UNIVERSITY OF CALIFORNIA COLLEGE OF AGRICULTURE AGRICULTURAL EXPERIMENT STATION BERKELEY, CALIFORNIA FARM TENANCY IN CALIFORNIA AND METHODS OF LEASING R. L. ADAMS and WILLIAM H. SMITH, JR. BULLETIN 655 October, 1941 CONTRIBUTION FROM THE GIANNINI FOUNDATION OF AGRICULTURAL ECONOMICS UNIVERSITY OF CALIFORNIA BERKELEY, CALIFORNIA CONTENTS PAGE Introduction 3 Method of study and sources of data . 3 Extent and trend of farm tenancy in California 5 Number of tenant farms 5 Land area rented 6 Distribution of farm tenancy in Cali- fornia 8 Types of farming 8 Location of tenanted farm areas 9 Size of farm 12 Mobility of tenants 14 Extent of moving 14 Time of moving 15 Eeasons for moving 16 The utility of farm tenancy 19 Availability of farms for leasing . . 20 The demand for farms to lease .... 20 Farmers who prefer renting to owning 21 Farmers for whom ownership is almost impossible under pres- ent conditions 22 Barriers to ownership 23 Limited ability and capacity ... 23 Insufficient capital 24 The rental basis 26 Definitions 26 Cash renting 26 Flexibility needed in cash renting 27 Types of farms rented for cash. 28 Time of payment 29 Reasons for payment of cash rent 29 Reasons given by owners and ten- ants who prefer cash renting. 30 Share renting 30 Types of farms rented for shares 32 Reasons for payment of share rent 32 Reasons given by owners and ten- ants who prefer share renting . 33 Sliding-scale rent 34 Purpose and nature 34 Improving the sliding-scale method 35 Examples of sliding-scale rents used in California 37 Empirical method for determining the division of farm income . . 40 Recent federal legislation affecting California farm-leasing practices 43 Agricultural conservation program 45 Range conservation program 45 Domestic allotment program 46 Proration of benefits and deduc- tions 46 General provisions regarding payments 47 Factors to be considered by land- lords and tenants when either or both plan to participate in the soil conservation program 48 California farm-leasing practices ... 49 Leasing land for field crops 50 Leasing land for truck crops 68 Leasing orchards, vineyards, and berry land 82 Leasing poultry farms 89 Leasing dairy farms 91 Leasing livestock ranges and ranches 96 Summary and conclusions 109 Appendix of tables 113 FARM TENANCY IN CALIFORNIA AND METHODS OF LEASING" R. L. ADAMS 3 and WILLIAM H. SMITH, JR. 4 INTRODUCTION Some years ago the College of Agriculture reported upon farm tenancy and methods of leasing farms in California. 5 Since that time several im- portant developments have taken place. Changes have occurred not only in leasing practices, but also in the relations among owners, tenants, the general public, and the federal government. Out of these changes has come the growing realization for the need of a definite farm-tenure pro- gram. Of equal significance, but often overlooked, is the need for adapt- ing such a program to local conditions. The practical limitations and conditions peculiar to local problems must be considered in any program designed to improve relations be- tween landowners and tenants, and to aid tenants in improving their conditions. A thorough understanding of the prevailing tenure practices and leasing procedures is fundamental to both planning and executing a successful farm-tenure program. Thus, field investigation and careful study of prevailing leasing practices in each locality is the first step toward developing the broad essentials of a sound and equitable farm- tenure system. Such a system should incorporate the desirable features of farm tenure that are in successful operation and should consider the interests of the community as well as those of tenants and landlords. The purposes of this publication, therefore, are to (1) indicate the ex- tent and trend of farm tenancy in California, (2) point out the use- fulness or utility of the practice of leasing, (3) suggest a basis for determining an equitable division of farm income between landlord and tenant, (4) suggest certain items to be considered in drawing up farm leases, and (5) describe leasing methods and practices commonly fol- lowed in various sections of California. METHOD OF STUDY AND SOURCES OF DATA 6 The method followed in this study was largely of a survey nature. This 1 Received for publication October 11, 1940. This bulletin supersedes Circular 272, California Farm Tenancy and Methods of Leasing, by R. L. Adams. 2 Paper No. 95, The Giannini Foundation of Agricultural Economics. 3 Professor of Farm Management, Agricultural Economist in the Experiment Sta- tion, and Agricultural Economist on the Giannini Foundation. 4 Associate in Agricultural Economics. 5 Adams, R. L. California farm tenancy and methods of leasing. California Agr. Exp. Sta. Cir. 272:1-48. 1923. (Out of print.) The authors wish to acknowledge their indebtedness to those organizations and individuals who so kindly gave of their time and information. [3] 4 University of California — Experiment Station was dictated first, by the extensiveness of the area under consideration ; second, by the wide diversity of types of farming in California; and third, by the small amount of previous research in farm tenancy for this state. 7 For these reasons much of the analysis is of a descriptive nature. The authors have drawn heavily upon the reports of the United States Bureau of the Census, especially for those sections that deal with the extent and trend of farm tenancy and the distribution of farm tenancy in California. Recent studies from other states have supplied examples of tenure relations for which no similar data exist in California. Those sections that deal with the utility of farm tenancy, the rental basis, and California farm-leasing practices are based upon data largely derived from field surveys. The most important sources include the records of several county agricultural conservation associations; the Agricultural Extension Service ; California Lands, Inc. ; Spreckels Sugar Company ; local branches of the Bank of America, the Ameri- can Trust and Savings Company, and several locally owned banks; national farm loan associations and production credit associations ; sev- eral large land companies and estates ; Japanese businessmen's associa- tions and growers' associations; farm advisors and agricultural com- missioners ; real-estate brokers and agents ; and dealers in and buyers of crop and livestock products. Information derived from the above sources was supplemented by questionnaires, correspondence, and personal interviews with over 350 farmers and livestock men. The section dealing with recent federal legislation affecting leasing practices in California is based entirely upon the published material of the Agricultural Adjustment Administration, supplemented by corre- spondence with officials of that organization. The section "California Farm-Leasing Practices" is based upon data that have hitherto been unavailable. These data have been obtained from 4,377 farm leases and have been supplemented by field investigation in each of the important agricultural sections of the state. Although the data in this study have drawn from a relatively large number of leases and from a considerable number of different sources, it must be realized that the possibility exists that certain aspects of the data may be nonrepresentative to a larger or smaller degree. The data were compiled over a three-year period and are not strictly comparable 7 Only two studies have been previously published which deal expressly with farm tenancy in California. The first of these was carried out under the joint sponsorship of the Commonwealth Club and the University of California College of Agriculture. (Commonwealth Club. Land tenancy in California. Commonwealth Club of Cali- fornia, Trans. 17(10) :397-448. November, 1922.) The second study is: Adams, E. L. California farm tenancy and methods of leasing. California Agr. Exp. Sta. Cir. 272:1-48. 1923. (Out of print.) Bul. 655 Farm Tenancy in California in point of time. Data were taken from long-term leases and short-term leases and thns involve leasing arrangements made under different con- ditions. Likewise, the authors have no definite assurance that leases sampled in each area were representative of the district. An effort was made to check the findings based on leasing data with the general knowl- edge of authoritative persons in each important area studied. TABLE 1 Number op Farms in California and Distribution by Tenure Status, 1880-1940 Total farms Owners Part owners Managers Tenants Census date Farms Per- centage of all farms Farms Per- centage of all farms Farms Per- centage of all farms Farms Per- centage of all farms 1880 (June 1)... 1890 ( June 1) . . . 1900 (June 1). .. 1910 (Apr. 15)... 1920 (Jan. 1)... 1930 (Apr. 1)... 1935 (Jan. l)f. . 1940 (Apr. I)... number 35,934 52,894 72,542 88,197 117,670 135,676 150,360 132,658 number 28,810 43,489 44,318 56,500 75,882 90.375 99,443 89,843 per cent 80.2 82.2 61.2 64.1 64.5 66.6 66.2 67.6 number 8,211 10,132 11,698 13,131 11,404 13,991 per cent * 11.2 11.4 9.9 9.7 7.6 10.5 number 3,253 3,417 4,949 7,768 6,817 3,425 per cent * * 4.5 3.9 4.2 5.7 4.5 2.8 n umber 7.124 9,405 16,760 18,148 25,141 24,402 32,696 25,399 per cent 19.8 17.8 23.1 20.6 21.4 18.0 21.7 19.1 * Included with owners. t In taking the 1935 Census of Agriculture, greater emphasis was placed upon securing a complete count of all places that might be called farms, with the result that many properties not previously counted as farms were included. Peterson has estimated that about 2,000 small properties were not counted as farms in 1930 which would have been counted in 1935. (Peterson, George M. Composition and character- istics of the agricultural population in California. California Agr. Exp. Sta. Bul. 630:10. 1939.) Sources of data: 1880-1900: United States Bureau of the Census. Thirteenth Census of the United States, 1910. vol. 5:127. 1913. 1910-1935: United States Bureau of the Census. United States Census of Agriculture, 1935. vol. 1:937. 1936. 1940: United States Bureau of the Census. Sixteenth Census of the United Stat nary release S-49, April 5, 1941. 1940. Prelimi- Finally, the very diversity of leasing practices between different farms and different areas will account for some element of noncomparability both over time and over area. These qualifying conditions were not com- pletely known and may account for a considerable degree of noncom- parability and nonrepresentativeness in the data. EXTENT AND TREND OF FARM TENANCY IN CALIFORNIA Number of Tenant Farms. — During the past fifty years, the practice of renting agricultural lands for farming purposes became firmly estab- lished in California. Though farm tenancy in California ranked well below the average in the nation for 1935, table 1 indicates a continued importance of tenancy in the state. Of the 150,360 farms reported in University of California — Experiment Station 1935, 21.7 per cent were operated by tenants. This was a 3.7 per cent increase over the 18.0 per cent tenanted in 1930 and a 0.3 per cent in- crease over the 21.4 per cent tenanted in 1920. The 1940 preliminary census releases indicate a shift from full tenancy to renting by part owners. California has a relatively low proportion of farms tenanted when compared with other states, but a more significant fact is brought out by figure 1, which is that the increase in tenanted farms in California as STATE PER CENT STATE PER CENT West Virginia Colorado Missouri North Dakota South Dakota Oregon California Michigan Idaho Montana Washington Utah Ohio Minnesota Wisconsin Maine Iowa Nebraska New Jersey New Hampshire Pennsylvania Kansas Indiana Arizona Fig. 1. — Increase or decrease in number of farms operated by tenants as a per- centage of all farms, 1930—1935. (See footnote on comparability between 1930 and 1935 census data, table 1, p. 5.) Data from United State? Bureau of the Census. United States Cen us of Agriculture, 1935. vol. 1:20. table 3. 1936. a percentage of all farms during 1930 and 1935 was exceeded by only- six states. The rate of increase in California for farms tenanted in 1935 over farms tenanted in 1930 is exceeded by ten states. It is apparent from these data that, although the degree of tenancy in California has been relatively small, there is an indication that tenancy has increased at a somewhat higher rate than was true for most other states. Land Area Rented. — When the percentage of tenancy was measured as a percentage of land in farms, it was found that 22.4 per cent of all land in farms in California was occupied in 1935 by tenants who owned none of the land on which they farmed. Data shown in table 2 also indi- cate that tenants occupied 20.2 per cent of all land in farms in 1930 and 22.7 per cent in 1920. 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This proportion has remained relatively stable as compared with the rate of increase for the United States. Turner 8 shows that from 1900 to 1935 there has been an increase of 14 per cent (from 31 per cent to 45 per cent) for the United States, while the in- crease for California during that period was about 5 per cent. TABLE 3 Tenancy by Types of Farms in California, 1930 Types of farm Farms Percentage of all farms Percentage of total farm acreage Tenancy Total percentage tenanted Percentage ren ted for cash Percentage rented for share Truck Cotton Abnormal* Dairy Cash grain Crop specialty . . . Animal specialty. Stock ranches General Self-sufficing Poultry Fruit All types. number 6,688 2,971 16,356 15,179 4,311 8,944 2,012 5,121 4,426 2,233 15,424 52,011 135,676 per cent 5.0 2.3 12.2 11.2 3 2 6.6 1.5 3.8 3 3 1.6 11 3 38 100 per cent 1.7 1.6 6.4 8.8 10 5.1 2.2 49.1 3 6 13 10 2 100.0 per cent 39.2 39.2 37.2 35.8 32.7 28.5 17.8 17 13 7 9.7 9.2 8.2 18.0 per cent 27.6 9.7 14.2 30 4 5 9.2 11 4 13 3 9.0 6.3 7.5 2.5 10.2 per cent 11.6 30.5 23.0 5.8 28.2 19.3 6.4 3.7 4.7 3.4 1.7 5.7 7.8 * Includes prison farms, dude ranches, etc. Source of data: United States Bureau of the Census. Fifteenth Census of the United States, 1930. Agriculture, vol 3(3) :65. 1932. DISTRIBUTION OF FARM TENANCY IN CALIFORNIA Types of Farming.— Certain types of farming are more adaptable to operation under tenancy. This is especially true in California for cotton, truck, dairy, cash grain, and crop-specialty farms. Fruit, poultry, gen- eral and animal-specialty farms, and livestock ranches tend to be owner-operated in California. Table 3 indicates the prevalence of rent- ing among the various types of farming in this state for the year 1930. Although fruit farms constituted 38.0 per cent of the 135,676 farms in California at that time, only 8.2 per cent of all fruit farms were tenanted. Poultry farms constituted 11.3 per cent of the California farms in 1930 but only 9.2 per cent of these were rented. By contrast, cotton and truck farms accounted for only 2.3 and 5.0 per cent, respec- 8 Turner, H. A. A graphic summary of farm tenure. U. S. Dept. Agr. Misc. Pub. 261 : 7. fig. 6. December, 1936. Bul. 655] Farm Tenancy in California tively, of all farms in California in 1930, but in each case 39.2 per cent of these farms were rented. Dairy and cash-grain farms constituted 11.2 and 3.2 per cent, respectively, of all farms. Of these, 35.8 per cent of all dairy farms and 32.7 per cent of all cash-grain farms were tenanted. Turner shows that, with the exception of dairy farms, a similar con- dition exists for the United States. The tendency for truck, cotton, crop- specialty, and dairy farms to increase in number in California will prob- ably have considerable influence on the future of tenancy. Farm ..tenancy exceeding the state Farm tenancy equal to or less than the state Fig. 2. — Counties in which the percentage of farm tenancy exceeded the state average, 1935. Data from table 24. Location of Tenanted Farm Areas. — Those counties in California containing more than the average percentage of tenancy in 1935 are shown in figure 2. Figure 3 indicates by counties the percentage of all farms that were rented in 1935. This percentage varied considerably from county to county. Nevertheless, there is a decided concentration of tenancy in certain areas, notably in Imperial County, the central-coast counties, and in the Sacramento and San Joaquin valleys. Table 4 lists the ten counties that had the largest proportion of farms rented in 1935. These ranged from 30 per cent in Yolo and Kern counties 9 Turner, H. A. A graphic summary of farm tenture. U. S. Dept. Agr. Misc. Pub. 261 : 7. fig. 6. December, 1936. 10 University of California — Experiment Station 1 1 Less than 10.0 per cent □ 100 to 19.9 per cent 20.0 to 29.9 per cent 30.0 to 39.9 per cent 400 per cent or more Fig. 3. — Percentage of all farms which were tenant- operated in each county in 1935. Data from table 24. TABLE 4 Counties in Which 30 Per Cent or More of All Farms Were Rented in 1935, and Area in Commercial Vegetables in 1934 County Percentage of all farms rented, 1935 Area in com- mercial vege- tables, 1934 1 2 per cent 44 41 40 40 36 35 34 33 30 30 acres 83,039 * 800 11,755 6,737 13,550 60,489 22,104 9,640 Yolo 15,684 * Dash indicates data not available. Sources of data: Col. 1: From table 25. Col. 2: From: Schneider, John B. The importance of the California truck-crop industry, p. 18. table 11. California Agr. Ext. Serv. December, 1935. (Mimeo.) Bul. 655] Farm Tenancy in California 11 to 44 per cent in Imperial County. Nine of the ten counties contained a total of 46.7 per cent of the commercial vegetable acreage in 1934. 10 Table 5 shows that in 1935 there were seven counties (Inyo, Marin, San Mateo, Sutter, Colusa, Merced, and Contra Costa) in which over 50 per cent of the land in farms was rented. The percentage of all crop- land harvested by tenants in these seven counties varied from 25.3 per cent for Inyo to 60.2 per cent for San Mateo. In addition, seven other TABLE 5 Counties in Which 45 Per Cent or More of All Land in Farms Was Bented in 1935 County Percentage of all land in farms rented Acreage of grain* threshed in previous yeart Cows milked during previous yeart Percentage of all land in crops harvested by tenants / £ S 4 per cent 86.1 58.5 58.1 55.7 53.4 51.0 50.7 49.4 49.0 48.0 46.3 46.1 45.4 45.0 acres 178 3,171 6,557 125,006 149,367 110,786 28,885 56,956 70,190 161,581 145,872 44,121 84,074 102,871 number 550 23,447 5,257 5.912 4,837 41,661 7,794 20,448 11,600 32,283 6,425 17,130 7,783 50,545 per cent 25.3 47.2 60.2 Sutter 30.3 36.4 39.1 32.4 Kings 35 5 36.5 San Joaquin Yolo Imperial 36.5 33.7 37.1 Solano 22.5 28.5 * Wheat, barley, rice, and oats, t 1934. Sources of data: Cols. 1 and 4: From table 26. Cols. 2 and 3: United States Bureau of the Census. United States Census of Agriculture, 1935. vol. 1:947. 