Crop-Share vs. Cash Lease Agreements

When Nebraska landowners lease farmland, the two most common structures are cash leases and crop-share leases, each with different implications for risk, income, and involvement. In a cash lease, the tenant pays a fixed amount per acre regardless of crop yields or market prices, providing the landowner a stable and predictable income stream with minimal involvement in farming decisions. This simplicity makes cash leases especially appealing to absentee owners or those who prefer steady returns, while tenants take on all production and price risk but also retain all profit above rent.

By contrast, crop-share leases divide both crop revenue and certain input costs between the landowner and tenant based on an agreed percentage, such as 60/40 or 50/50. This setup aligns the incentives of both parties: landowners can benefit from higher returns in good years, and tenants share some downside risk, reducing their exposure when prices or yields drop. However, crop share often requires more communication, record-keeping, and cooperation on management decisions, and income can vary widely year-to-year. Ultimately, choosing between cash rent and crop share depends on both parties’ risk tolerance, desired income stability, and willingness to collaborate, and a written lease reflecting those priorities helps prevent misunderstandings.