences or permanent interior fences, have been an issue in recent
years. Table 21 would indicate that the basic arrangement is one of
materials provided by the landlord with the labor performed by the
tenant. However, in one- fourth to one-third of the cases under crop-
share and crop-share-cash leases, the landlord paid for one-half or all
of the labor on the construction of new fences. Under livestock-share
leases, many landlords used this opportunity to provide additional
capital to offset the tenant's labor input on livestock.
44
BULLETIN No. 677
[September,
Table 21. Landlord's Share of the Cost of Labor and Repairs
on Farm Structures, by Type of Lease
Item
Crop-
share leases
Crop-share-
cash leases
Livestock-
share leases
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Per-
cent
Num-
ber
Labor on building repairs
All
58.5
5.9
5.9
29.7
82.7
5.4
11.9
28.1
6.0
3.0
62.9
40.0
12.4
3.8
43.8
57.7
5.8
7.7
28.8
79
8
8
40
135
139
9
20
168
47
10
5
105
167
42
13
4
46
105
90
9
12
45
156
70.3
4.3
8.6
16.8
87.1
1.7
.5
10.7
24.7
3.1
1.1
71.1
50.2
9.7
1.8
38.3
49.6
3.3
10.0
37.1
213
13
26
51
303
316
6
2
39
363
89
11
4
256
360
109
21
4
83
217
163
11
33
122
329
76.4
4.5
11.2
7.9
92.8
4.1
3.1
29.6
11.2
3.1
56.1
50.8
13.8
7.7
27.7
53.4
10.2
11.4
25.0
68
4
10
7
89
91
4
3
98
29
11
3
55
98
33
9
5
18
65
47
9
10
22
88
One-half
Other arrangements
None
Total
Materials on fences
All
One-half
Other arrangements
None
Total
Labor on new fences
All
One-half
Other arrangements
None
Total
Labor on conservation
structures
All
One-half
Other arrangements
None
Total
Labor on repairing tile lines
All
One-half
Other arrangements
None . . . . . . .
Total
THE FARM RESIDENCE
Major changes have occurred since the second World War in facili-
ties associated with the farm residence. The result has been that urban
standards of living have been incorporated into farm residences, includ-
ing those that are occupied by tenant families. In a very real sense
this has complicated the farm rental arrangement in that one is faced
with all the complexities characteristic of urban residential rentals, but
without the direct cash rent return. Solutions to the problem have
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 45
taken several courses, one being to permit the tenant to modernize the
farm residence at his own expense, but protected by adequate reim-
bursement guarantees. Another solution has been for the landlord
to provide a modern residence and hold the tenant responsible for all
repairs and maintenance on the modern facilities. A third solution
remains in the realm of possibilities since it has not been adopted on
any widespread scale. This would be, in effect, to develop two leases,
one on the farm residence and the other on the farm land and farm
improvements. Advocates of this arrangement point out that the resi-
dence is a consumption item and that a separate rental on it would allow
the tenant to know exactly how much his living quarters are costing
him. A separate rental would help establish a basis for providing those
modern conveniences within the residence which efficient and capable
tenant families feel they want and can afford and would have if they
were on their own property.
Table 22. Age of Farm Residence on Rented Tracts, by Type of Lease
Crop-share
leases
Crop-share-cash
leases
Livestock-share
leases
Total
leases
Perct.
No.
Perct.
No.
Perct.
No.
Perct.
No.
Range in years
Under 5
3.1
3.1
4.7
6.3
82.8
2
2
3
4
53
4.0
3.3
2.0
1.7
2.6
86.4
12
10
6
5
8
260
6.1
2.4
4.8
3.6
4.8
78.3
5
2
4
3
4
65
4.2
2.7
2.7
2.4
3.6
84.4
19
12
12
11
16
378
5 to 9
10 to 14
15 to 19
20 to 24
25 or more . . .
Total
64
301
83
448"
The number of leaseholds reported is smaller than the total sample because some lease-
holds had no residence and because the data were incomplete on some of the leaseholds that
did have residences.
Table 22 indicates that relatively few, about 1 out of 7, farm resi-
dences have been constructed within the past 25 years. This is within
the period of time in which electric power has been brought to most
farm homes, and following the electric power have come water under
pressure, water heaters, bathrooms, septic tanks, electrified kitchens,
and modern laundry facilities. It is interesting to note (Table 23) that
the old coal or wood furnaces were largely furnished by the landlord
while a larger proportion of the newer oil or gas furnaces are furnished
and repaired by the tenant.