1936. counties had 45 per cent or more of their farm land rented during that year. In 1934 these fourteen counties threshed 56.5 per cent of the principal grains grown in California. 11 About 40 per cent of the cows milked in California during 1934 were contained in the same fourteen counties. Figure 4 indicates those counties in which the percentage of all land in farms rented in 1935 exceeded 30 per cent. Note the uniformity with which the renting of farm lands exists in the Sacramento and San Joa- quin valleys. The abnormally high proportion of land rented in Inyo County is accounted for by the large holdings over which the City of Los Angeles has control as a safeguard for its source of water supply. 10 Schneider, John B. The importance of the California truck-crop industry. California Agr. Ext. Serv. p. 18. table 11. December, 1935. (Mimeo.) 11 Wheat, barley, rice, and oats. 12 University of California — Experiment Station Size of Farm. — For some farmers, tenancy has been the means by which they have progressed from the status of farm laborer to that of farm operator. To others, tenancy has been the means of obtaining larger and more productive farms. When individual capital is limited, tenancy provides a means of achieving a more adequate income. Thus, an increase in the degree of tenancy in a given district may be brought about by farm laborers and farm operators who are seeking increased incomes through tenant farming. I I Less than 30.0 per cent EZI 30.0 to 39.9 per cent 40.0 to 49.9 per cent 50.0 to 59.9 per cent 60.0 per cent or more Fig. 4. — Percentage of all land in farms rented in 1935. Data from table 25. The size of farms is usually measured by acreage and value of land and buildings. Size of farm may also be measured in value and volume of produce and in a number of other significant characteristics. Table 6 indicates that the average farm in California has decreased in acreage over the period 1880-1935, while during the same period the value of the average farm has increased. Table 7 shows that despite the tendency for smaller farms to increase in California, farm tenants have rented proportionately more of the larger farms. In 1900, 17.9 per cent of the farms in California under 50 acres in size were tenant-operated, while 29.9 per cent of the farms of 175 acres Bul. 655] Farm Tenancy in California 13 or more in size were tenanted. Farms under 50 acres in size had increased from 39.0 per cent of all farms in 1900 to 63.3 per cent in 1930. Never- theless, tenants rented only 13.3 per cent of these smaller farms and TABLE 6 Size and Value of Average Farm in California, 1880-1935 Year Size of average farm Value of average farm* Average value per acre* 1880 acres 461.8 405.0 397.4 316.7 249.6 224.4 202.4 dollars 7,293 13,180 9,759 16,447 26,122 25,203 15,466 dollars 15.79 1890 32.53 1900 24.56 1910 51 93 1920 104.67 1930 112.33 1935 76.40 * Land and buildings only. Source of data: United States Bureau of the Census. United States Census of Agriculture, 1935. vol. 3:51. 1937. continued to prefer larger farms. Although only 16.1 per cent of the farms in California were 175 acres or larger in size in 1930, 27.7 per cent of these farms were tenant-operated. Similarly, Turner has shown TABLE 7 Sizes of Farms in California and Percentage Eented, 1900-1935 Farms under 50 acres Farms, 50 to 174 acres Farms, 175 acres or over Year Percentage of all farms Percentage rented Percentage of all farms Percentage rented Percentage of all farms Percentage rented 1 2 8 4 5 6 1900 per cent 39.0 48.9 56.0 63.3 65.7 per cent 17.9 * 13.3 per cent 29.3 25.7 24.0 20.6 19.4 per cent 22.5 24.8 per cent 31.7 25.3 20.1 16.1 14.8 per cent 29.9 1910 1920 _ 1930 27.7 1935 * Dashes indicate data not available. Sources of data: Cols. 1,3,5: United States Bureau of the Census. United States Census of Agriculture, 1935. vol. 3:100. 1937. Cols. 2, 4, 6: Turner H. A. A graphic summary of farm tenure. U. S. Dept. Agr. Misc. Pub. 261:34. 35. December, 1936. that for the United States the greatest increases in tenancy in the North and West have occurred for farms of larger sizes. 12 The relation between tenancy, farm size, and farm value has been pointed out in the report of the President's Committee on Farm Ten- 12 Turner, H. A. A graphic summary of farm tenure. U. S. Dept. Agr. Misc. Pub. 261:33. fig. 50. December, 1936. 14 University of California — Experiment Station ancy. 13 It was indicated that the average size of owner-operated farms in California for 1935 was 106.4 acres, and the value per farm was $11,978 for land and buildings. By contrast, tenant-operated farms averaged 208.1 acres in size and were valued at $14,136 per farm. Gen- erally, tenants in California have operated larger and more valuable farms than have owner-operators. Turner shows that a similar situation was true for most northern and western states during the year 1930 ; 14 but this was not true for the southern states. It is conceivable that this difference in types of tenancy may be influenced by the greater emphasis in the South on tenancy as a means of attaining operator status, whereas tenancy as a means of obtaining larger farms may be more emphasized in the North and West. MOBILITY OF TENANTS Extent of Moving. — The frequent moving of farm tenants has been held to be the most serious problem in farm tenancy. 15 Of the tenant farmers in the United States in 1934, 34.2 per cent moved to new farms during the following year (table 8). In California 31.1 per cent of all tenant farmers moved to new farms in 1935. Figure 5 indicates the mobility of tenants by counties during the year 1935. In nineteen coun- ties 50 per cent or more of the farm tenants had occupied their farms for only one year or less. There is no apparent relation between the degree of farm tenancy and the degree of mobility which exists in various counties. Nevada County, with the highest degree of tenant mobility (fig. 5) , had only 16.8 per cent of its farms under tenant operation in 1935 (table 9) . Imperial County had the second highest percentage (62.9 per cent) of tenant farmers who had occupied their farms for one year or less in 1935. As compared with 13 U. S. President's Committee. Farm tenancy. Eeport prepared under the auspices of the National Resources Committee, p. 104. Washington, D. C. February, 1937. 11 Turner, H. A. A graphic summary of farm tenure. U. S. Dept. Agr. Misc. Pub. 261:40. fig. 58. December, 1936. It is often felt that the average size of tenanted farms is larger than the average size of owner-operated farms because tenanted farms must support two families — that of the tenant and that of the owner. This opinion arises from a tendency to confuse the basis of rental payment with the person to whom the payment is made. Payment of rent constitutes a return to the landlord which includes interest and depreciation on capital, payment for taxes and management, and profit. The pay- ment of rent is made in the same manner to banks, insurance companies, land com- panies, and to individual farm owners. That the individual recipient of rent supports his family on the sum received is only incidental. The larger farm becomes necessary for the tenant because he receives only the returns from farming operations. The returns from land ownership go to the landowner. If the landowner and the farmer are one and the same person, then both incomes are received by him. Thus, to maintain a given income level, a smaller or less productive farm suffices for the owner-operator because he receives income from two sources — farming operations and ownership of land. 15 Schickele, Rainer, and Charles A. Norman. Farm tenure in Iowa, tenancy prob- lems and their relation to agricultural conservation. Iowa Agr. Exp. Sta. Bui. 354:172.1937. Bul. 655] Farm Tenancy in California 15 other counties, fewer tenants in Imperial County had occupied their farms for a period of five years or longer. Tenants in Marin County have been more stable than those in other highly tenanted counties. Over 53.0 per cent of all tenants in Marin County in 1935 had occupied their farms for five years or more. This may be compared with 9.4 per cent in Imperial County, 19.3 per cent in San Mateo County, and 27.3 per cent in Inyo County, other counties with comparable degrees of ten- ancy (table 26). TABLE 8 Percentage Distribution of Farm Operators by Term of Occupancy and by Tenure in California and the United States, 1935 Period of occupancy California United States Owners Tenants Owners Tenants per cent 6.1 4.3 14.9 21 4 18.7 34.6 per cent 31.1 14.9 26.7 14.7 6.9 5.7 per cent 5.9 3.9 13.2 17.2 15.3 44.5 per cent 34.2 One year Two to four years 13.1 24.1 14.7 6.8 7.1 Total 100.0 100.0 100.0 100.0 Source of data: U. S. President's Committee. Farm tenancy. Report prepared under the auspices of the Nationa Resources Committee, p. 100. table VII. Washington, D.C., February, 1937. In only eight counties did 40 per cent or more tenants occupy their farms for five years or longer. These counties include San Francisco, 66.7 per cent; Marin, 53.0 per cent; Mariposa, 50.0 per cent; Sierra, 50.0 per cent; Humboldt, 45.7 per cent; Amador, 42.6 per cent; Santa Barbara, 41.0 per cent; and San Luis Obispo, 40.0 per cent. Except for Marin County each of these counties has a relatively low degree of farm tenancy. Time of Moving. — As early as 1923 it was determined that most farm tenants in California moved during the months of October and Novem- ber. 16 No significant change has taken place since that time. The time of moving is fixed partly by custom and partly by the kinds of crops and livestock being raised. Crops like cotton, which have an extended harvest- ing period, may hold the tenant on his land later than November, whereas farms on which grain is threshed in early fall may allow tenants to move earlier than October. In dairy districts that are based on grass pasture, tenants usually move in March when winter stocks of feed are low and new grass is coming on. lfl Stewart, Charles L. When do tenants move? U. S. Dept. Agr. Div. Land Econ. p. 6. table 1. April, 1923. (Mimeo.) 16 University of California — Experiment Station Reasons for Moving. — Often one finds the assumption that all tenant mobility is undesirable and unprofitable. 17 This assumption is subject to some qualification in its application to California conditions. Consider, for example, the degree of mobility indicated in figure 5 for such counties PER CENT 20 40 60 80 100 COUNTY Nevada Imperial Shasta Tehama Lake Riverside Butte Kern Plumas San Bernardino San Diego Madera Glenn Tulare Merced Fresno Mono Mendocino Del Norte Placer Stanislaus Yolo El Dorado Napa Sonoma Modoc San Joaquin Calaveras Per cent of tenants on farms one year or S less COUNTY Sutter Kings Yuba Tuolumne Sacramento Contra Costa Santa Cruz Colusa Solano Siskiyou Santa Clara San Benito Ventura Trinity Inyo Mariposa Alameda Amador San Luis Obispo Orange Santa Barbara Los Angeles Monterey San Mateo Sierra Humbolt San Francisco Marin PER CENT 20 40 60 60 100 I Per cent of tenants on farms five years or more Fig. 5. Per cent of tenants on farms more than one year and less than five years -Mobility of farm tenants in California in 1935. Data from table 26. as Nevada, Shasta, Tehama, Lake, San Bernardino, Glenn, and Mendo- cino, all counties in which more than 50 per cent of the tenants in 1935 had occupied their farms for one year or less. In several of these counties the grazing of livestock is an important part of their agriculture. In these counties, too, there is considerable renting of pasture land and often very little renting of cropland (see table 9, cols. 2 and 3) . The rent- 17 Black, John D., and E. H. Allen. Farm tenancy in the United States. Quar. Jour. Econ. 51(3) :422. May, 1937. Bul. 655] Farm Tenancy in California 17 ing of summer and winter pasture is often carried on in conjunction with the ownership of a home ranch. Obviously the shifting from one seasonal pasture to another and to different pasture lands from year to year has little in common with the moving of tenant families from farm to farm. In the interpretation of United States census data, it is necessary to differentiate between the TABLE 9 Tenant Mobility Related to Percentage op Land in Farms and Land in Crops Which Was Rented in 1935 County Tenant mobility* Percentage of all farm land rented Percentage of harvested cropland rented Percentage of all farms rented 1 2 S 4 per cent 69.3 62.9 60.4 59.0 57.8 57.7 57.6 56.6 54.5 54.2 54.0 53.8 52.9 52.5 51.0 50.4 50.0 50 50.0 per cent 22.8 46.1 36.7 43.2 32 2 36.7 39.5 23.9 15.4 15.0 29.4 44.5 41.0 19.8 51.0 39.1 5.6 28.9 35.7 per cent 9.9 37.1 19.2 13.2 16.1 23.4 27.4 30.8 10.8 8.9 19.3 40.7 24.9 25.8 39.1 22.3 5.8 15.0 22.7 per cent 16.8 43.8 19.9 Tehama 21.4 15.4 17.6 Butte 17.6 Kern 30.0 10.0 San Bernardino 6.9 San Diego 14.6 28.5 21.9 Tulare Merced 22.1 35.8 Fresno 21.0 11.1 Mendocino 14.4 20.7 * Percentage of tenants on their farms one year or less. Sources of data: Col. 1: From table 26. Cols. 2 and 3: From table 25. Col. 4: From table 24. types of tenant mobility in order to evaluate the relative importance of mobility, for example, in Imperial County and in Nevada County. Another aspect of tenant mobility that is of importance in California involves the rotation of farmers who are crop specialists (p. 21). This type of tenant prefers to raise only one crop. He is a commercial operator in search of maximum profits from farming. Landlords who are aware of the danger from pest increase and soil depletion involved in crop specialization favor the mobility of such tenants. In these cases the attainment of benefits from crop rotation involves the rotation of both tenants and crops. From a strictly commercial viewpoint this practice may be a useful device for tenants and landlords. It is questionable, however, whether 18 University of California — Experiment Station the shifting of certain social costs to the community is justified by the possibilities of a greater revenue to the landlord and tenant. Against the possible difference in revenue one must balance the unsatisfactory community relations and poor housing which are usually coexistent with a high degree of tenant mobility. To a large degree the mobility of tenants is the outcome of natural com- petitive processes. In this adjustment, tenants as well as landlords are always seeking to better their positions. In some instances, tenants have bid up rental rates for better lands to a point often beyond their ability to pay except during the better years. Often these higher rental rates limit the type of farming to an extent which makes crop rotation un- profitable for the tenant. Mobility thus may arise from the inability of individual tenants to pay high rental rates year after year, and from the intensified specialization that is made necessary by the pressure of high rental rates. Although tenants move for a number of reasons in addition to those discussed above, probably the greatest single impetus for tenant mobil- ity arises from unsatisfactory landlord-tenant relations. 18 Leasing ar- rangements are so largely a matter of custom that neither landlords nor tenants give much thought to the improvement of their relations. The tenant often has little influence in determining the provisions of his lease. His attitude is usually one of obtaining the most favorable situation under the existing arrangements. If the tenant feels that he has not been treated fairly he moves on to another farm as soon as possible. Many such moves are merely the outcome of a lack of clear understand- ing between tenant and landlord at the very start. Matters of minor significance may easily become the reasons for moving if not properly agreed upon and recorded in a written lease. 19 Most tenant moving that arises out of landlord-tenant relations may be attributed to : 1. Short leases with no provisions for renewal. 2. Inadequate provision for improvements, upkeep, compensation, and rental adjustments. 18 Trent summarizes the importance of landlord-tenant relations in the following manner : "Probably no other transaction so vitally affects the nation's basic resources as this tenure relationship between 2,865,155 tenant farmers and their landlords. Probably no other type of transaction, with the possible exception of the industrial employer-employee relationship, so vitally affects the economic and social welfare of so many American people as tenure arrangements between the 13 million people who live on rented farms and the owners or landlords from whom they rent." (Trent, Dover P. The nation's soil and human resources. U. S. Dept. Agr. Farm Security Ad- ministration, p. 9. Undated mimeograph.) 10 Bausman found that 7 per cent of the reasons given by tenants for moving con- cerned the condition of buildings and fences, and 10 per cent concerned other conflict- ing interests of the landlord and tenant. (Bausman, R. O. Farm tenancy in Delaware. Delaware Agr. Exp. Sta. Bui. 178:75. table 26. August, 1932.) See also: Schuler, E. A. Social status and farm tenure. U. S. Farm Security Ad- ministration Social Research Report IV: 164. table 96. April, 1938. Bul. 655] Farm Tenancy in California 19 3. Noncooperation and mutual distrust between landlord and tenant. 4. Incompetent or dishonest tenants and landlords. Probably the best illustration of the great number of minor points upon which landlord-tenant disagreements may develop is to be found in an Iowa study. 20 This report is based upon the replies of 573 persons, each of whom expressed his opinion on the "main shortcomings of our leasing practices and landlord-tenant relationships." The most numerous of these replies are presented below in the order of their frequency. Only the four or five most numerous replies are given under each classification but this number will suffice to illustrate the range and character of replies received. Tyrpes of i and i ords . Insecurity of tenure : Landlords too greedy Short-term leases Landlords are overmortgaged Too short notice Landlord doesn't furnish materials Landlord's lien Many incompetent landlords Minimum term should be three years Landlords not concerned about welfare Inadequate lease provisions : No compensation for improvements _ - , , . , Many incompetent tenants Too few stock-share leases „ . 