The trend in production agriculture is toward larger farms. Producers accomplish this objective by purchasing or renting land. Renting land may be preferred to purchasing because of a lack of capital to purchase land to preserve capital for other uses, because there is no land for sale in the area, or some may perceive land to be more profitable then owning land. The three types of leasing agreements common in Missouri are cash, flexible cash, and cropshare. For more information about different types of rental arrangements used in Missouri see MU Guide G 406, Customary Farm Rental Arrangements. This guide focuses on one specific rental agreement, cropshare leasing. This guide uses producer survey information to determine how inputs are split for cropshare agreements specifying production is shared 50-50 or 2/3-1/3. A 2/3-1/3 cropshare arrangement refers to an agreement where the tenant receives 2/3 of the crop and the landowner receives 1/3 of the crop.

A cropshare leasing agreement refers to an agreement between a landowner and tenant for the sharing of the crop as earnings for their contribution in land, labor, and capital. Crop-sharing normally involves grain crops such as small grains, corn, milo, and soybeans. However, crop-sharing also occurs in the production of cotton, hay, and rice. The landowner's share of the crop depends on the contribution made toward production of the crop. Landowner's, at a minimum, contribute land. Similarly, the tenants share of the crop depends on the contribution made. The tenant will provide, at a minimum, machinery and labor. However, each cropshare leasing arrangement is unique, reflecting the contribution made by each party and the negotiating strength of each party. One aspect of negotiating between tenants and landowners is how inputs are split.

This guide is based on a 1999 University of Missouri Cropshare Rental Arrangement Survey. The survey was administered statewide and responses were received on over 300 cropshare rental agreements. The values reported here are state and regional averages, so an individual county or area may differ in how a cropshare arrangement is specified. Furthermore, cropshare agreements may be unique to the parties negotiating the agreement and the information provided in this guide should be used only as reference values in the agreement between tenant and landowner.

Summary of respondents

Table 1 provides some general summary statistics of respondents to the cropshare survey. Of those producers surveyed, 56% of acres farmed were cropshared and 19% were cash rented. The average tenant rented from six landowners through either a cropshare or cash rental arrangement. The average tenancy of the cropshare agreement was twelve years. Most respondents indicated that the lease was renewed annually. Only 35% of respondents indicated the use of a written lease in their cropshare agreement. Given the legal question of who is liable should someone be injured or should one party be in breech of the contract, a written contract is strongly recommended - see your local extension specialist for more information. On average, the terms of the cropshare agreement were discussed six years ago. This indicates that once a cropshare agreement is decided upon, the agreement is useful over years.

Output shares for cropland, cotton, rice, and hay

Table 2 lists the share of output tenant's received by Farm Management District (figure 1) and crop type. The other column refers to respondents who did not indicate a 50%, 67%, or 75% output share. The amount of output received by the tenant should be in proportion to inputs and risks contributed. There is considerable variation in the type of sharing of output across the state. In the northwest district 100% of tenants indicated a 50-50 cropshare agreement. However, in the southeast and southwest districts the typical agreement was 2/3-1/3. Generally, corn cropshare rental agreements are either 50-50 or 2/3-1/3. For cotton, 2/3-1/3 was typical. A 50-50 cropshare agreement for hay was the most typical. For rice, generally a 2/3-1/3 agreement was used. Soybean cropshare agreements were split between 50-50 and 2/3-1/3. A 2/3-1/3 cropshare for wheat was the most common reported agreement.

Input share arrangements

Economic evaluation of a cropshare agreement would suggest that production-increasing variable inputs should be split in proportion to output received. For example, in a 50-50 cropshare agreement in which insecticide is required to reduce an expected pest problem that endangers the crop, the tenant and landowner would split the insecticide costs 50-50. This is because both the landowner and tenant could increase revenue through exterminating insects. However, in reality such arrangement will depend on how the tenant and landowner specify the cropshare contract. Table 3 summarizes tenant's share of inputs contributed for 50% and 67% (2/3) of output received. Cropshare agreements for both dryland and irrigated type of land are listed. The table is organized such that the percent of survey respondents reporting are listed for whether the input was shared the same, different from, or not shared (tenant pays all expense) in proportion to the output share received. Government payments are generally split in the same proportion as output received.

In general, for the 50-50 cropshare agreement contributions of inputs are shared in the same proportion as output. Nearly 30% of the respondents indicated they paid all costs for each of fertilizer, herbicide, and insecticide application. This is probably due to the tenant having the machinery necessary to apply the inputs and not having to pay a custom applicator. For a 50-50 cropshare agreement, harvest costs are generally split equally. Generally, cropshare agreements for dryland and irrigated land are similar. However, more often inputs are slit in the same proportion as output received. Additionally, irrigation cost are typically shared in proportion to output share received.

For the 67-33 (2/3-1/3) cropshare agreement contributions of inputs are paid for primarily by the tenant more often than for the 50-50 agreement. However, fertilizer and lime costs are typically paid in the same proportion at output received. This is because fertilizer and lime could be considered long-term investments in the land which is owned by the landowner. Only marginal differences between input contributions were observed between dryland and irrigated land types.