46
BULLETIN No. 677
[September,
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FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS
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1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 49
PERSONAL INFORMATION
While farm leases are business contracts, the relationship between
landlord and tenant is a highly personal one. The management contri-
butions by each of the two parties, which we have already noted in
Tables 15 and 16, are evidence of the degree of personal association
and relationship inherent in share leases. This is particularly true of
livestock-share leases, which in this regard border on partnership
rather than impersonal contractual relationships. Thus, the personal
characteristics of the landlord and of the tenant may be crucial to the
success of the lease agreement. How well is the landlord informed
about modern farming? Has he had any farm experience? Is he able
to take an understanding attitude toward unfavorable results that are
beyond the control of the tenant? How often does he visit the farm?
Does he live close enough to the farm that he can keep well informed
about its problems and needs? Can he be reached readily to share in
management decisions that must be made quickly? These questions
suggest some of the reasons why the personal attributes reported in
Table 24 may be important to a successful farm lease.
Approximately one-third of the leasehold properties are owned by
women. Many of these women are widows who have inherited this
farm property from their husbands. They may or may not be capable
and well-informed managers of their farm property. Where such
owners are represented by competent professional management, there
may be a very favorable climate for a successful lease experience.
One of the problems of great concern to tenure experts in the
recent past has been the problem of the absentee owner. Inasmuch as
the level, fertile land of east-central Illinois makes good investment
property, one would suppose the absentee owner problem would be
particularly acute in this area. Measured in terms of distance removed
from the farm, the problem does not appear to be particularly signifi-
cant. Eighty-five percent of all of the owners reported in this study
lived within a maximum distance of 50 miles from their farm property.
This is usually less than an hour's drive by automobile. Over 75 per-
cent of the rented properties were visited by the owners, or by their
agents, five times or more each year.
About a third of all the leases reported in this study were between
father and son or other related parties. The number of leases between
relatives was greatest for the livestock-share and the crop-share leases.
One may assume from this that the crop-share-cash leases reported in
this study come closest to representing a competitive relationship in
the rental market.
50
BULLETIN No. 677
[September,
Table 24. Personal Information on Landlord and Tenant,
by Type of Lease
Item
Crop-
Crop-
share-
Live-
stock-
Total
cash
share
Ownership of farms
Percent of leases
Male
60.5
57.7
85.0
62.2
Female
36.1
38.1
14.0
34.3
Male and female
3.0
3.7
1.0
3.1
Institutional
.4
.5
.4
Landlord's farm experience
None
20.5
26.3
20.9
23.5
1 to 9 years
4.6
6.0
4.7
5.3
10 to 19 years
10.2
4.6
8.1
7.1
20 years or more
62.4
56.6
64.0
59.6
Raised on farm (years not indicated) ....
2.3
6.5
2.3
4.5
Type of owner
Sole owner
61.1
60.4
66.3
61.4
Co-owner
24.4
20.2
22.7
21.9
Life tenant
5.3
5.2
4.0
5.1
Trustee, etc
4.2
8.1
4.0
6.2
Institutional, other combinations
4.2
3.9
2.0
3.8
Manager (ownership not indicated)
.8
2.2
1.0
1.6
Distance of owner from farm
Lives on farm
22.1
7.6
24.8
14.8
Under 10 miles
45.8
47.9
37.6
45.9
11 to 50 miles
17.2
26.9
28.7
23.8
51 miles and over
14.9
17.6
8.9
15.5
Number of visits by landlord or his agent
None, or less than once a year
4.2
2.5
2.8
1 to 4 times a year
25.1
21.6
6.0
20.8
5 to 9 times a year
9.3
14.7
6.0
11.7
10 to 14 times a year
9.3
15.7
13.0
13.1
15 to 19 times a year
2.3
6.7
5.0
5.0
20 times or more
19.7
22.4
39.0
23.6
Lives on farm or nearby
23.5
8.9
25.0
16.0
Frequently
6.6
7.5
6.0
7.0
Relation of tenant to landlord
Son, son-in-law
22.4
17.1
34.0
21.1
Other kinship
19.2
11.0
7.0
13.3
Not related
58.4
71.9
59.0
65.6
Tenant's length of tenure on this property 8
Less than one year
.4
.5
1.0
.5
1 to 4 years
25.5
19.7
39.4
24.2
5 to 9 years
22.0
24.8
29.3
24.4
10 to 14 years
22.4
27.8
17.2
24.6
15 to 19 years
14.3
8.3
6.1
10.1
20 to 24 years
8.5
9.3
4.0
8.4
25 to 29 years
2.7
4.4
2.0
3.5
30 years or more
4.2
5.2
1.0
4.3
* The length of tenure by lease types given
in this
table does
not mean that
the entire
tenure on a given farm has occurred under the same lease
. There is
a natural progression for
many tenants from father-son partnerships to livestock-share tenants to crop-share or crop-
share-cash tenants to part-owners and finally to full owners. Over a period of several years,
there is some drop out due to the tenants achieving ownership by purchase or by inheritance
or due to death loss, retirement, or leaving the farm. This drop out tends to reduce the
number who hold leaseholds more than 10 years. The fact that the number ef crop-share and
of crop-share-cash tenants actually increased during the 10 to 14 year period indicates a
feeding-in process. Most of the new recruits no doubt came from the ranks of the livestock-
share tenants who became crop-share or crop-share-cash tenants after several years.