5 . . of tenant and farm Types of tenants : Inadequate improvements Leases in landlord's favor Tenants exploit soil Tenants operate on shoestring Dishonest tenants Lack of definite understanding Tenant not interested in another man , g regarding upkeep f arm Unsatisfactory rental provision : Attitudes : Rents too high Disagreements due to petty differences Eents too high on grassland and intolerance Landlord and tenant think only Lack of cooperation between landlord about rent and tenant Renters outbid each other Exploitation spirit in landlords and Cash rents fully due even in crop tenants failure Landlord fails to understand tenant's problems THE UTILITY OF FARM TENANCY Taylor defines farm tenancy as ". . . an institution which provides for getting the land into the hands of those who are in a position to cultivate it but who are unable to buy farms." 21 This has been the traditional use for tenancy in the United States ; primarily to facilitate the transfer of farms from one generation to the next. There is, however, considerable evidence that tenancy in California has come to have several additional uses. Some of these are discussed on pages 20 to 23. 20 Report and recommendations of the Farm Tenancy Committee. Iowa State Plan- ning Board, p. 62 and 63. Des Moines, Iowa. October, 1938. 21 Taylor, Henry C. Agricultural economics, p. 270. The Macmillan Company, New York. 1922. 20 University of California — Experiment Station AVAILABILITY OF FARMS FOR LEASING In California extensive areas of the state are in possession of owners who do not care to sell at prevailing prices. Other owners are unable or unwilling to farm or manage their holdings personally. These owners look upon farm ownership as an investment. Tenancy provides such own- ers with an income, less responsibility and risk, freedom from farm labor problems, a possibility for larger and more regular returns, and freedom to live in localities which provide better educational facilities for their children or more desirable living conditions for themselves. Tenancy relieves owners who are engaged primarily in other businesses and who find it inconvenient or impossible to give the time and attention required in operating a farm. This applies particularly to banks, farm- mortgage companies, insurance companies, and other lending institu- tions. These agencies have come into possession of extensive holdings of farm properties during the past seven or eight years as a result of fore- closure and assignment of delinquent mortgages. 22 Tenancy provides a means of utilizing these and other lands while being held for eventual sale. Lands that are being held for ultimate uses other than farming, such as power sites, mineral claims, burial grounds, residential subdivisions, forest plantings, or water supplies, may be temporarily leased to farm tenants. Tenancy is commonly utilized in connection with lands in- cluded in estates pending final court decrees permitting distribution of THE DEMAND FOR FARMS TO LEASE The preceding section indicates how farms become directly available for renting. There is the demand side of any exchange to be considered as well. Why do some farmers prefer to rent rather than become owners ? Why are some farmers content to remain tenants all or most of their lives ? Finally, why do some farmers find it impossible to become owners ? There are two major groups of farmers in California who practice leasing. These may be thought of as (1) farmers who prefer renting to owning, and (2) farmers for whom ownership is impossible under present circumstances. In order to facilitate discussion, each of these groups will be described separately, though it should be understood that there is no clear-cut distinction separating one group from the other. In other 22 "At the beginning of 1929 the Federal Land Banks, the joint stock land banks, life insurance companies, and three state credit agencies had an investment of not quite 150 million dollars in acquired real estate. By 1937 this had increased to over 983 million dollars involving 28 million acres of farm lands. To this sum may be added over 45% million dollars of farm lands held in 1937 by operating commercial banks." (Wall, Norman J., and J. E. Enquist. A graphic summary of agricultural credit. U. S. Dept. Agr. Misc. Pub. 2:68:3, 4. September, 1938.) Bul. 655] Farm Tenancy in California 21 words, where the individual farmer is concerned there may be an over- lapping in the considerations which influence him to practice leasing. Farmers Who Prefer Renting to Owning. — Included in this group are newcomers to agriculture and newcomers to California. The former find tenancy the means by which they may gain experience in farming and test themselves before actual purchase. The latter find tenancy the means by which they may test their ability under California conditions. There are also farmers who are prospective buyers and wish to test the suitability of a particular farm. A second portion of the group that prefers renting to owning is made up of farmers who use tenancy as a means for increasing their farm in- come. They are characterized by better-than-average skill and capacity but lack the necessary capital or credit for buying a farm suited to their needs. Tenancy serves to transfer the required capital from those who have it to those who are able to make fuller use of it. This consideration is particularly important in California where the average farm in 1935 was valued at $15,466, as compared with $4,823 for the United States as a whole. 23 In the same year, United States census data show that tenant farms averaged 208.1 acres in size in California as compared with 106.4 acres for the average owner-operated farm in California. There has been a definite tendency for tenants in California to operate larger and more valuable farms than is true for owners. Closely allied to tenants who rent all the land which they farm are part owners. These are owner-operators who rent only a portion of the land on which they farm. They too use tenancy as a means for increasing size of farm and farm income. The United States census data for 1935 show that part owners in California rented over 50 per cent of the land which they farmed during that year. This amounted to more than two thirds of the acreage farmed by full tenants during the same year. 24 Included also in the group of farmers who prefer renting to owning are those for whom tenancy allows the concentration of knowledge, skill, equipment, and capital on the growing of one or two specialized crops year after year. Under this system a rotation of farmers accompanies the rotation of crops. Mobility is highly desirable to this group of farmers and the ownership of land becomes an unattractive use of their capital. The practice is illustrated in some sections of the state where lands have been rented in the past for dairying and alfalfa ; this was followed 23 United States Bureau of the Census. United States Census of Agriculture, 1935. 1:937. 1936. See also: U. S. President's Committee. Farm tenancy. Report prepared under the auspices of the National Resources Committee, p. 103, 104. Washington, D. C. February, 1937. 24 United States Bureau of the Census. United States Census of Agriculture, 1935. 1:937. 1936. 22 University of California — Experiment Station with several years of truck crops. When yields declined the land was returned to dairying and alfalfa. This method of rotating farmers who are crop specialists is also practiced on several of the large holdings in California. The records of one estate, for example, showed a regular cropping system of sugar beets, beans, and alfalfa, with specific tenants being regularly shifted to maintain the cropping system. This practice involves the social costs of excessive tenant mobility. (See p. 17.) A very unusual and the final segment in the group of farmers who prefer renting to owning is composed of corporations and individuals who are known locally as "grower-shippers." These are mainly growers of large quantities of specialized truck crops. They not only farm large areas of the better soils in an intensive manner but they also operate packing, icing, and shipping facilities for their products and the prod- ucts of smaller farmers who sell to grower-shippers. It is not unheard of for a grower-shipper to handle products that have been raised on land owned by him, on lands rented by him from individuals and corpora- tions, and on lands farmed and owned by other farmers. The operations of grower-shippers are somewhat speculative. They require large amounts of capital for operating and equipment expense. In common with most speculative enterprises, grower-shippers desire liquidity and flexibility of capital so as to meet changing needs quickly. Renting of land, hiring of labor and facilities, and the borrowing of large sums of money are characteristic of grower-shipper operations. Intense competition among the members of this group and other large- scale operators for early markets and high prices has influenced rental rates in some districts to the point where crop rotation has been reduced to a minimum and the application of large amounts of fertilizer has be- come a standard practice. Farmers for Whom Ownership Is Almost Impossible under Present Conditions. — There are two principal groups of tenants for whom owner- ship is well nigh impossible under present conditions in California. These may be classed as (1) farmers who are limited in physical and mental capacity, and (2) farmers who lack capital and credit standing. The determinants of these two classes of farmers apply not only to those tenant farmers who have striven unsuccessfully for ownership but also to farm laborers who have sought tenant status. In the discussion of farm tenure it is usually assumed that the only alternative is between farm tenancy and farm ownership. As a matter of fact, the real alternative is often between farm tenancy and working as a farm laborer. 2 "' 25 Goldenweiser, E. A., and Leon E. Truesdell. Farm tenancy in the United States. U. S. Bur. of the Census. Census Monograph IV: 14, 15. 1924. See also: McCormick, Thomas C. Comparative study of rural relief and non- relief households. Works Progress Administration Research Monograph, p. 59, 65, 66, 1935. Bul. 655] Farm Tenancy in California 23 Contrast the relative position of a tenant who has shelter and food for his family, and a job, if only for a year, with the position of thousands of migrant farm laborers in California who have at the best five to six months' work each year. The migratory farm laborer in California often moves several times a year, sometimes to other states and back again. His living level is probably much below that of the farm tenant in California. The attainment of tenant status by a portion of this group would be a step toward stability and would represent a distinct advance in their well-being. It is usually more difficult to raise one's status from tenant to owner than from laborer to tenant. That this has become increasingly so was indicated as early as 1921 by Bizzell. 26 A similar conclusion was reached by Goldenweiser and Truesdell in 1924," 7 who pointed to the increasing percentage of tenancy in the higher age groups as evidence that a per- manent tenant class was developing in the United States. Turner, in 1936, had this to say : "These facts indicate that if a young man wished to farm it became increasingly necessary to accept the status of tenant or cropper, and that fewer young men were finding acceptable opportunities even as tenants and croppers." 28 The difficulty which farm laborers and tenants have encountered in attempting to attain owner status is complicated by greater capital re- quirements due to increased land values and increased mechanization on the one hand, and to low agricultural wages and farm earnings on the other. Where wages are low or employment sporadic, the acquiring of capital for farm ownership is often beyond the ability of farm laborers. Implements and tools, however, may be acquired gradually and they constitute a much smaller investment than is represented by the average owner-operated farm in California. BARRIERS TO OWNERSHIP Limited Ability and Capacity. — The responsibilities and obligations of ownership in a highly competitve form of agriculture are often beyond the capacity of some tenants (and some owners). Many are not capable of successfully operating farms on their own initiative but, when super- vised and directed by landlords, such tenants often make very successful farmers. They often require help in the financing of farming operations and in marketing products. A number of these people have passed the time of life when they can develop initiative, self-reliance, and new abili- 28 Bizzell, W. B. Farm tenancy in the United States. Texas Agr. Exp. Sta. Bul. 278:176.1921. 27 Goldenweiser, E. A., and Leon E. Truesdell. Farm tenancy in the United States. U. S. Bur. of the Census. Census Monograph IV: 141, 142, also 92, 93. 1924. 28 Turner, H. A. A graphic summary of farm tenure. U. S. Dept. Agr. Misc. Pub. 261:44. December, 1936. 24 University of California — Experiment Station ties necessary to independent operation. 29 For them a secure and satis- factory tenancy is preferable to an insecure and mortgaged ownership with its attendant risk and obligations of interest, taxes, and other ex- penses. It is for these farmers that tenure improvement has its greatest significance. Although farmers who find it impossible to attain owner status have been classified into two groups for the purpose of discussion, it should be realized that these groups are not mutually exclusive. The factors that have made tenancy a permanent status for a specific farmer might easily be a combination of lack of capital and old age, or limited ability. Insufficient Capital. — Why is it impossible for the bulk of the tenant farmers in this group to attain ownership ? In the past this has not been so. Formerly, farmers could turn to cheaply priced railroad lands and to homestead grants. Fertile lands from these sources have long been ex- hausted. Now farmers must finance the purchase of land or resort to tenancy. As land values rise, capital requirements increase and credit facilities become increasingly important in facilitating farm ownership. Rising land prices in California have made the holding of land profitable in the past. This has largely been due to a profitable system of agriculture and to the tendency to capitalize speculative and residential values along with productive or agricultural values. When farmers are faced with high capital requirements and are unable to meet the provisions set up by credit agencies, they must decide between the ownership of a smaller or less productive farm and renting a larger or more productive farm. 80 Some hope for tenants in this group has been held since the passage of the Bankhead-Jones Farm Tenant Act in July, 1937. This act has a clear- cut program of making loans to tenants for the purpose of buying farms. The act provides for departures from ordinary mortgage-loan procedure in three main respects : (1) the terms of the loan are very liberal in that each borrower may obtain credit up to the full value of the security for 20 Bausman found that out of 178 tenants in Delaware, over one half did not in- tend to buy a farm eventually. Of this number over 27 per cent gave old age as their reason and 33 per cent gave financial inability and fear of debt as their reasons. (Bausman, R. O. Farm tenancy in Delaware. Delaware Agr. Exp. Sta. Bui. 178:91. table 40. 1932.) See also: Schuler, E. A. Attitudes and social conditions of corn belt and cotton belt farmers. U. S. Farm Security Administration Social Research Report IV : 66, 68. April, 1938. See also: Report and recommendations of the Farm Tenancy Committee. Iowa State Planning Board, p. 61. October, 1938. 80 Black and Allen have concluded that "unless some form of mortgaging can be developed that permits interest and principal payments according to yearly in- come variations, more tenants than formerly should keep their wealth in working capital than in land." (Black, John D., and R. H. Allen. Farm tenancy in the United States. Quar. Jour. Econ. 51(3) :420. May, 1937.) Bul. 655] Farm Tenancy in California 25 a longer period and at lower interest rates than are ordinarily possible ; (2) the lending contract provides that certain farming practices, ap- proved by the Secretary of Agriculture, be followed by the borrower ; and (3 ) the borrower can sell or assign his farm only with the permission of the Secretary of Agriculture. The tenant-purchase program has been in operation over three years. Up to June 30, 1939, a total of 6,180 farms were purchased by tenants, over half of which were in the cotton belt. 31 Only 39 farms were pur- chased under the Act in California during the same period. These 39 farms averaged 43 acres in size and had an average value of $8,127 each. 32 The 1939^0 program was expected to permit about 7,068 new farms to be purchased in the United States for which 38 million dollars was appropriated. 33 What does this program mean to tenants who are barred from owner- ship through lack of capital and credit ? Assuming that appropriations reach 50 million dollars a year and about 5 per cent of this amount is used for administration, 12,125 loans each averaging $4,000 could be made each year. This number would be less than one half of 1 per cent of the number of tenants and share croppers in the United States in 1935. Obviously the bulk of tenants desiring ownership will not be helped by a program of this size. As one writer has said of these appropriations, "They are less than the appropriations made in recent years for emer- gency feed and seed loans." 34 What then are the prospects for governmental credit to reduce farm tenancy? Murray believes that government farm credit can be consid- ered successful if it prevents a continuation of the trend toward tenancy even though it does not reduce farm tenancy. But he is pessimistic : If we assume 100 million dollars is loaned annually, a liberal estimate, one half by the Farm Credit Administration through the Federal Land Banks and Land Bank Commissioners, and the other half by the Secretary of Agriculture as authorized by the Farm Tenant Act, even this amount will not have much effect. ... it should not be overlooked that this sum is equal to approximately only one per cent of the value of land and buildings on tenant operated farms. 