by Jason Foscolo, Esq
Good lease agreements for farmland are more important now than ever before. The cost of farmland is at an all-time high, which often makes leasing land the only viable alternative for many farmers. This is especially true for new and beginning farmers who often begin their careers with limited capital. Of course, it is always a good idea to get an important legal agreement like a lease in writing, no matter how rudimentary the terms of the lease.
With the advent of alternative production techniques and the rise of sustainable farming, farmland leases can be more than a tool for merely securing access to farmland. Leases can be the legal bridge protecting and developing a limitless range of ecological or social benefits that are increasingly important to the agricultural economy. “Sustainable agriculture” is an umbrella term used to encompass the many different production methods, systems, and approaches that seek to meet the goals of profitability, stewardship, and quality of life. As farmers increasingly consider these alternative agricultural practices, such as organic production, both landlords and tenants have new opportunities to use leases in creative and wealth-building ways.
A “sustainable lease”, therefore, can be used to mandate the type of agricultural practices used on farmland that guarantee a sustainable outcome. Some of the characteristics of the sustainable lease are the emphasis it places on things like soil conservation, wildlife protection, wind and water erosion, crop rotation, managed intensive rotational grazing, and even fair farm labor. Examples of “sustainable lease” terms are limited only by the desires of the landlord and tenant. A lease can prohibit a tenant from planting a crop that is known to deplete soil fertility. Conversely, a lease may require crops to be cycled in such as way as to replace those nutrients. Landlords can mandate the planting of buffer strips to prevent erosion on highly-erodible land, or
demand that farmworkers working the parcel receive a set wage above the state and federal minimum wage. The potential list of such sustainable terms is virtually limitless.
Often, a lease agreement containing these types of mandates can positively affect the commercial or financial interests of both landlords and tenants in the agricultural economy. It’s not only ethical or environmental to have a sustainable lease – sometimes it’s just good business. In our changing agricultural industry, the terms of a sustainable lease can have significant economic affects for all parties to the agreement.
Landlords can use sustainable leases to protect the quality of their land. It is well within the ability of a landlord to use a lease to restrict a tenant to a specific type of agricultural activity or to prohibit certain crops or certain other techniques. A useful example of this characteristic of a sustainable lease is the organic farmer who will lease land only to another organic farmer. Converting land to organic production requires an investment of time, effort and expense. No sustainable lease could be complete without acknowledging, and then protecting, these significant costs. This same concept can be applied to any other type of agricultural practice in order to preserve the characteristics of farmland that are most important to the individual landlord, such as soil conservation or wildlife preservation.
Tenants can benefit from sustainable lease agreements in multiple ways. A sustainable tenant should take the perspective that increasing soil fertility in the landlord’s land should be considered the equivalent of any other capital improvement to the land, like installing irrigation equipment or permanent structures. Sustainable agricultural practices often require that costly soil rehabilitation efforts be conducted on marginally productive or environmentally strained land. Fertilizing and remineralizing depleted land with sustainable inputs adds value to a parcel of land. It is an investment that cannot be removed from the land at the conclusion of the lease term. For farming practices which rehabilitate soil, tenants should either seek a rent rebate for improving soil health or negotiate a longer term lease that will enable them to recoup a worthwhile return on their investment in the land.
The biggest challenge to leasing land sustainably is the relative personal values of the parties to the agreement. Both parties need to appreciate the ecological or social good that can be created by sustainable farming. Sustainable leases are therefore best used between sustainable landlords and sustainable farmers. The ecological or social benefits may not be obvious to all landlords, or to all farmers for that matter, but sustainable leasing has truly tangible and quantifiable value nonetheless. The sustainable lease begins with a mutual appreciation of these values.
The type of landlord most likely to appreciate a sustainably farming tenant is a land trust. These institutions have a strong interest in sustainable endeavors like land stewardship, soil conservation, habitat preservation, and water quality. In addition, they can benefit from sustainable leases in more ways than rehabilitating the health of their soil. Adopting a policy of sustainable leasing is a great way for land trusts to demonstrate to their supporters that they are conducting their stewardship role in an intelligent, responsible manner. They are not only more likely to have an appreciation for the agricultural practices of their tenants – it is in the nature of their mission to indeed brag about it.
Farmers are the first ecologists. Their land is a generational asset that deserves thorough protection and development by all participants in the agricultural community. Whether you are a landlord or a tenant farmer, think of the humble lease agreement as one of the most important tools you can use to fulfill your duties of stewardship.
Jason Foscolo is the principal attorney of Jason Foscolo LLC, a general practice lawfirm dedicated to the special needs of farmers and food entrepreneurs.