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 51
It has been said that an ideal tenure system is one that has short
leases but an assurance of long tenure. That this is being accomplished
by the tenancy arrangements on Illinois farms is evidenced by Table
24. A strong continuity of tenure on the same rental property is sug-
gested by the fact that the number of tenants who had held leases on
the same property for from 1 to 4 years was almost exactly the same
as the numbers who had held their leases for from 5 to 9 years and
from 10 to 14 years. That the same frequency does not continue beyond
14 years should be no cause for concern. After a tenancy of 15 years,
a tenure change to a status of owner-operator is normal and desirable
by most successful tenant families. This fact, plus the effects of death
and disability and voluntary occupational change, will account for much
of the diminution in the continuity of tenure beyond 15 years.
Livestock-share leases show the shortest continuity of tenure due
to the operation of a tenure cycle and to the place of this lease in the
cycle. Most young farmers enter farming short on both capital and
management experience. On farms which need to be operated as live-
stock farms, livestock-share leases allow the landlord to share more
fully in providing both capital and management than do either the
crop-share or the crop-share-cash leases. Since many of these leases are
between father and son, there is a change from livestock to crop-
share or to crop-share-cash leases when the father dies or when he
retires and wishes to reduce his role in the management of the business.
At the same time, the tenant has had an opportunity to accumulate the
capital necessary to finance all of the livestock and livestock equipment,
and he is ready to move up to the more independent status of a crop-
share or a crop-share-cash tenant.
Table 25 provides information that is descriptive of some of the
environment in which farm tenancy operates. Rented land generally
is the better and higher priced land in a given area. The poorer,
cheaper land tends to go into owner-operation. Most tenants are
full-time farmers, but a fourth to a third do some work off the farm.
Part-time farming (the operator works 100 days or more a year off the
farm) is relatively rare in east-central Illinois, but it is one alternative
to enlarging the size of farm as a means of achieving full employment
of the tenant's labor.
Professional farm managers can provide useful services for
absentee owners, women landowners, and others who are unable or
unwilling to manage their property themselves. Most landlords per-
form their own management function, probably because they frequently
52 BULLETIN No. 677 [September,
Table 25. General Information
Item
Crop-
share
Crop-
share-
cash
Live-
stock-
share
Total
Soil productivity
Above average
23 8
Percent
28 3
of leases
43 6
28 7
Average
72 1
67 8
52 5
67 3
Below average
4 1
3 9
3 9
4
Tenant works off the farm
33.2
25.6
23.5
27.9
Days of off-farm work by tenant
None
66.8
74.4
76.5
72.1
100 days or less
24 5
21.1
20 4
22 2
More than 100 days
8.7
4 5
3 1
5 7
Farms employing agent or farm manager. . .
Landlord taking legal action against tenant
Farms using farm bank account
6.1
11.7
17.4
1.7
13.5
10.1
3.0
21.0
12.6
1.3
13 9
are former farm operators or prefer to do so as a retirement activity.
Social Security retirement tests may alter this number in the future.
Only a very few landlords reported ever having taken legal action
against a tenant. The higher proportion among the livestock-share
leases indicates the greater complexity of this lease and the greater
degree of landlord involvement in areas of potential conflict. On the
whole, the small proportion testifies to the effectiveness of the lease
arrangements and to the degree of mutual interest between tenant and
landlord.
LEASE CHANGES DESIRED
The last item on the questionnaire invited landlords and tenants to
tell "what changes would improve your farm lease agreement or your
relations with the other party to your lease." The response indicated
that, in general, farm leases and landlord-tenant relations were satis-
factory. Only 294 persons made comments. Of these, 210, or 71
percent, either expressed satisfaction with their leases or further ex-
plained some parts of their lease arrangements. Only 84 suggested
changes. The major suggestions are summarized in Table 26. As some
persons made several suggestions, the totals are larger than the number
of individuals.
