Leasing farmland to grow trees

Two weeks ago I was offered a great opportunity to have use to someones farmland that is 15 minutes from where I live. I met with him today and did a landscape job for him and know quite a bit about the guy since he lives across the street from me. I feel quite confident in this deal since his family has owned the land for 170 years and he has lived here his entrire life. Anyways, he wants me to make up a proposal to begin growing trees on 3 acres that has irrigation access meaning pumps are onsight and only wants a % of sales when I harvest them starting in about 4 years. I said that I would work on it this week drawing up plans and a % sales lease for them. However, I need information to go off of to base my offer as to what I will pay him at the time of harvest for use of his familys land. Honestly I haven't a clue what that amount is or should be so any help is appreciated. I do know that an acre of land developed around here outside of city limits is in the area of $50,000-$60,000 on average. They own 2,500 acres and hes looking for a way to bring in cash since it is not currently used for anything.

 

A percentage of sales is fine,but don't do it for a flat lease fee.
I've grown christmas trees on my own prop but would never consider it on someone elses.Not enough in it if you sell wholesale.If you go retail it would be different,but that is a whole different ballgame. lots of trimming and maintenance on christmas trees so it may be different depending on what you are considering growing.

 

Has he told you why he wants to do this? Possibly it's to keep his agricultural tax status on the land. If that status is lost, he'll owe more in taxes than you could possibly pay him. Maybe you need to delve a little deeper before giving away what little profit you'll have.

 

What type of trees do you plan on harvesting in 4 years?

Sounds alittle odd to me.

 

Hi Brent,

Here is a link that I found for you. "The Basics of Farm Leasing." Maybe it will help you.

 

looking at starting with red maple, sugar maple, green ash, white ash, red oak, maybe tulip poplar and cleveland pear. All are 5-6' now and are $3 ea. These will be marketable 1.75" in approx 4 years. Looking at using 25% for my self, 25% retail, 25% wholesale to other landscapers and 25% internet. Average tree price will be @$100 ea. at harvest with this makeup. He has done this before with another guy several years before. To add he was hinting @10% sales which is great and he fully understands that it is just dirt that he is leasing.

 

Good soil or well fertilized they may get there.
The red maple depends on what type,The sugar maples are slow to get started,And the red oak depending on variety is a slow grower in the beginning as well.The ash will probably get you there in 4 years.Not trying to discourage you,it can be done but it will require a bit more attention than you may be anticipating.
I'm not sure there is a big demand for poplar either other than for somone doing reforestation or some type of regrowth activity.(very large fast growing trees once established.)JMO

 

Another guy did the same thing a few years back on the same farm and had 2"+ trees in four years. Must be good soil. I'm looking at putting drip irrigation in also. Settling on 1000 trees this fall, just curious how long that will take to plant bare root with an hand held auger.

 

Good soil and irrigation will probably get you there.
As for the thousand trees,with a helper you can do it in a day,but plan on two if you've never done it before.It aint fun on the back.
Thats somewhere around two acres of planting and you will hit plenty of rocks.
You will lose about 5 % of your stock on average in the first year, so plan on replanting at least a few replacements.

Brings back good memories of my property in N.Y.State............

 

tell him you pay the property taxes


I lease some pasture and corn land
last year he covered the taxes

this year, i just let him take all the hay
he wanted for free, cause I like farmers