35 The net conclusion, then, is that the bulk of tenants who desire owner- ship but who lack adequate capital and credit cannot look forward to ownership in the near future. For them a program of improved condi- tions of tenure will be of most immediate benefit. 31 United States Department of Agriculture. Press release. November 7, 1939. 32 United States Department of Agriculture. Press release. September 1, 1939. 33 United States Department of Agriculture. Press release. August 1, 1939. 34 Maddox, James G. The Bankhead-Jones Farm Tenant Act. Law and Contem- porary Problems IV(4) : 451. Duke University. October, 1937. 35 Murray, William G. Governmental farm credit and tenancy. Law and Contem- porary Problems IV(4):506. Duke University. October, 1937. 26 University op California — Experiment Station THE RENTAL BASIS Definitions. — Leasing is the result of a demand for lands by those who do not or cannot buy, supplied by owners who cannot or prefer not to farm their lands. When defined, "leasing" or "tenanting" of farms or farm lands is the granting by an owner to another the right to use land, buildings, improvements, equipment, and other property over a period or at will, in return for an agreed rental, service, or other compensation. In law the terms "leasing" and "renting" are used interchangeably, but in general usage leasing implies a written contract, while renting implies a verbal agreement. The lease itself is an agreement or contract, which may be verbal or written. The written document, usually called a lease, is actually an instrument or evidence of a lease in which the various terms, conditions, stipulations, covenants, and agreements are set forth governing and de- fining the rights of both parties under the lease. A tenant is one who receives right of possession under consent of the owner or his agent for the purpose of holding, occupying, and farming the land. The tenant may be designated in the lease form as the "lessee," the "party of the second part," the "second party," or simply as the "renter" or the "tenant." The rent is the amount and the nature of the consideration for which the owner agrees to lease or rent a given farm property. Rents may be paid in the form of money (cash rent) or in crops (crop-share rent) ; they may be fixed rents or sliding-scale rents. A fixed rent is one in which the amount to be paid in cash or crop share is agreed upon at the time the lease is drawn. A sliding-scale rent is one in which the amount of money or crop share to be paid is contingent upon a variable such as the price received, the crop yield, the gross returns, or the manner and form in which the product is marketed. The grantor of a lease (usually an owner, agent for an owner, or trus- tee) is commonly designated as the "lessor," the "party of the first part," the "landowner," or "landlord." CASH RENTING In cash renting, 30 a certain price per acre or a lump sum for the entire farm is paid. In California the tenant usually pays all or a part of the 30 Care must be exercised in the interpretation of cash-rental rates as given in this publication. Unless otherwise stated, the cash-rental figure is the annual contract rate per acre. Thus, if two or three different vegetable crops are grown during the year upon a given piece of land, each crop is quoted as being grown on land that rents for a given sum per acre per year. While it is true that in allocating costs each crop would bear only a portion of the total annual rent, it must be realized that only the figure for the yearly rent per acre is significant for comparison. If one should use figures corresponding to the rent allocated to each crop, such Bul. 655] Farm Tenancy in California 27 cash rent in advance. Where part payment is made, the tenant guarantees the payment of the balance regardless of good or bad season. He assumes supervision of the farm and furnishes all the working capital required for farm operation. This includes man and horse labor, tractors, machin- ery, implements, tools, feed, seed, and usually all the livestock when kept as a part of the farm. Cash renting is, therefore, usually limited to ten- ants who have accumulated sufficient capital to enable them to operate a farm in the customary manner. Flexibility Needed in Cash Renting. — Renting for fixed cash rents over relatively long periods has a definite danger for both landlord and tenant. This is especially true in California because so large a part of the farming carried on is highly specialized and commercialized. It is usually assumed that in cash renting no problem of dividing the returns is in- volved ; yet in a broader sense the amount of rent that can and will be paid depends, in the long run, upon the amount of gross income, as in share renting. For that reason determining in advance how much cash rent the tenant will be able to pay is of special importance to tenants and landlords, particularly where longer leases are involved. This may be ap- proximated by drawing up a farming plan, based on a mutually accept- able cropping system, in which the probable average yearly gross income is determined. It must be assumed that average prices over the past few years will be received for yields that are typical for the farm under con- sideration. A rough estimate of probable net farm income for the farm under consideration may be obtained by budgeting costs that are typical of local conditions, or by the use of accepted standards of production that prevail in the community. A method even more suitable is to compute the cash rent to be paid on a sliding-scale basis. This may be done after the proper rental rate for the farm under present conditions has been determined. The sliding-scale method serves to add flexibility to the cash rental rate so that it may be adjusted to meet future conditions of costs, prices, and yields. A detailed discussion of the sliding-scale method of computing rental rates will be found in the section "Sliding- Scale Rents" (p. 34). In actual practice the setting of a fixed cash rental rate is largely influenced by commodity prices prevailing at the time the lease is being negotiated. As a consequence, either the tenant or the landlord may sub- figures would be so markedly influenced by the differences in cropping systems fol- lowed as to obviate comparison among lands otherwise comparable in rental value. In addition, such allocated rental figures would be unsatisfactory for one of the purposes of this paper, namely "to describe leasing methods commonly followed in this state." One of the common practices in the state is to determine cash-rental rates on a yearly rental per acre. Renters and landowners carry on negotiations in terms of annual rental rates per acre. Therefore, information contained in this publication would be considerably reduced in its applicability unless presented on a basis which promotes its understanding and comparability. 28 University of California — Experiment Station sequently suffer a reduction in relative returns received over the period of the lease. It is almost axiomatic that long-time (three years or more) leases favor the landlord on a declining price trend and favor the tenant on a rising price trend. 37 The same relation holds to a lesser degree for seasonal price trends and shorter leases. Three remedies have been suggested for this situation: (1) one-year leases with option for renewal, (2) longer leases but with provision for annual adjustment of rent, and (3) both annual and longer leases using the sliding-scale basis for adjusting rental rates. Each of these three types of leases has been used in California. Their use, however, is rela- TABLE 10 Cash and Share Tenants on California Farms, 1900-1930 Total tenants Cash tenants Share tenants* Year Farms Percentage Farms Percentage 1900 1910 number 16,760 18,148 25,141 24,402 number 9,074 9,737 14,230 13,880 per cent 54.1 53.7 56.6 56.9 number 7,686 8,411 10,911 10,522 per cent 45.9 46.3 1920 43 4 1930 43.1 * Includes some cash-share renters. Sources of data: 1900: United States Bureau of the Census. Twelfth Census of the United States, 1900. vol. 5:33. 1902. 1910: United States Bureau of the Census. Fourteenth Census of the United States, 1920. vol. 6(3) :36. 1922. 1920-1930: United States Bureau of the Census. Fifteenth Census of the United States, 1930. Agriculture, vol. 2(1) :31. 1932. tively rare as compared with that of the more rigid contract customarily used. Landlords, tenants, and their agents are inclined to perpetuate in- adequate lease forms rather than make needed improvements. For this reason, there is a definite need for the development and distribution of more acceptable lease forms that will incorporate some measure of flexi- bility, and that will be acceptable to both landlords and tenants. Types of Farms Rented for Cash. — In 1930 about 57 per cent of all farms tenanted in California were rented for cash (table 10). Only six states exceeded California in this respect, five of which were north At- lantic states, the sixth being the neighboring state of Nevada. 38 The distribution of share and cash renting among farm types in Cali- fornia for 1930 is shown in table 3 (p. 8). Cash renting is common for leasing dairies, poultry farms, stock ranches, truck farms, and abnormal farms. For each of these farm types, two thirds or more of the farms tenanted are rented for cash. Although field data analyzed as a basis for 37 Holmes, C. L. Drawing up the farm lease. Iowa Agr. Exp. Sta. Cir. 87:9. 1923. :!s Turner, H. A. A graphic summary of farm tenure. U. S. Dept. Agr. Misc. Pub. 231:18. fig. 22. December, 1936. Bul. 655] Farm Tenancy in California 29 this publication were confined almost entirely to the years 1936 to 1939, inclusive, the results indicate a similar distribution of cash renting among the various farm types in California. (See tables 12, 14, 16, 18, 19, and 20.) Exceptions to this generalization occur because of local conditions and unusual circumstances. For instance, where vegetable lands are being newly developed and no record of past yields exists upon which tenants may base their judgment of the rental rate asked, it is the practice to rent on a crop-share basis. Under such conditions, tenants will often refuse to pay a fixed cash rent until two or three crops have been grown and an estimate of probable future yields may be made. This procedure is common in the newer vegetable districts and is often used in older established districts when land is shifted from one crop to another, the latter crop being grown for the first time. By trial and error certain lands are determined to be favorable or unfavorable for a given crop, but the tenant prefers to shift a part of this risk to the landlord through the medium of share renting. Dairying affords another example where an exception to the rule exists because of local conditions. Most of the dairies leased in California are rented for cash, but dairy leasing in Humboldt and Imperial counties is based largely on the share method. In both counties the share method has apparently supplied the necessary flexibility to the rental rates that has been obtained in other counties through the use of the sliding-scale cash rent. Time of Payment. — Cash rents are often paid monthly in advance as is true for dairy and poultry farms, or quarterly and semiannually as is true for most truck farms. Cash rents for pasture land and stock ranches are computed as a lump sum per year or so much per acre per year for permanent pasture. Rent for seasonal pasture is usually computed on a head-month or animal-unit basis ; however, in some cases a lump sum is paid. Payment may vary according to the individual circumstances of both landlord and tenant. Monthly and quarterly periods of payment are commonly used for seasonal or supplementary feeds, whereas semi- annual and annual periods of payment are more usual for pasture and ranches rented on an annual basis. Reasons for Payment of Cash Rent. — It is difficult to determine why landowners and tenants favor cash renting for one crop and share rent- ing for another. Although several reasons have been given by both land- lords and tenants, the answer is not known in the majority of cases. The owner who rents for cash is able to quote a lower rental rate owing to the smaller risk and degree of management required. 39 Tenants who have 39 Holmes, C. L. Eelation of types of tenancy to types of farming in Iowa. Iowa Agr. Exp. Sta. Bul. 214:330, 332, and 358. table IV. 1923. 30 University op California — Experiment Station above-average equipment and capital usually prefer to rent for cash, but this is not true for all crops in California. Crops grown on a share basis in one part of the state are often grown on a cash basis in another part. This was found to be especially true for sugar beets (see p. 65). In numerous cases both cash and share leasing for the same crop existed side by side. Custom, habit, type of farming, price outlook, and indi- vidual circumstances play an important part in determining both the form and the amount of rent to be charged. Cash renting is more often used in California for lands growing crops that are highly perishable and subject to extreme seasonal price varia- tions, or where the product is not homogeneous and is difficult of proper division except in money terms. Type of landlord often influences the payment of cash rent. For some owners it is impossible or undesirable to give the attention required when crops are divided on a share basis. Institutional owners, managers of estates, absentee owners, and heirs with little or no farming experience favor leases requiring the least supervision of tenant and property, and which provide for payment of rents in cash, usually in advance. Reasons Given by Oivners and Tenants Who Prefer Cash Renting. — Owners who favor cash rents declare that : 1. Cash renting protects them from careless and inexperienced tenants. 2. There is less need for supervision of tenants. 3. Cash rents being paid in advance involve no collection difficulties. 4. Kisks from crop failure and market fluctuation are passed on to the tenant. 5. The cash lease is easier to prepare and understand. 6. The better tenants prefer cash renting. Many tenants too prefer cash renting. They believe that : 1. Cash rental rates average less than share rents. 2. The cash lease is simpler and easier to understand. 3. There is greater freedom in selecting enterprises, farming methods, and market outlets. 4. The tenant receives the full benefit from his skill and hard work. 5. All benefits from higher yields, better quality, and higher prices go to the tenant. 6. There is less interference from the landlord. SHARE RENTING Under the share method of renting, the landlord receives a fixed share of the crop or the proceeds from its sale. Unlike most cash renting the landlord who rents for a crop share receives his rent at the end of the crop season. Thus his returns depend upon the kind of crops grown, the Bul. 655] Farm Tenancy in California 31 care and skill with which the farm is operated, and crop yields and prices obtained. Under share leasing the landlord retains a larger measure of control over the tenant and the farm than is true under cash leasing. This is par- ticularly important to landlords who furnish a part of the dairy herd in dairy leases or for leases of orchards and vineyards. Landlords renting on shares often include provisions in the rental contract that determine the acreage of each crop to be grown, the farming practices to be fol- lowed, the method of marketing, and the time and method of delivering the landlord's share. Because of this added function of supervision which share renting involves for the landlord, and because of the increased risk involved in share renting, share landlords normally receive higher rental rates than do cash landlords. 40 In California the tenant who rents for a share usually furnishes all or most of the working capital for operating the farm. This includes operat- ing cash, labor, machinery, implements, tools, seed, and materials. Modi- fications of this general practice exist for several crops and in several areas. For example, landlords often furnish a part of the seed or fer- tilizer, or a portion of the water or harvesting costs. In other cases land- lords may furnish a part of the equipment and tools as is often done in orchard and vineyard leases. Share renting is particularly suited to farmers who have limited capi- tal but have the necessary skill and equipment. It is also suited to farmers who have less-than-average managerial ability but adequate farming knowledge and skill. Share renting is suited to landlords who have both the time and the knowledge to contribute to the relation necessitated be- tween landlord and tenant by the share agreement. The most important consideration in share renting is the process by which a proper division of the crop is determined. Most landlords and tenants understand and agree upon the proposition that the gross income from the farming operations should be divided in proportion to the value of the contributions made by the two parties respectively. They do not, however, often understand what the value of their contribution amounts to and how to determine a basis for proper division of the crop. The result is seen in the perpetuation of accepted rental rates in common usage in each community. The failure to determine the rental share on the basis of the amount and value of each party's contribution often leads to the inequitableness to be found in share-rent contracts. The remedy is for tenants and landlords to learn how to appraise their respective con- 40 Johnson, O. E., and E. M. Green. Eenting land in Missouri. Missouri Agr. Exp. Sta. Bul. 167:18. table 12. 1920. See also: Holmes, C. L. Eelation of types of tenancy to types of farming in Iowa. Iowa Agr. Exp. Sta. Bul. 214:332, 358, and 361. 1923. 