There were proportionately more suggestions for changing the
livestock-share leases than for the other types of leases. This fact
reflects the greater complexity of livestock-share leases, the larger
number of items shared by landlord and tenant, and the need for a
1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 53
Table 26. Major Suggestions Made for Improving Leases
and Landlord-Tenant Relations
Number of times
Suggestions suggested by
Tenants
Landlords
1
Changes in sharing costs
31
7
?
Written leases
17
3
Better cooperation, more management participation. .
10
6
4
Change in cash rent, cash rent on buildings
3
11
S
More and better improvements
11
6
More reimbursement guarantees
8
1
7
More fertilizer, lime, and rock phosphate . . .
8
8
Longer term leases
7
q
Improvements in residence
3
10,
Up-to-date lease
2
Total number of major suggestions .
}00
25
mutual interest in the business and an equitable sharing of inputs and
returns.
Tenants made more suggestions for changes than did landlords, the
ratio being about 2.5 to 1. Individual tenants wanted landlords to share
or to share to a greater extent in such costs as combining, hauling the
landlord's grain, shelling and combining corn in the field, crop drying,
applying fertilizers, legume and grass seeds, and fuel costs (on
livestock-share leases). Landlords took the opposite view, principally
on hauling grain, combining, and fuel costs.
Tenants wanted written leases, particularly with elderly landlords
whose farms were likely to be involved in estate settlements. They ex-
pressed a hope for 5-year leases, but they were not particularly unhappy
with 1-year leases that were automatically renewable and that provided
for lease termination notices of 6 months or more.
Both tenants and landlords recognized the importance of a mutual
interest in the farm business. Some respondents pleaded for more
managerial freedom; others invited greater management participation
by the other party on an open-minded, interested basis. Some tenants
expressed the belief that if professional farm management services
were employed by the landlord, greater benefits would result through
the greater use of fertilizer, more adequate buildings, and higher
quality seed.
Only a few tenants asked for a reduction in cash rents. On the
other hand, some landlords felt that they had to have higher cash rents
to offset high taxes. Landlords renting small acreages looked to cash
rents to justify the high capital costs of buildings and extra improve-
54 FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS [September,
ments. Some tenants preferred to make improvements at their own
expense rather than pay higher rent, provided they had adequate re-
imbursement guarantees or could take the improvement with them when
they left. Fertilizer cannot be moved after it is applied to the soil;
therefore, tenants registered a special plea for reimbursement arrange-
ments on such costs.
SUMMARY AND CONCLUSIONS
Crop-share and crop-share-cash leases are the predominant lease
types in east-central Illinois, accounting for 84 percent of the leases in
the area. Livestock-share leases account for 13 percent, while cash,
labor-share leases, and special arrangements make up the remaining
3 percent (Table 2).
Prevailing rent shares on grain crops are almost exclusively one-
half of the crop (Table 4), except that on some of the sandy or tim-
bered soils, the landlord receives only a two-fifths share. The basis for
a one-half rent share is an approximate equality between the annual
values of the fixed inputs or contributions of both parties land and
the improvements on it by the landlord, and labor, power, and ma-
chinery by the tenant.
Variable costs such as crop seeds (Table 5), annual fertilizers
(Table 6), corn shelling (Table 7), and insect control (Table 8) are
shared in the same way as the crops are shared, namely 50-50 or 40-60.
Only 34 to 50 percent of the tenants shared in the cost of limestone,
but 44 to 60 percent shared in the cost of rock phosphate, and 64 to 77
percent shared in the cost of potash applied as a single plant food
(Table 6). The increased proportion of tenants sharing in these costs,
from that observed in earlier studies, indicates a growing acceptance
of the practice of holding the landlord responsible for initial applica-
tions of these materials and a growth in the practice of expecting the
tenant to share in the cost of repeat or maintenance applications.
Livestock-share leases, in which the landlord usually owns a half
interest in the major livestock enterprises and receives one-half of the
livestock returns, generally also provide for an equal sharing in such
costs as legume and grass seeds (Table 5), hay baling and silo filling
(Table 7), weed control chemicals (Table 8), livestock expense and
purchased feed (Table 12), and feed grinding (Table 13). Most of the
livestock-share leases also provided for the landlord to share half of or
to assume all of the expense of the purchase of such livestock equip-
ment as self-feeders, waterers, and water heaters (Table 14).
