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Lease Supplement for Obtaining Conservation Practices to Control Soil and Nutrient Loss

File C2-08
Updated July, 2019

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Cooperation between tenants and landowners is essential for establishing and maintaining needed conservation practices on a rented farm. Rents should be adjusted to reflect costs and risks incurred by both parties. Conservation practices and improvements will not be made unless they are agreed to in advance and the tenant has the necessary machinery and management ability to establish and maintain them.

Soil and Nutrient Loss

Control of soil and nutrient loss is beneficial to both the landowner and tenant, as well as to downstream users. Tenant and landowner should agree to follow specific conservation practices that will control soil loss for a field or the entire farm. Soil loss limits (tons/acre) have been set under USDA Natural Resource and Conservation Service (NRCS) conservation compliance guidelines. The farm’s soil conservation plan provided through the NRCS will specify alternative soil management practices (mulch or zero tillage, contouring, terraces, rotations, grass waterways, ground cover, buffer strips, etc.) to maintain soil losses within allowable limits. The plan can be modified by mutual agreement of the landowner and tenant.

Reduced Tillage and Cover Crops

Ground cover, including living cover such as cover crops or residue from previous crops, is beneficial throughout the growing season as well as over the winter. Extra trips over fields with tillage tools break down residue and living cover, and loosen soil. No-till or reduced tillage systems help maintain adequate residue cover needed on sloping land, while cover crops protect against erosion during months when crop cover is not present. Contact local NRCS personnel for determinations of adequate ground cover based on slope, crop, tillage practices, and timing of tillage operations.

Cropping Practice Examples

(check if required)
_____ Fields shall be tilled and planted on the contour where feasible.
______ A cover crop shall be seeded on all agreed on crop acres.
______ Grass waterways damaged by tillage, use of herbicides or other means shall be repaired at the tenant’s expense.
______ Tenant shall clip waterways as necessary for maintenance of soil conservation practices, unless enrolled in CRP during the nesting season.
______ Corn and soybean fields shall have sufficient residue cover at planting time to control erosion within soil loss limits set under the conservation plan.
______ No fall tillage shall occur on acres coming out of soybean production.
______ No-till practices shall be used on designated fields.
______ Crop residue shall not be removed from fields unless agreed on by the landowner and tenant.
______ Cropping plans shall be followed as agreed on by the landowner and tenant.
______ Strip cropping shall be maintained on fields as designated by the landowner.
______ Erosion shall be controlled around ponds and creeks.

Permanent Practices

Terraces, farm ponds, windbreaks, water control structures, reforestation, grass waterways, diversion ditches, pasture improvement, buffer zones, and other practices requiring long-range investments may require special agreements between landowners and tenants for installation, maintenance, and sharing of cost and benefit. A tenant is more likely to follow sounds environmental practices if the additional costs are shared, or if he/she is assured of repayment for the undepreciated value of the initial investment should the lease agreement end.

If the tenant shares in the cost of establishing permanent practices, the initial value should be determined, including both out-of-pocket costs paid and the value of any labor or machine work contributed by the tenant. A depreciation rate for calculating the remaining value of the initial cost should be agreed on. A depreciation rate of 5% to 10% annually (10- to 20-year life) is appropriate for most structures.
A table for depreciating the cost of establishing conservation practices is presented in the accompanying "pdf" file that you can access by clicking here or on the icon above.

Cost-share Payments

Cost-share payments are often available for establishing certain conservation practices. A plan for sharing expenses and cost-share payments should be a part of the lease agreement. Contact the USDA Farm Service Agency, NRCS, and the Soil and Water Conservation District (SWCD) offices for information about availability of cost-share funds from both federal and state sources. Any cost share funds received by the tenant should be deducted from the initial investment before calculating the annual depreciation.
The Iowa Custom Rate Survey, (FM1698/ AgDM A3-10) can be used to value labor and machinery that the tenant. AgDM File A1-41, Conservation Practices for Landowners provides detailed information about both annual and permanent conservation practices and structures, including typical costs.

 

More Information

Iowa Nutrient Reduction Strategy
ISU Extension and Outreach Farmland Leasing Resources
Conservation Practices for Landlords, AgDM File A1-41
Tax Treatment of Water Quality Measures for Farm Operators and Landowners, Center for Agricultural Law and Taxation

The Lease Supplement for Obtaining Conservation Practices and Controlling Soil Loss is presented in the accompanying "pdf" file that you can access by clicking here or on the icon above.


Jamie Benning, extension water quality program manager, 515-294-6038, benning@iastate.edu
Reviewed by William Edwards, retired economist. Questions?
Original author Kenneth Muller, former county extension education director