32 University of California — Experiment Station tributions and to follow this procedure in determining the rental share. One approach to this problem involves the use of the "empirical method," which is discussed in detail in the section "Empirical Method for Deter- mining the Division of Farm Income" (p. 40). Types of Farms Rented for Shares. — During 1930 about 43 per cent of the tenanted farms in California were rented for a share of the crop (table 10). These farms constituted about 8 per cent of all farms in California, including both rented and nonrented farms. Most share leasing in California is practiced in the renting of cash grain, cotton, and crop-specialty farms and orchards and vineyards. This relation is shown in table 3. A similar relation was disclosed from analysis of the data and field surveys which have provided a part of the basis for this study. (See tables 12 and 16.) Information derived from table 3 indicates that about 85.0 per cent of the cash-grain farms rented in 1930 were leased on shares. For cotton the percentage was 77.8 per cent, while 62.2 per cent of the crop-specialty farms were leased for shares. Although only 8.0 per cent of the fruit orchards and vineyards in the state were rented in 1930, share renting was the preferred method of leasing, there being 75.0 per cent of the rented orchards and vineyards on the share basis. In many cases, orchard owners prefer the share method because greater control over their relatively large investment is retained. Reasons for Payment of Share Rent. — Share renting in California is most often used where crops are relatively nonperishable and may be easily and cheaply stored, or where the product is homogeneous and a fair division is easily obtained. Both landlords and tenants have given several reasons for preferring to rent on shares; yet field observation and leasing data have indicated that the custom of the community is the most potent factor in determining whether share or cash leasing will be followed. To illustrate, it was noted that in areas where relatively more cash renting for other crops was practiced, there was also more renting of field crops for cash than elsewhere in the state. This was particularly true for beans, flax, peas, and sugar beets and was noticeable mainly in the Salinas Valley, Ventura County, Imperial Valley, and in Kern County. The influence of habit is well illustrated by the general use of one- fourth share for field crops. Where one-fourth share was found to be inequitable, landlords and tenants made adjustments in the relative con- tributions that each furnished rather than change the rental rate. This tendency to change the terms of the lease rather than the amount of rent has accounted in part for the highly variable nature of leases and leasing practices found in California. Farmers who have organized their operations on the share system often find it difficult or undesirable to change to cash renting. Not unlikely is Bul. 655] Farm Tenancy in California 33 the realization by farmers of the favorable man-land relation involved in growing field crops on a share basis. This is particularly true for grain hay, small grains, and beans. When tenants spread their labor, equip- ment, and management over larger acreages of land, the resulting prod- uct is due to a relatively lesser use of the tenant's labor, management, and equipment, and a relatively greater use of the landlord's land. Thus the tenant uses his contribution to the best advantage in relation to the amount of land involved and receives a relatively higher unit return on his contribution. Changes in the type of farming in an area have often resulted in changes in the prevailing system of leasing. This may be illustrated by the present development of truck-crop production in the southern San Joaquin Valley. In the past this area has been devoted mainly to crops that have rented for shares, but with the development of truck crops has come the use of new leasing methods, new farming methods, and, to a certain degree, new farmers. When the price outlook is unstable, landlords who anticipate rising prices, such as for instance those which came about during World War I, will demand share rents in order to benefit from the price increase. 41 On the other hand, when declining prices are anticipated, landlords prefer cash renting. Considerable share leasing is practiced because tenants often have limited cash available and little or no credit standing. Payment of cash rent by them is impossible. Landlords find it necessary to rent to these tenants on shares. In some cases the advancement of operating funds and other help is necessary to enable the tenant to bring the crop through harvest. Reasons Given by Owners and Tenants Who Prefer Share Renting. — Owners prefer share renting because : 1. Share rents average higher than cash rents. 2. It is easier to supervise and direct the tenant's farming and market- ing operations. 3. Owners receive a part of any increase in returns due to higher yields, better quality, and better prices. 4. Owners participate in the returns due to the hard work and acumen exercised by the tenant. Tenants prefer share renting because : 1. Share renting permits farming with less money. 2. Share rents are more equitable in that they partially provide for changing market conditions and prices. 41 Holmes, C. L. Eelation of types of tenancy to types of farming in Iowa. Iowa Agr. Exp. Sta. Bul. 214:344, 345. 1923. 34 University of California — Experiment Station 3. Under share renting the risk from crop failure, poor yields, and poor quality is shared with the landlord. 4. The landlord is more interested in the success of the tenant and will more easily advance financial and other help to the tenant if needed. SLIDING-SCALE RENTS Purpose and Nature. — One of the most important weaknesses in rent- ing for fixed cash or share rents is the rigidity of rental rates in the face of price changes or crop failure. Englehorn shows that in the drought years of 1934 and 1936 the cash tenant in southern Iowa was at the mercy of the landlord. 42 In 57 per cent of the cases studied, no adjustment was made in the cash rent. In 17 per cent of the cases, reductions were made ranging from 25 to 50 per cent, and in 12 per cent of the cases, tenants still had last year's rent to pay in April of the following year. Holmes presents the situation in the following manner : In the prosperous years of 1916 to 1919 the gross receipts of farmers increased very greatly. On cash rented farms the landlord's share of these receipts does not increase, as does that of the share landlord, with increases in price of products which come in the course of the year or during the term of the contract. Further, the tenants strenuously resist increases in the rental rate when contracts are renewed even though prices are rising. . . . With the slump in prices and the resulting disastrous seasons of 1920 and 1921 it was the tenant who wanted share rent. Those who had contracted to pay a fixed sum at an increased rate for the use of their farms were threatened with bankruptcy. County records show that of the farmers who took advantage of the provision for voluntary bankruptcy, by far the larger proportion were cash tenants. 43 Landlords and tenants have tried to correct this situation by using one-year leases or by adjusting rental rates at annual intervals in longer leases. This practice has not proved adequate, especially for seasonal price changes. A more adequate method which has come into use in Cali- fornia and elsewhere is the "sliding scale" method of determining rental rates. One of the first to advocate this method of adjusting rental rates was Millard Peck. 44 He showed that cash rental rates change with price changes, but to a lesser degree and with a decided lag in time. Thus rents tend to be higher than they should be when prices are low and lower than they should be when prices are high. In principle, the sliding-scale cash rental is a periodic determination of a rental rate based on prices obtainable for the farm products during the period for which the rent is calculated. It is a reflection of the share method in leasing but translates quantities of products into terms of 42 Englehorn, E. J. Farm tenure in Iowa. Part VI. Landlord-tenant relationships in southern Iowa. Iowa Agr. Exp. Sta. Bui. 372:81. 1938. 43 Holmes, C. L. Eelation of types of tenancy to types of farming in Iowa. Iowa Agr. Exp. Sta. Bui. 214:344, 345. 1923. 44 Peck, Millard. A plan for adjusting cash rent to changes in prices of farm prod- ucts. Iowa Agr. Exp. Sta. Bui. 295:210. 1932. Bul. 655] Farm Tenancy in California 35 money, the amount of which is to be changed periodically according to the changes in prices for the particular products. The rental rate is stipulated at the time of drawing up the lease, but determining the actual rent to be paid is postponed until some future time (for example, monthly, quarterly, semiannually, or annually). Although Peck's orig- inal exposition of the sliding-scale renting method provided for rents to be based entirely upon the price factor, the methods in use in Cali- fornia often include consideration of yield, quality, and method of har- vesting, as well as price. Advocates of the sliding-scale method claim that it results in a rent closely related to prices of farm products and that it tends to stabilize the economics of tenant farming by encouraging longer-term leasing. They also claim that the sliding-scale method of renting encourages live- stock production, relieves the landlord of marketing responsibilities, and lessens the degree of supervision over the tenant. Finally, they claim that the plan is equitable and readily workable. In theory, the sliding-scale rental is based on the assumption that over a period of years cash rentals tend to adjust themselves to the prices which tenants receive for their products, and that a given percentage change in prices of products will eventually be reflected by a similar percentage change in cash rentals. This method facilitates that adjust- ment by recognizing that cash rents in excess of the tenant's ability to pay are not readily collected. In addition, collection may entail undue hardship for the tenant. Likewise, when cash rents are set below the tenant's ability to pay, the landlord is deprived of an equitable share in the farm income. Improving the Sliding-Scale Method. — Eventually the element of pro- duction costs should be introduced as further refining the sliding-scale method. Variability in cost factors between farms of similar type and yield capacity should be more often considered in setting rental rates. It is well known that the better farms tend to be undervalued and the poorer farms overvalued. Appraisers, assessors, farmers, and business- men have experienced this phenomenon. It is also well known that a given group of similar farms growing the same crops in any one year will exhibit a wide distribution of unit costs and unit profits. Equality of yields or prices between different farms does not necessarily mean equality of net farm incomes. Differences in managerial ability account for a large part of the differ- ences in net farm incomes earned by similar farms. However, it is also true that greater inputs of labor, fertilizer, cultivation, and irrigation water often account for higher yields and price returns. Under a system in which rental rates are based on price or price and yields, the farmer 36 University of California — Experiment Station on average-quality land who produces high yields and quality through greater inputs is penalized relative to the farmer who produces similar yields and quality on the best land with lesser inputs. Table 11 will illustrate this relation. If price alone had been used to set rental rates, six farmers receiving from $10.00 to $10.78 per 100 pounds would have paid similar cash rent, although their net incomes per acre ranged from $7.24 for farm no. 4 to $26.77 for farm no. 11. TABLE 11 Yields, Costs, and Beturns of Fifteen Tulare County Cotton Growers, 1933 Farm no. Yield of lint per acre Average prices per hundred- weight lint Total costs per acre Total income per acre Net income per acre 1 pounds 1,226 851 750 802 599 605 838 615 531 619 345 484 487 533 458 773 443 dollars 11.00 9.72 10.78 9.63 10.00 10.10 9.67 9.00 10.60 10.22 10.55 8.97 9.50 9.50 9.50 9.85 10.07 dollars 91.59 62.07 62.21 61.68 43.38 50.02 73.34 50.47 51.91 59.11 34 43 45.62 49.46 58.51 54 42 60.81 44.02 dollars 147.10 91.94 88.98 87.19 64.48 69.68 93.17 62.79 64.10 71.19 41.67 48.78 52.60 57.48 49.42 85.57 50.66 dollars 55.51 9 29.87 11 26.77 5 25.51 6 21.10 10a 19.66 10 18.83 3 12.32 12 12.19 14 12.08 4 7.24 8 3.16 13 3 14 136 -1.03 13a -5 00 24.76 6.64 Source of data: Derrick, Neil. Cotton Enterprise-Efficiency Study, Fourth Annual Summary, Tulare County, 1933. 8 p. California Agr. Ext. Serv. 1934. (Mimeo.) If gross income (that is, price combined with yield) had been used to set rental rates, then the four farmers with gross incomes of between $62.79 and $69.68 per acre would have paid similar rents although their net incomes per acre ranged from $12.19 for farm no. 12 to $21.10 for farm no. 6. A consideration of farm no. 10 in relation to the fourteen remaining farms will illustrate the situation very clearly. Farm no. 10 had third highest yields and the second highest gross income, but low prices and the second highest costs were sufficient to reduce net farm income per acre to seventh place. High costs for farm no. 10 were mainly due to excessive expenditures for cultural and harvesting labor. The average per acre cultural-labor cost on fifteen cotton farms was $8.47, but the figure for farm no. 10 was $14.65 per acre. The average expenditure for Bul. 655] Farm Tenancy in California 37 harvest labor on fifteen farms was $16.07 per acre; on farm no. 10 it was $26.42. Thus farmers who obtain increased yields and increased gross income through the expenditures of larger-than-usual sums for better preparing the land, better cultivation of the crop, and careful and complete harvesting will be penalized by a renting system which over- looks the cost factor in setting rental rates. Examples of Slidi?ig-Scale Bents Used in California. — Several ex- amples of sliding-scale rents were noted during the progress of this study. Some of these are given below, together with the names of the crops and the areas for which they are in use. Rental rates quoted are not to be taken as being correct for all properties in the area but only as an example of the rent for this particular property under a given set of circumstances. Therefore, rental rates quoted are only illustrative of the method of computation involved in using the sliding-scale rental basis. Nine leases for dairy properties located in Monterey County were leased on the sliding-scale basis for the period 1931 to 1940. The rental basis in use for the period 1937 to 1940 was the monthly average milk- fat quotation on the San Francisco market, the scale being as follows : Milk-fat quotation, Rent per acre in cents per pound per month Below 30 $1.15 30-39 1.31 40 or more , 1.52 Rents are payable in advance and the rent for the current month is based on average milk-fat prices for the previous month. The tenant furnishes everything except land, buildings, and taxes and insurance thereon and maintains all fences, buildings, and sewerage systems, and agrees to whitewash dairy buildings once each year. Materials for repair and maintenance and for whitewashing are furnished by the owner. In the Los Banos district, over 40 leases for dairy and alfalfa in combi- nation were using sliding-scale rents based on the monthly average milk- fat quotation on the San Francisco market. Most of these w T ere based on the following scale : Milk-fat quotation. Rent per acre in cents per pound per month 25.0 or less $1.67 25.1-32.5 2.08 32.6 and above 2.50 Rents are payable monthly in advance and the rent for each month is based on the average milk-fat prices obtainable for the previous month. Tenants pay water costs and furnish everything except land and build- ings. The landlord usually furnishes seed for reseeding the alfalfa stands. Buildings must be of a type to pass the California state require- 38 University of California — Experiment Station merits for grade-A-milk production or the landlord furnishes materials with which the tenant may repair and remodel unsatisfactory buildings. When new buildings are required the landlord also furnishes all mate- rials while the tenant is responsible for their erection. Landlords and tenants in Humboldt County have developed a dairy lease providing for the distribution of dairy income on a share basis but incorporating certain features of the sliding-scale method. A yearly rental of a certain number of pounds of milk fat is agreed upon by both parties. This amount of milk fat is based on a careful estimate of the carrying capacity of the alfalfa enterprise and an assumption that pro- duction will average 300 pounds of milk fat per cow per year. Landlords and tenants then agree on the proper share of income (usually 33% per cent or 30 per cent) to be paid as rent. Payment of this share is divided into twelve monthly installments. Unlike the sliding-scale methods which are based on price, the Humboldt method takes into consideration the seasonality of dairy production. Monthly payments are so graduated as to provide for the tenant's operat- ing expenses in each month. Hence, the tenant pays the largest part of his annual rent during the months when the production of his herd is at its peak. The monthly rent is paid on the fifteenth day of each month in the following manner : Per cent of the Month yearly rent February 15 2.5 March 15 0.0 April 15 5.0 May 35 10.0 June 15 12.5 July 15 15.0 August 15 12.5 September 15 10.0 October 15 10.0 November 15 10.0 December 15 7.5 January 15 5.0 Under this method of leasing, the tenant furnishes the herd, equipment, operating capital, feed, labor, and materials required to operate the dairy and the alfalfa enterprise. The landlord furnishes the land, seed for developing alfalfa, house and dairy buildings, and pays taxes and insurance on land and buildings. Several leases for dairies operated in conjunction with Ladino clover were investigated. One of these located in Kern County illustrates a typical rental scale based on monthly average quotations on the San Bul. 655] Farm Tenancy in California 39 Francisco market for 92-score butter as given by the Federal-State Mar- ket News Service : Butter quotations, Rent per acre in cents per pound per month 20 $0.50 21 0.75 22 1.00 23 1.25 24 1.50 25 1.75 Rents are payable in advance each month and are based on average quotations for the