1961] HULLKTIN No. 677
Many equipment (Table 14), power, and fuel costs (Table 13)
under livestock-share leases are shared in a variety of ways ranging
from 100 percent by the landlord to 100 percent by the tenant. These
items may be bargaining points or opportunities by which tenant and
landlord can achieve a balance of total inputs in line with the way
returns are shared. Farms differ from one to another, and the soil defi-
ciencies or the fixed improvements contributed by the owner are fre-
quently compensated for by contributions of equipment and special
facilities.
Cash rent on tillable hay and pastureland is found only in crop-
share-cash leases (Table 9). The most common rates are $5, $6, $8,
and $10 per acre with almost the same frequency for each rate. Cash
rent on nontillable land also ranges from $5 to $10 per acre, but most
rates are in the $5 to $8 range.
Cash rent on buildings, where such occurs, usually takes the form
of charging the same acre rate for the area in the farmstead as is
charged for tillable hay and pasture. Lump-sum rents on the farm-
stead or buildings range mostly from $50 to $250 (Table 9).
A little less than half of the farm lease agreements in east-central
Illinois are in writing (Table 17). Yet such important considerations
as (a) notice to terminate the lease, (b) reimbursement guarantees,
(c) rights of entry, and (d) management prerogatives must be in writ-
ing to be legally enforceable if they deviate from common law or
customary arrangements.
Three out of every 4 landlords are farmers, retired farmers, or
widows of farmers, or have had some farm experience. Eighty-live
percent of the landlords live within 50 miles, or about an hour's drive,
from their rental property. Only 1 out of 8 employs an agent or
manager (Table 24).
In general, both tenants and landlords are satisfied with their lease
agreements. Only 84, or 1 out of every 8 tenants or landlords, made
suggestions for changes in their leases. Changes desired by tenants
include (a) more sharing in variable costs by landlords, (b) written
leases, and (c) more capital improvements by the landlord or written
reimbursement guarantees for improvements made by the tenant.
Landlords wanted higher cash rents to offset higher taxes (Table 26).
LIST OF TABLES
TABLE PAGE
1 Description of Sample and Rates of Response " 4
2 Distribution of Usable Questionnaires, by Type of Lease
and Respondent 7
3 Average Size of Leased Tract Reported and of Other Land
Farmed by Tenants on These Leaseholds, by Type of
Lease and by Size of Leasehold 9
4 Share of Harvested Crops Received by Landlord 11
5 Share of Seed Costs Paid by Landlord 13
6 Division of Soil Treatment Expenses, Landlord's Share 15
7 Share of Harvesting Expenses Paid by Landlord 17 to 19
8 Share of Spraying Expenses Paid by Landlord 20
9 Cash Rents Paid by Tenants on Crop-Share-Cash Leases. . . 22
10 Proportion of Crop-Share and Crop-Share-Cash Tenants
Paying a Given Kind of Cash Rent, by Estimated Value
of Landlord's Buildings per Acre, by Size of the Rented
Tract, and by Kinship Between Tenant and Landlord;
and Amounts of Rent Paid by Level of Building Investment 24
1 1 Landlord's Share in Ownership of Livestock on Livestock-
Share Farms 26
12 Landlord's Share of Current Livestock Expenses Under
Livestock-Share Leases 28
1 3 Landlord's Share of Other Current Expenses Under Livestock-
Share Leases 29
14 Landlord's Share in Ownership of Machinery and Equipment
Under Livestock-Share Leases 31 to 34
15 Management Participation Under Livestock-Share Leases. .. 35
16 Management Participation Related to Crop Production, by
Type of Lease 36 and 37
17 Characteristics of Written Leases, by Type of Lease 38
1 8 Percent of Written Leases Containing Reimbursement Guar-
antees to Tenant, by Type of Lease 40
19 Rights Reserved by Tenant and Landlord, by Type of Lease 41
20 Estimated Value of Landlord's Buildings per Acre and per
Leasehold Tract 42
21 Landlord's Share of the Cost of Labor and Repairs on Farm
Structures, by Type of Lease 44
22 Age of Farm Residence on Rented Tracts, by Type of Lease 45
23 Cost-Sharing Arrangements on the Farm Residence, by Type
of Lease 46 to 48
24 Personal Information on Landlord and Tenant, by Type of
Lease 50
25 General Information 52
26 Major Suggestions Made for Improving Leases and Landlord-
Tenant Relations . 53
10M 9-61 74384
UNIVERSITY OF ILLINOIS-URBANA
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