Land Improvements

Nearly 80% of the respondents indicated the landowner paid all of the costs of land improvement. 14% of respondents indicated that land improvement costs were split and 7% indicated the tenant paid for land improvements. Because there is a long-term benefit to the land, it was not surprising that the landowner generally covered land improvement costs. There is little value to the tenant for paying land improvement costs only to have the landowner rent to a different tenant the following year. However, an average tenancy of the land of twelve years (table 1) indicates long-term expectations by the tenant and landowner.

Related Publications

G 404 Farm Land Values
G 426 Farm Lease Agreement
G 427 1997 Cash Rental Rates in Missouri
G 428 Customary Farm Rental Agreements

Table 1. Summary Characteristics of Missouri Tenants Responding to CropShare Lease Survey (120 producers responding and 307 different cropshare rental arrangements)

Characteristic	Units	Average	Minimum	Maximum
Acres farmed	acres	1349	18	4400
Acres crop-share rented	acres	254	18	4400
Acres cash rented	acres	758	4	4320
Landowners rented from	number	6	1	29
How many years renting	years	12	1	45
Terms of lease last discussed	years	6	1	30
Use a written lease	percentage	35%	n/a	n/a
How often is lease renewed	years	2	1	11
Use conventional tillage	percentage	70%	n/a	n/a

Table 2. Reported Tenant's Share of Output in Cropshare Leasing in Missouri by Farm Management District and by Cropping Practice

Farm Management District/ Crop	Tenant's Share of Output
	50%	60%	67% (2/3)	75%	Other
	---------- Percent Distribution ---------
Statewide	38	3	51	2	6
Farm Management District
Northwest	100
Northeast	57		43
West central	53	5	31		11
Central	77	1	19	3
East central			100
Southwest	23		77
South central	Insufficient Responses
Southeast	10	3	75	2	10
Crop
Corn	45	4	46	1	4
Cotton			100
Hay	57		36		7
Rice			65	14	21
Soybean	41	2	53	1	3
Wheat	25	4	67		4

Table 3. Reported Sharing of Crop Inputs Under Cropshare Leasing by Type of Land and Output Shares, Missouri, 1998

Type of Land and Output Share/Input Share
	Government		Fertilizer			Herbicide
	Payment	Seed	Material	Application	Lime	Material	Application
	--------- Percent of Respondents Reporting ---------
Overall
50-50
Tenant pays 50%*	94	100	99	70	100	96	56
Tenant pays different than 50%	6			2			1
Tenant pays 100%			1	28		4	43
67-33 (2/3-1/3)
Tenant pays 67%	97	1	86	24	72	8	5
Tenant pays different than 67%	3				18
Tenant pays 100%		99	14	76	10	92	95
Dryland
50-50
Tenant pays 50%	94	100	99	71	100	99	58
Tenant pays different than 50%	6			2			1
Tenant pays 100%			1	27		1	41
67-33 (2/3-1/3)
Tenant pays 67%	95	1	75	37	71	15	11
Tenant pays different than 67%	5				21
Tenant pays 100%		99	25	63	8	85	89
Irrigated
50-50
Tenant pays 50%	94	100	100	65	100	76	41
Tenant pays different than 50%	6
Tenant pays 100%				35		24	59
67-33 (2/3-1/3)
Tenant pays 67%	100		96	14	73	1
Tenant pays different than 67%					17	1
Tenant pays 100%		100	4	86	10	98	100

* For example, 100% of survey responses indicated tenants paid 50% of seed costs

Table 3 (continued). Reported Sharing of Crop Inputs Under Cropshare Leasing by Type of Land and Output Shares, Missouri, 1998

Type of Land and Output Share/Input Share
	Insecticide				Crop	Irrigation
	Material	Application	Harvest	Hauling	Consulting	Energy	Repairs
	--------- Percent of Respondents Reporting ---------
Overall
50-50
Tenant pays 50%*	98	71	65	71	47	94	64
Tenant pays different than 50%			3				19
Tenant pays 100%	2	29	32	29	53	6	19
67-33 (2/3-1/3)
Tenant pays 67%	15	2	6	17		20	21
Tenant pays different than 67%	1		3	2
Tenant pays 100%	84	98	91	81	100	80	79
Dryland
50-50
Tenant pays 50%	99	70	69	69	38	n/a	n/a
Tenant pays different than 50%						n/a	n/a
Tenant pays 100%	1	30	31	31	62	n/a	n/a
67-33 (2/3-1/3)
Tenant pays 67%	20	4	6	23		n/a	n/a
Tenant pays different than 67%						n/a	n/a
Tenant pays 100%	80	96	94	77	100	n/a	n/a
Irrigated
50-50
Tenant pays 50%	94	76	41	82	69	94	64
Tenant pays different than 50%			18				19
Tenant pays 100%	6	24	41	18	31	6	19
67-33 (2/3-1/3)
Tenant pays 67%	12		5	12		20	21
Tenant pays different than 67%	1		6	4
Tenant pays 100%	87	100	89	84	100	80	79

* For example, 98% of survey responses indicated tenants paid 50% of insecticide materials

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