previous month. Tenants furnish everything except land and buildings. Where water and seed are furnished by the land- lord there is an adjustment in rental rate. Several leases for cotton lands were noted to be using rental rates based on sliding scales. One of these in Fresno County paid rentals based on the following scale for the period 1936 through 1939. Share rent, in Price of cotton, in per cent of seed cents per pound and lint Up to 10.00 20 10.01 to n.oo : 21 11.01 to 12.00 22 12.01 to 13.00 23 13.01 to 14.00 24 Over 14 25 In these leases the tenant furnished everything except land and was required to deliver the landlord's share at the gin. The landlord paid his pro-rata share of ginning charges. The above lease shows that the sliding- scale principle is equally well adapted to share rents as to cash rents. Thus the owner shares in increased prices as well as increased yields. The owner in practically all cases receives his pro-rata share of all fed- eral cotton-allotment payments, and, where available, a share of Soil Conservation Act payments. A number of vineyards were rented on the sliding-scale basis. One of these, a farm in Fresno County on which Thompson Seedless grapes were grown, rented for the following shares during 1937-1939. Share rent when Share rent Share rent when sold sold roadside or when sold on Raisin prices, in as raisins or table at dehydrator, in vines, in cents per pound pack, in per cent per cent per cent 2.0 or less 35 40 45 2.1 to 3.0 40 45 50 3.1 to 4.0 471/2 52% 57% 4.1 or more 55 60 65 40 University of California — Experiment Stat. on Owner pays for ditch water and one third of the pest control. Another lease in the same county illustrates the same method but a different scale on which rents were computed for Thompson Seedless grapes. Raisin prices, in Share rent, in cents per pound per cent Up to 3.0 30 3.1-3.5 35 3.6-4.0 40 4.1-4.5 45 Another example of a sliding-scale method in use is shown below for a prune orchard in Yuba County. Base price, in Share rent, in cents per pound per cent 1 None 2 20 2% 30 . Over 2V 2 33% Numerous additional examples of sliding-scale rents were studied in this survey. Few were used for beef cattle, lamb feeding, apples, sugar beets, and truck crops, and practically no sliding-scale rentals were being used in leasing lands for raising grain or grain hay. EMPIRICAL METHOD FOR DETERMINING THE DIVISION OF FARM INCOME The amount in money or crop share that constitutes a fair rent for a given property is frequently a matter for dispute. Custom is not a safe guide, even though it largely operates in setting rental rates. Changes in leasing practices lag behind changes in economic conditions, and the necessary adjustments involve considerable friction between landlords and tenants. Custom may be the starting point in setting rental rates, but the rate should also be tested to determine the extent to which each party is entitled to share in the income. The empirical test, or analysis, indicates what each party to the lease (owner and tenant) is entitled to receive as his share of income by giving due weight to that which each contributes toward producing the income, and to compensate each party in accordance with his relative contribu- tion. These contributions may be of several kinds, including the fol- lowing : 1. Eeal estate (land, buildings, orchards, pumping plants). 2. Working equipment (work animals, tractors, trucks, automobiles, implements, and machinery), dairy-house equipment, orchard equipment, poultry equipment, and other equipment. 3. Livestock other than work animals. 4. Capital to finance operations. Bul. G55] Farm Tenancy in California 41 5. Labor (manual and managerial). 6. Cash expenses for materials, supplies, power, and harvesting. 7. Taxes and insurance. All items are based on the proposition that the person who contributes is entitled to (a) the prevailing rate of interest, a sum to offset deprecia- tion, and proper maintenance of any real estate or equipment that he contributes, (b) a fair rate of interest plus mortality or replacement of work animals and other livestock, (c) the return of moneys advanced for operating needs (either with or without interest), (d) the prevailing rate of wages (including management by either party when con- tributed), (e) full return of all cash paid out for labor, feed, seed, and other cost outlays required in the operation of the farm, and (/) com- pensation for taxes paid and insurance covered. These calculations are to be made on the productive value of the farm. 45 The procedure consists in carefully listing : 1. What the owner supplies. 2. What the owner pays. 3. What the tenant supplies. 4. What the tenant pays. The use of fixed capital is figured by including interest, depreciation, maintenance or upkeep, and mortality. Actual expenditures are in- cluded at full price. Unpaid labor is figured at its current worth, and taxes and insurance are included at the actual amounts paid. The sum- mary of these items constitutes the productive basis for the farm income, and each party is entitled to share in the farm income to the extent that he has contributed toward its production. The first step in the procedure consists in making two lists, one showing what the tenant supplies, the other what the owner supplies. For ex- ample, assume that an 80-acre farm is available, on which there is a 20- cow dairy, 10 brood sows, 50 acres of alfalfa, 25 acres in small grains or corn, and complete equipment. The landlord agrees to furnish land (worth $9,020), buildings (worth $1,270), 20 cows, 1 bull, 10 brood sows, 1 boar, $530 worth of farm implements, and $328 worth of mis- cellaneous equipment. The landlord will also pay taxes ($125) and in- surance ($15). The tenant is to supply work animals (worth $300), all labor, all purchased seed, feed, and the money required for operating expenses ($500) . Items involved : From owner : Land $ 9,020.00 Buildings 1,270.00 45 The productive value of the farm is based on its expected ability to yield a given money income over a given period in the future. It is the present value of the farm as a business organization and makes no allowance for home value or speculative value. 42 University of California — Experiment Station From owner (Continued) : Cows (20) $ 1,200.00 Bull 100.00 Sows (10) 150.00 Boar 20.00 Implements 530.00 Miscellaneous equipment 328.00 Taxes 125.00 Insurance 15.00 Total .' $12,758.00 From tenant : Work stock $ 300.00 Labor and management (personal and hired) 1,400.00 Purchased feed : Horses 12.00 Dairy 360.00 Hogs 374.00 Seed 21.00 Water (irrigation, domestic, and stock) 80.00 Other materials 10.00 Contract work (baling hay, threshing grain) 142.00 Incidentals 50.00 Total $ 2,749.00 Assuming that these figures are accurate, and that each party is en- titled to (a) return of money spent outright, (&) 4 per cent interest on capital, and (c) an amount to cover depreciation, the following results are obtained : For owner : Outlay — taxes and insurance $ 140.00 Interest on investment— $12,618 at 4 per cent 504.72 Depreciation : 5 per cent on buildings 63.50 6 per cent on cows and bull 98.00 17 per cent on sows and boar 28.90 10 per cent on implements 53.00 25 per cent on $116 special equipment 29.00 10 per cent on $105 special equipment 10.50 10 per cent on $109 tools 10.90 Total interest of owner in output $ 938.52 For tenant : Outlay : Labor $ 1,400.00 Feed 646.00 Seed 21.00 Water 80.00 Materials 10.00 BuL - 655 ] Farm Tenancy in California 43 For tenant (Continued) : Contract work '. . $ 142.00 Incidentals 50.00 Interest on operating funds at 4 per cent on $500 20.00 Interest on work animals at 4 per cent on $300 12.00 Depreciation of work animals at 10 per cent on $300 .... 30.00 Total interest of tenant in output $ 2,414.00 Total interest of both parties $ 3,352.52 Allocation of income (cash or product) : To landlord 28 per cent To tenant 72 per cent This test will function properly only when accurate values are assigned to each contribution from the tenant and landlord. The test does not establish a universal standard good for all time, but must be adjusted to meet new conditions. If the farm does not produce enough income to meet the combined interests of both parties then each shall share in the deficit according to his respective contributions, just as each would have shared in the surplus had it occurred. RECENT FEDERAL LEGISLATION AFFECTING CALIFORNIA FARM-LEASING PRACTICES Legislative measures for raising agricultural prices, for the disposal of domestic surpluses, and for controlling agricultural production have become of increasing concern to farmers since the early 1920's. Most im- portant of these which influence leasing practices today are the Federal Soil Conservation and Domestic Allotment Acts of 1935 and 1936, as supplemented by the Sugar Act of 1937 and the Agricultural Adjust- ment Act of 1938. These provide for :* 1. Conservation payments to producers who adjust their acreage of soil-depleting crops as prescribed in the allotments and carry out soil- building practices as approved by the Agricultural Adjustment Ad- ministration. 2. Parity or price-adjustment payments, when funds are provided by Congress, to producers of corn, wheat, cotton, tobacco, and rice who do not overplant their allotments. 3. Commodity loans to cooperators. 4. Marketing control of surpluses when approved by two-thirds vote of the producers of cotton, wheat, corn, rice, and tobacco. 5. Federal crop insurance on wheat. 6. Purchases of farm surpluses f or_relief distribution. 7. Funds to subsidize the exporting of farm surpluses. 40 United States Agricultural Adjustment Administration. The A.A.A. notebook. Farm Plans, p. 7. Washington, D.C. March, 1939. 44 University of California — Experiment Station These acts involve landlord-tenant relations to the extent that land- lords and tenants participate in the federal agricultural program. Beginning in 1937 and continuing during 1938, 1939, and 1940, both tenants and landlords have become increasingly aware of adjustments made necessary by their participation in one or more phases of the fed- eral farm program. At first the question of participation and subsequent distribution of benefit payments was covered by simple verbal agree- ments between landlords and tenants. Later stipulations in written leases often provided that the tenant "comply with the provisions of the Agricultural Adjustment Act," while in other leases it was stipulated that "the tenant will comply with the crop acreage allotment as provided for his particular farm by the county Agricultural Conservation Pro- gram." Most of the leases in which these provisions were noted also in- cluded a clause that covered the division of benefit payments on the same basis as for division of the crop. One such clause, which is particularly complete, is quoted as follows : The tenant shall pay to the owner a sum equal to % of any and all of the condi- tional payments allocable to said sugar beet crop under the Sugar Act of 1937, or any laws in continuation or amendment thereof or in substitution therefor, without deduc- tion on account of any such payments which may be in fact not obtained because of tenant's failure or neglect to comply with any of the conditions or requisites there- for ; payments on account of said sum to be made to owner at the rate of % of each such conditional payment when such payment is received by tenant or would have been received but for non-compliance with all of the conditions and requisites therefor. Other leases provided for the sharing of any payments arising out of the agricultural conservation program. An example of one such clause reads as follows : The tenant shall pay to the owner a sum equal to */£ of any soil conservation or other benefit payments which may be payable in connection with the said crop or acreage upon which it is grown, said sum to be payable to owner at the rate of % of each such payment of whatsoever nature, which becomes payable. Seldom are specific cropping programs or conservation practices set forth within the lease form. Often the landlord relies upon the tenant for knowledge and direction in carrying out the requirements set up by the Agricultural Adjustment Administration. Both farm owners and tenants may (and should) obtain complete information regarding the requirements set up by the Agricultural Adjustment Administration by communicating with their county agricultural conservation committee or the secretary of the county conservation committee association. A brief summary of the conditions and provisions of the Agricultural Ad- justment Act now (1940) in effect as these pertain to leasing practices is given below. Bul. 655] Farm Tenancy in California 45 AGRICULTURAL CONSERVATION PROGRAM Under the agricultural conservation program as carried out by the Agricultural Adjustment Administration, benefit or compliance pay- ments are made to farmers and farm owners for their voluntary co- operation in following certain farming practices that are deemed soil building in nature. The total amount of such payments is limited by a soil-building allowance for each farm, the sum of Avhich can be obtained from the office of the county agricultural conservation association. Some of these practices are as follows : 1. Application of commercial fertilizers. 47 2. Application of straw and mulching materials. 3. Constructing standard terraces, ditches, reservoirs, and dams for the control of runoff and to provide stock water. 4. Reseeding depleted pastures. 5. Seeding and renovating legumes and grasses. 6. Planting and using green manure and covercrops. 7. Seeding alfalfa and permanent pasture grasses. 8. Planting and cultivating forest trees. 9. Control of noxious weeds. 10. Contour listing, subsoiling, or furrowing of noncropland. 11. Contour seeding of small grain crops. 12. Strip cropping and pit cultivation. RANGE CONSERVATION PROGRAM Under the range conservation program, payment is made to ranch owners and operators for following such range-building practices as : 1. Natural reseeding by deferred grazing. 2. Artificial reseeding of depleted pastures. 3. Contour listing, furrowing, or subsoiling for erosion and runoff control. 4. Construction of spreader dams and terraces. 5. Development of stock water on range lands, both artificial and natural sources. 6. Elimination of destructive plants, especially Klamath weed. 7. Establishing fire guards. As a condition to obtaining payments for these practices, the rancher must follow conservation-range-management practices as to grazing ca- pacity and securing and maintaining a good stand of grass or other 47 Limited to the application of (a) superphosphates to establish stands or new developments of legumes, ryegrass, perennial grasses, permanent pastures, green- manure crops for orchards; (fc) gypsum or sulfur to cropland; and (c) fertilizer to sugar beets. 46 University of California — Experiment Station forest plants. Total payments that may be earned by any ranching unit by the performance of the above practices are limited by a range-build- ing- allowance based on the acreage and carrying capacity of the range. Payments earned for following approved soil-building practices are made to the landlord, tenant, or share cropper who carried out the soil- building practices. If more than one person contributed toward these soil-building practices, then "payment shall be divided in the proportion that the units contributed by each such person to such practices bears to the total units of such practices carried out on the farm in 1939. " 48 DOMESTIC ALLOTMENT PROGRAM Under the provisions of this program as administered by the Agricul- tural Adjustment Administration, payments are made to farmers for their voluntary compliance with the soil-depleting acreage allotment which has been determined for their individual farm. Compliance re- quires that only a certain proportion of the farm be planted to soil- depleting crops, the remainder of the land to be put to nonsoil-depleting crops or uses. Specific crops included as soil-depleting crops in California are corn, tobacco, grain and sweet sorghums, cotton, rice, broom corn, mangel- wurzels (or stock beets), potatoes, sugar beets, truck crops, commercial bulbs and flowers, commercial mustard, cultivated sunflowers, hemp, flax (except where used as a nurse crop or where matched acre for acre with legumes or grasses), wheat, buckwheat, rye, millet, Sudan grass (unless used for pasture), oats, peas, barley, peanuts, field beans, and soybeans. 49 Special allotments are established for cotton, rice, wheat, potatoes, and commercial vegetables. All other soil-depleting crops are classified as general soil-depleting crops. Payments are made on the basis of normal yields per acre for each farm and are computed for each acre of the allotted acreage. Acreage allotments for each farm are made on the basis of good soil management, tillable acreage, soil types, topography, degree of erosion, and the acre- age of soil-depleting crops customarily grown. Penalties for noncompli- ance are provided for in a scale of deductions for each acre planted over the established allotment. In the event that deductions exceed payments, a deduction may be made from either the landlord's share or the tenant's share of any payments made to either or both of them with respect to any other farms in the county or state. Proration of Benefits and Deductions. — The net payment or net de- duction to be made for compliance or noncompliance with the provisions 4 " United States Agricultural Adjustment Administration. Payments in connection with soil building practices. California Handbook. Section 10b, p. 29. Washington, D. C. February, 1939. 4!> United States Agricultural Adjustment Administration. 1940 California Hand- book, p. 27-28. Washington, D. C. October, 1939. Bul. 655] Farm Tenancy in California 47 of the domestic allotment program is divided among landlords, tenants, and share croppers in the same proportion that each is entitled to share in the crop proceeds at the time of harvest. Fixed commodity payments are excepted. When cash rental is paid, the tenant is considered to have full interest in the crop and is therefore entitled to the entire compliance payment. Where landlords attempt to avoid responsibility for excess acreage of soil-depleting crops by leasing for cash, the county or state committee has the authority to deny any or all of the payments. In case of crop failure or nonplanting of crops, payments are prorated according to the amounts which the landlord, tenant, or share cropper would have shared if the entire acreage had been harvested. The total of all payments in any one year is limited to $10,000 to any one person or corporation. General Provisions Regarding Payments. — Payment of benefits is determined by the extent to which the farmer cooperates with the Agri- cultural Adjustment Administration toward achieving the aims of the Agricultural Adjustment Act of 1938. No payments for other than soil-building practices shall be computed for any farm lying idle. Payments or shares of payments are computed and made regardless of questions of title, advances, claims or liens against any crop or the proceeds therefrom in favor of the owner or any creditor. Payments or shares of payments are assignable for financing crops or as security for cash loaned for that purpose. Any unjustifiable change in farm arrangements from those existing in one year which would give the landlord a larger share of payments under the program for the following year may be disapproved by the county committee and payments made on the former basis. In the event of any unjustifiable reduction in the number of share tenants or share croppers in a given year below the average number on the farm during the preceding three years, which would result in in- creased payments to the landlord, such payments shall not be greater than would otherwise be made provided the county committee certifies the reduction as unjustified and disapproves such a reduction. If any person who files an application under the provisions of the 1939 program has resorted to any form of subterfuge to deprive any other person of payment to which such person is normally entitled, the Secre- tary of Agriculture may withhold all or part of the payments due the person participating or employing the scheme. The Secretary may also require such a person to refund, in whole or in part, the amount of pay- ment that has been or would otherwise be made to such a person in con- nection with the prevailing program. 48 University op California — Experiment Station Payment of benefits is made only upon application by a person who is entitled to share in the crops grown on the farm under a lease or oper- ating agreement, or who is the owner or operator of the farm. If a person has the right to receive all or part of crops or proceeds from more than one farm in a county, application for all the farms must be made at the time of application for payment on any one farm. FACTORS TO BE CONSIDERED BY LANDLORDS AND TENANTS WHEN EITHER OR BOTH PLAN TO PARTICIPATE IN THE SOIL CONSERVATION PROGRAM Tenants and landlords should express and discuss their intentions to participate or not to participate in the current agricultural program be- fore signing a lease. The tenant should learn what commitments the land- lord has made for the future, what soil-building plans or measures the owner has in mind, and whether or not the owner will require him to contribute toward the cost of such measures. Tenants who plan to grow cotton, potatoes, rice, commercial vegetables, or wheat should determine whether or not the landlord plans to participate in the allotment pro- gram and to what extent such participation will reduce the acreage avail- able for growing that crop. The latter consideration may be illustrated for cotton. Cotton acreage allotments are : apportioned among the farms of the county on which cotton was planted in any one or more of the three previous years, in a manner that will result in a cotton acreage allotment for each such farm which is a percentage (which shall be the same per- centage for all farms in the county or administrative area) of the land in the farm during the third year which was tilled annually or in regular rotation exclusive of the acres of such land normally devoted to the production of sugar cane for sugar, wheat, rice for market, or wheat or rice for feeding to livestock for market. 50 The tenant who plans to grow commercial potatoes should know whether or not the property to be leased is located in one or more of the following counties which are designated as the commercial potato area for California by the Agricultural Adjustment Administration. These counties are Contra Costa, Kern, Los Angeles, Modoc, Riverside, San Bernardino, San Joaquin, and Siskiyou. A larger area has been designated as the commercial vegetable area in California and includes 28 of the counties in the state. The landlord who plans to participate in one or more phases of the federal agricultural program should outline the nature of such par- ticipation to the prospective tenant and should designate the tenant's part in the program with suitable clauses in the lease form. The landlord 50 United States Agricultural Adjustment Administration. Farm acreage allot- ments. 1940 California Handbook. Section 4, p. 2. Washington, D. C. October, 1939. Bul. 655] Farm Tenancy in California 49 should also protect his interests in the event of noncooperation by the tenant. This may be done with suitable clauses providing for payment by the tenant of such sums as would have been received by the landlord except for the tenant's noncompliance. Where tenants are required by the terms of their leases to farm a portion of the acreage in soil-building crops and suffer a reduction in gross income otherwise available, land- lords should adjust the rental arrangements accordingly. CALIFORNIA FARM-LEASING PRACTICES Leases are the result of bargaining between prospective tenants and owners. Therefore they reflect the relative bargaining power of the two parties. Lack of uniformity in size, productive capacity, equipment, location, and operating costs of farms and ranches, coupled with the personal characteristics of landlord and tenant, requires each lease to be largely treated as an individual case. Rental rates 51 for properties likewise vary through wide extremes because of great differences in sizes, types, locations, and conditions of farms, as well as differences in specific provisions of various leases. Terms cover not only rentals in cash or crops but may provide for reimbursing the tenant for improve- ments such as planting alfalfa, care of orchards, leveling land, clear- ing off underbrush and trees, putting in drains, and construction of buildings. Statements defining and governing the duties, obligations, rights, and reservations depend on the type of farming involved. For instance, fruit leases define with care the way that trees and vines shall be handled ; rice leases specify removal of weeds; tomato leases call for proper dis- posal of vines ; livestock leases define the beginning of grazing season, the range capacity, and provide against overgrazing range or pasture; grain leases often specify the type or variety -of seed to be used; and cotton leases specify the variety of cotton to be grown. Leases made for farms in areas where irrigation water is scarce and costly commonly carry detailed provisions for its use, whereas leases made in areas where drainage or pumping is an important item are careful to state clearly the responsibilities of each party. Certain provisions which do not pertain to farming are found in many leases. Examples of these are (1) reservation of mineral rights, (2) the 51 Eental rates discussed herein are contract rates paid by tenants to landlords. They do not represent the landlord's net rent. Net rent is the sum remaining after charges for taxes, insurance, depreciation, and landlord's management have been deducted from the contract rent. For example, if the contract rent is $40 per acre per year and the landlord's expense prorated per acre is $10 (taxes on land and buildings, $4; insurance on buildings and other structures, $2; depreciation on buildings and other structures, $3; and management, $1), the remainder ($30) represents net returns to the landlord and includes interest on his investment in land and improve- ments and a remainder which is profit. 50 University of California — Experiment Station right to start operations to bore for oil, (3) the retention of hunting rights, and (4) rights of way. Many southern California leases carry provisions reserving to the landlord all mineral rights and rights of way necessary for the development of petroleum, gas, asphalt, and other minerals. No amount of detailed leasing provisions, however, will offset the necessity for integrity on the part of both parties in the drawing up of a lease. The more valuable the investment the more carefully are pro- visions included to insure proper care and safety of farm properties. Despite the multiplicity of considerations influencing leasing prac- tices in California, it is apparent that the renting of many farms follows certain general rules which are based upon local customs and practices. It is possible, therefore, to discuss the leasing terms for lands upon which various types of crops are grown with some degree of general utility. A survey such as this, however, is not a guide to the drawing up of a lease to cover a specific property in a way that will meet all conditions and safeguard the interests of both parties to the lease. LEASING LAND FOR FIELD CROPS Crops discussed in this group include the grains such as barley, oats, corn, milo, rice, and wheat, grain hay, alfalfa, beans, sugar beets, cotton, and flax. Share rents for the group as a whole are most commonly set at % (table 12), there being 800 out of 1,614 leases that were written at this figure. Shares of % and % were also widely used, there being 248 and 335 leases written for these respective share rents. A more detailed discussion of the various crops in this group follows in which certain differences in leasing practices for specific field crops are pointed out. General Field Crops. — This group is made up of a number of leases in which no specified crops were mentioned in the lease, although the grow- ing of field crops was the chief type of farming followed by the tenant. A total of 31 leases was studied in which it was found that share rents varied from % to %, with shares of % and % accounting for 21 of the 31 cases studied. In common with most leases of field crops it was found that leases written for one-year periods predominated, there being 22 of the leases written for this period. There were 6 leases written for two-year periods and only 3 leases for periods exceeding two years. In most cases where leases were written for more than one year, special requirements were to be observed by the tenant. These included fallowing half of the land, leveling, and planting a part of the acreage to alfalfa, eradicating Bermuda grass, paying taxes, and delivering crop in con- tainers at specified places. This procedure is based on the idea that if the tenant is required to perform certain operations from which an Bul. 655] Farm Tenancy in California 51 TABLE 12 Annual Rental Rates Paid for Lands upon Which Field Crops Were Grown, 1937, 1938, 1939 Crop Share rents Range Typical* Number of Cash rents Range Typical* Number of General field crops Alfalfa Barley Beans Corn Milo (sorghum) Cotton Flax Grain and hay Hops Ladino: Per acre Per day (lambs) Per head-month (cattle) Oats Rice Sudan grass Sugar beets Wheat Total 1/6-1/2 1/5-1/2 1/5-2/5 1/5-1/2 1/6-1/3 1/6-1/3 1/6-1/2 1/5-1/2 1/6-1/3 1/5-1/3 1/5-1/3 1/5-2/5 1/5-1/3 1/8-1/2 1/6-2/5 1/4-1/3 1/4-1/3 1/4-1/3 1/4 1/5 1/4 1/5 1/4 1/4 1/4 1/4 1/3 1/4 1/4 1/4 number 31 147 208 256 41 47 91 36 104 32 17 49 12 382 161 dollars 12.50-40 00 2.00- 3.00 11.00-30.00 6.00-25.00 3.90-24.50 14.00-60.00 5 00-20.00 01- 0.015 1.50- 2.00 6.00 4 00-12.00 9 00-55.00 2.25- 5.00 dollars 15.00-20.00 -t 15.00-25.00 12.00-15.00 10.00-15.00 25 00-35.00 15.00-20.00 6.00- 8.00 20.00-35.00 number 82 24 13 18 11 17 9 1 14 134 354 * "Typical" is taken to be the modal value or that value which is most frequent in the sample. t Dashes indicate data not available. TABLE 13 Length of Leasing Period Commonly Used in Renting Land for Field Crops Length of leasing period Crop One year or less Two years Over two years Alfalfa number 17 149 91 36 115 8 87 36 13 25 60 114 number 11 9 1 3 1 3 4 1 1 11 34 number 43 7 4 2 Cotton Flax 2 6 Milo *.. Oats 3 2 2 Wheat 13 Total 751 79 84 52 University of California — Experiment Station extended benefit is gained, the tenant should be given a longer lease so that he may derive some of the benefit, or a reduction in rent should be made to offset this added expense (for example, a one-year lease at Vo share in which the tenant was required to pull trees and level land when the normal share would be % or y s ) • Most of the leases written for % share were in the vicinity of River- dale, Lemoore, Hemet, and Parkfield, whereas most of the leases in which y s rent was paid centered in Merced and San Joaquin counties. With one exception those leases written for Vi share centered in the San Joaquin Valley, especially in Merced and Fresno counties. Alfalfa Hay. — Mature stands of alfalfa, rented for the production of hay and not as a part of a dairy lease, are usually leased on a share basis. The share varies under different conditions. Study of 147 leases indi- cated a range of from y 5 to y 2 , with the majority calling for rents of i/i or % share in baled hay ; % or % in stack ; and % when placed in the barn. One-third share of stacked hay is commonly deemed equivalent to % baled, and % baled is equivalent to % in the stack. Lesser rents (namely % of baled hay or % in the stack, or some other percentage of stacked hay) hold if the yield is somewhat low or if costs tend to be high. One lease, for instance, calls for 40 per cent of the crop as rent if water is obtained from a community ditch, 50 per cent if the landlord pays for operating a farm pumping plant, and % if the tenant pays all the operating costs. Another lease, in Kings County, calls for 30 per cent share rent if ditch water is used and 20 per cent share if reliance must be placed upon operating the farm pumping plant. Leases calling for V2 in the stack sometimes obligate the landlord to pay for water, as noted for instance in Mendocino, Orange, and Los Angeles counties. In San Bernardino County, mainly in Chino Valley, rental rates for mature stands of alfalfa ranged from % to % share in the bale. A few instances were noted in San Bernardino County in which cash renting was practiced, the rates being from $10.00 to $30.00 per acre. Although 14 share in the bale is the recognized basis for alfalfa rents in Imperial Valley, a study of specific leases has shown that rates of Y 5 and % are also frequently used. The best stands in that area usually rent for y 3 share, while lands yielding less-than-average tonnage bring as little as % share. When hay is pastured the usual share in the Im- perial Valley is Va of the money income. The tenant pays all water costs except district taxes; the average water cost per acre as reported by growers was between $2.50 and $3.00 per crop year. In the coastal section of southern California the most frequent rents for established alfalfa stands were found to be y s and x /4 shares in the Bul. 655] Farm Tenancy in California 53 bale. If delivered in the stack or pastured the share was usually y 2 . In some cases the landlord furnished seed and water and received V2 of the crop in the stack. This was a common procedure in the San Fernando Valley district. Delivery in the stack was found to be a common procedure in the high plateau counties of northern California. In Mendocino and Siski- you counties a rate of % in the stack predominated, with a few cases at % in the stack found in Lassen County. In the Sacramento and San Joaquin valleys most leases (about two- thirds of those studied) called for payment in baled hay rather than a division in the stack. In general the most common rent shares were set at V4 in the San Joaquin Valley and % in the Sacramento Valley. An attempt to correlate share rents in terms of yields (and a price for hay estimated as likely, from $8.00 to $10.00 per ton) indicated that for a 3-ton yield the tonnage paid as rent was 0.75 ton per acre; for a 4-ton yield the amount varied from 0.8 to 1.3 tons, with the average at 1 ton; and for a 5-ton yield the amount was 1.7 tons. Higher yields were not represented by enough cases to permit deductions. On this basis one may assume that if costs are in line (neither excessively high nor excessively low), rents in terms of baled hay tend to be stabilized at 14 share for a 3- or 4-ton crop, or at % for a 5-ton crop. The majority of leases studied were made for periods of more than one year, with most being drawn for three-year periods. Cash leasing of mature alfalfa stands is less common than is true of share leasing but is nevertheless widely practiced. This is especially true in those areas where considerable cash leasing of lands for other crops prevails. For instance, in the San Fernando Valley, cash-rental rates for alfalfa land ranged from $15.00 to $35.00 per acre, with sums of $20.00 per acre or more being most usual. In the Antelope Valley section, cash rates of $15.00 to $17.50 were most frequently found. In the Imperial Valley from $12.50 to $17.50 were the usual rates, with most examples found at $15.00 per acre. The best stands in the San Joaquin Valley rented at $20.00 and $25.00 per acre, with ordinary stands at $17.50 and $20.00, and older plots at from $12.00 to $15.00. The Salinas and Santa Clara valleys were found to contain relatively more cash renting of alfalfa lands than elsewhere in the state. The prevailing rental rates in these valleys ranged from $20.00 to $35.00 per acre, with the ma- jority of the leases examined calling for rents between $25.00 and $35.00 per acre. Here, as in several other vegetable-growing areas, competition among crops for available land not only influences the level of rents but the form of payment as well. 54 University of California — Experiment Station Several leases provided for methods of reimbursing tenants in case alfalfa lands were sold before the terminating date of the lease period. For example, one five-year lease in Mendocino County provided for the landlord to pay to the tenant $25.00 per acre if the land is sold during the first two years of the lease, $15.00 per acre if sold in the third year, $10.00 per acre if sold in the fourth year, and $5.00 per acre if sold in the fifth year. Seeding Alfalfa Lands. — Various rent concessions are given to ten- ants whose leases require the seeding of land to alfalfa. These concessions usually provide for substantial reductions in share of crop required as rent. Adjustment of these concessions is governed by the amount of leveling work to be done or other contributions required of a tenant. The landlord commonly supplies necessary seed and may or may not supply water the first year. It is often customary to allow the tenant to retain for his use all alfalfa hay produced during the season following seeding and sometimes to reduce the rent during the second year and infrequently the third year, according to how much expense the tenant is obligated to pay. One type of lease permits the tenant to retain all the alfalfa the first year following seeding, % the second year, and then to pay a required 2 /2 beginning with the third year. Another lease pro- vides that the tenant shall receive 75 per cent of the alfalfa the first year and 67 per cent thereafter, or rents of *4 the first year and Vs the second and on succeeding years. The underlying idea is for the landlord to pay the tenant some agreed proportion of the expense of putting in hay by permitting retention of larger shares by the tenant than the basic rate for mature alfalfa. Most leases for newly seeded alfalfa land are written for periods of from three to five years, with a few ranging up to eight and ten years in length. Cash renting was less often followed, crop share being the pre- dominant rental basis for newly seeded alfalfa lands. In the coastal sections of central and southern California, cash rents were found to be relatively more frequent than elsewhere. The rates for the state as a whole ranged from $12.50 to $40.00 per acre, the higher rents ($20.00 to $40.00) being most common in the central and south coastal counties, and the lower rates ($15.00 to $25.00) were usually found in the Sacramento, San Joaquin, and Imperial valleys. The common practice in the coast counties is for the tenant to develop the stand at his sole expense, as contrasted with the usual procedure in the interior valleys where the landlord often furnishes seed and water for planting. In the Imperial Valley the rent share may be reduced from V4 to % where the tenant reseeds at his expense. Several instances were Bul. 655] Farm Tenancy in California 55 noted in which concessions were given to the tenant for developing the stand. On the other hand, several leases in the San Joaquin and Imperial valleys provided for the landlord to develop the new stands in return for a rent of V3 instead of the usual % share. In Los Angeles, Orange, and San Diego counties, several leases were found to provide for pay- ment of V2 of the crop baled when the landlord furnished water and seed for development of a new stand. Other leases in the same area provided that the owner would receive a *4 share the first year and y s each year thereafter if the tenant furnished the seed and water for planting. Barley. — Various shares are demanded as rent for barley land, the proportion being influenced by the yield record of the farm, whether or not the land can be cropped annually or must be summer-fallowed one year in three or every other year, and whether or not irrigation facilities are available. Sometimes reservation of stubble to the tenant increases the required share ; or if reserved by the landlord the share rent may be somewhat reduced. The higher shares are demanded for irrigated lands of proved high-producing capacity, and those which are more economical to operate. A study of 208 leases is indicative of the various rates and frequency of occurrence. Share rents of ^4 an d Vs were the most frequently used, these two accounting for 145 out of 208 cases. All but 11 of the 208 leases studied ranged between % and % shares. There were 4 cases where shares of % were paid. Each of these leases was written for a period less than one year and 2 leases were written for periods of 4 months. Most barley leases were written for one year or less. Those written for longer periods generally included out-of-the-ordinary provisions required of the ten- ant. For example, one lease written for a five-year period required the tenant to level, check, and seed to barley, and later to put in alfalfa, after the owner had pulled out pear trees. Another lease written for four years provided for a fixed cropping schedule, with the amount and type of seed to be planted and provisions for smut control also stipulated. Still other leases required unusual delivery operations and a few leases provided that straw be baled and delivered to owner. Leases of y 5 share and less, of which there were 28 examples, generally provided for summer fallow or for the landlord to get all the stubble and pasture. These leases too were mainly for dry-farmed lands. The 208 leases studied and field surveys in several counties have indicated that share rents paid for barley lands in the San Joaquin Valley have tended to be lower than those in the Sacramento Valley. For instance, in Merced and Fresno counties rents on dry-farmed barley lands were usually % and 14 shares ; on irrigated lands they were ^4 56 University of California — Experiment Station share when tenant furnished water, or 30 per cent and Vs shares when the owner furnished the water. By contrast, lands rented for barley pro- duction in Sacramento, Yolo, and Solano counties were almost entirely dry-farmed with prevailing rents of Vi on poorer land, % on medium to good land, and % on the best lands. In both areas the owner usually gets all straw and stubble pasture which is usually rented for grazing at from $0.40 to $1.25 per acre. Only a few cash leases for barley lands were noted; these few in So- lano and Yolo counties called for annual rents of $2.00 and $3.00 per acre. In practically all cases studied, including both cash and share leases, the tenants furnished everything required except land and build- ings. In nearly all sections of the state the usual procedure is for the tenant to deliver the landlord's share to the nearest warehouse or ship- ping point. In most sections too it has become the practice for the landlord to receive all stubble and straw when share rents are paid. Beans. — Most leases for bean land were let on share rents, there being only 16 leases found where cash rent was paid. Of 256 crop-share leases studied, 158 were let on y± shares and 72 were let on % shares. Only tw o leases were let on shares below *4 and only 4 leases called for rents ex- ceeding y 3 . One of the ranches leased for % share had a lower- than- average yield ranging from 5 to 8 sacks per acre. In one case where % share was paid, the landlord plowed the land, furnished water, and one half the sacks, while the tenant furnished seed, labor, threshing costs, and delivery costs. In most cases, however, the tenant furnishes every- thing except land and buildings and is required to deliver the landlord's share to a designated warehouse or shipping point. Analysis of yields per acre, both in gross cash income and in sacks of beans per acre, showed practically no relation to rents charged. Gross cash income per acre for land let on y s share ranged from $15.00 to $90.00 per acre with the majority being between $45.00 and $60.00 per acre. The same situation was true for lands let on % share. The extremes were $17.50 and $85.00 per acre for gross cash income with the majority between $40.00 and $60.00 per acre. Yields for land let on % share ranged from 7 to 25 sacks per acre with the majority being between 14 and 20 sacks per acre, while yields for land let on % share ranged from 7 to 20 sacks per acre with the majority between 12 and 20 sacks per acre. It would seem that factors other than current yields and prices are of more importance in determining rela- tive share rents paid for bean lands. Crop-share rents paid when growing baby lima and large lima beans tend to be somewhat larger than is true for other varieties. In Orange Bul. 655] Farm Tenancy in California 57 County about two thirds of the leases studied called for rents of % share and all straw, or % share without the straw. In Ventura County all leases for irrigated bean land called for y 3 share with only dry-farmed and hillside lands renting for the lower V4 crop share. In Los Angeles and San Diego counties, the common crop share is Vi in the sack and delivered to the warehouse. All straw is to remain on the land for the owner to feed or plow under. In Stanislaus County about half of the leases investigated for lima-bean land provided for rents of Va share, while lesser rents (for example, *4 and % shares) predominated for Pinto, Red Kidney, and Bayo. Only 16 leases studied were based on cash rentals. Each of these was a lease for lima-bean land. The rental rates varied from $11.00 to $30.00 per acre with two thirds of the leases between $15.00 and $25.00 per acre. Most of these leases were to be found in areas where considerable cash leasing was practiced for other crops. The usual leasing period is for one year, and few leases for bean land were found to exceed this length. Several instances were noted where tenants had farmed the same property for a number of years — in two cases as long as forty-nine and fifty-one years, respectively. On both of these ranches lima beans were grown to the exclusion of all other crops. Numerous tenants were discovered who had farmed the same bean land for as long as ten and fifteen years and who had always used the one-year lease. Several of these tenants had never had more legal security than was afforded by a year-to-year verbal lease. But customary practices are so well defined that tenants and owners take them for granted. Corn and Milo. — The term "corn" in leases is used both for Indian corn, or maize, and for nonsaccharine grain sorghums. The terms govern- ing leases for both crops are very similar, although a study of 88 leases covering both crops showed that share rents paid for lands on which sorghums were grown tended to be somewhat higher than was true for corn lands. Share rents for corn lands ranged from % to % with over one half of the leases centered at % share rent or less. It was found, on the other hand, that 43 of the 47 leases for lands planted to sorghums were let at !/4 or above. Of the 47 sorghum leases studied, there were 33 let on % share, 10 on y s share, and the remainder on y 5 and % shares. In one case the tenant paid no rent in return for farming the land and paying the water charges. In some cases, especially in the southern counties, the landlord's share was to be sacked and delivered free ; in other sections this provision was not mentioned in leases. The terms are very similar to those appear- 58 University of California — Experiment Station ing in grain leases and for most localities little difference occurs between grain and corn leases. A possible exception is an occasional clause which sets forth that the tenant is to clear the land of corn or sorghum stalks before the termination of his lease. Terms of lease were most commonly for one year or less, there being only 6 of the 88 corn and sorghum leases written for periods of two years or more, and only 1 lease for sorghums exceeded the one-year period. In each case where the lease ran for more than one year, the tenant was required to give some additional consideration. For instance, one tenant agreed to pull trees and vines on 20 acres and to summer-fallow an additional 20 acres. In another lease the tenant was not given the use of farm buildings ; in two cases the tenant was required to give one fourth of the stubble and pasture to the landlord. In 6 of the 16 cases where Y± shares were given for corn lands, the tenant was required to sack and deliver the landlord's share, while in none of the 17 cases where Yq share was given was this true. Cotton. — The great majority of leases governing the granting of use of land for growing cotton are made for a single year or season. This is partly because of a landlord's desire to retain the right to sell or to change crops, and because tenants do not wish to obligate themselves to grow cotton in the event that the outlook for cotton prices for the succeeding year or years may not justify planting this particular crop. Of the 115 leases of cotton land for which data were compiled, all but 3 were made for a period of one year. Of the 3 leases, 1 was drawn for a two-year period. The other 2 were for three years each. The majority of the cotton-land leases provided for payment of rent in the form of a share of the crop. The share, as recorded in 91 leases, varied from % to i/ 2 . Of the 91 leases, 45 called for %, 26 for %, 9 for %, 5 for %, and 1 each for 30 per cent and % shares. Four called for varying shares ac- cording to the selling price of cotton, namely, (1) % if cotton sells for 10 cents or less a pound of lint, Ys if the price is above 10 cents; (2) Vf> if cotton is less than 10 cents, Y± if 10 cents or more ; and (3) % if price is less than 15 cents, and % if 15 cents or more. The fourth lease called for 21 per cent if tenant pays in ginned cotton (personally assuming cost of ginning) and 25 per cent if delivered as seed cotton; landlord pays ginning charge on his share. Frequently changes in the share are reflected in the obligation assumed by the landlord, such as an agreement by the landlord to accept seed cotton, which obligates him to pay the ginning charge on his cotton. This consideration frequently results in a rental rate of % instead of %, or % instead of %. If the landlord pays all or a part of the cost of irrigation water, the rental rate may likewise Bul. 655] Farm Tenancy in California 59 be stepped up. One lease, not included in the 91 referred to above, pro- vides that the landlord shall supply everything but labor and that the crop shall be shared equally. The proportion of the crop required as share rent is influenced by the productive capacity of the land, the outlook for cotton 'prices, and whether the land is in a high-cost area. Thus, plowed-up alfalfa land tends to command a larger share than land not so benefited, and may command share rents equal to % of the crop. Share rents in areas with a record of low yields may not exceed % °f "the crop. Relatively high outlays for weed control, for irrigation water, or for transportation costs from field to gin may cut the rent to y 5 and even to Yq. As a general rule, however, if the landlord is paid in ginned cotton with no obligations on his part to pay any part of the producing or ginning costs of his share of cotton, land producing a yield of about a bale, with prices at about 10 cents, and with no exceptionally high costs, commanded a fairly well standardized rent of y 5 . If the yield is about 1% bales, 14 is not uncommon. Tenants are seldom interested in leasing cotton land that does not give promise of producing at least 1 bale of ginned cotton (approximately 500 pounds) to the acre. Cotton seed is commonly shared in the same proportion as the lint. Occasionally cash rents are paid for cotton land. The amount of rent paid is influenced by the same factors as indicated in connection with share renting (namely, yields, price outlook, required operating outlay, harvesting, hauling, ginning, and storing). As a rule, however, cash rents are paid only for the better cotton lands — those promising a yield of IV2 bales or more at not excessive costs. The cash leases studied show prevailing cash rents for good lands to be at $20.00 and $25.00 per acre. Lands of about 1-bale yielding capacity called for rents of $12.00 and $15.00, while lesser rents when reported (namely, $6.00 and $10.00) usually called for the tenant to level the land or provide other improve- ments. A classification of leases by county areas indicated that rates of $15.00 to $20.00 per acre were general for land in Kern County which produced from 1% to 2 bales per acre. In Fresno County most cash rents centered at $15.00 per acre, whereas in Tulare County rents were scattered be- tween $6.00 and $15.00 per acre. A few examples of cash leases for cotton land in the Imperial Valley centered at $12.50 and $15.00 per acre. Cash leases were infrequently found in the Imperial Valley, almost all leases for cotton being on crop shares. Flax. — Most of the leases for flax land studied provided for rents payable on the crop-share basis. Of the 49 leases studied, 13 were based 60 University op California — Experiment Station upon cash rents and 36 leases on crop shares. Field investigation in both the San Joaquin Valley and the Imperial Valley confirmed this rela- tion. Cash rents in 13 leases varied from $3.90 to $24.50 per acre. In the Imperial Valley the usual cash rent was found to range between $10.00 and $15.00 per acre, and in the San Joaquin Valley the relatively rare cash rents varied from $3.90 to $5.00 per acre. The *4 crop share was found to be the usual rental basis in both the San Joaquin and Imperial valleys. A few (7) leases called for % share, and 1 each for % and % shares. In the latter case the tenant furnished only his labor and equipment in return for y 2 of the crop. As is true of most field-crop leases, the majority of the leases studied were written for a one-year period. Only 3 leases provided for two-year periods and none for a longer period. In all cases except in the lease for % share, the tenants furnished everything required except the land. The usual practice is for the tenant to deliver the crop share in sacks to the edge of the field or to a place nearby designated by the landlord. Grain and Grain Hay. — Grain and grain-hay leases are comparatively simple and their provisions are neither numerous nor exhaustive. Sizes of holdings used for grain growing are rather large, ranging from 80 to 320 acres if irrigated, or 160 to 1,280 acres if dry-farmed, with larger and smaller farms found occasionally in both groups. Lands used solely for grain are often handled under dry-farming methods, although there is considerable grain produced on leased irrigated lands. Grain-hay clauses are usually inserted to cover the cutting of hay instead of grain during dry seasons, or to take care of growing grain cut from harvester lanes and headlands, or for lands not easily handled for grain harvest- ing. In general, the same terms apply to grain hay as to grains, with the exception of provisions covering sacking of grains, baling straw, or threshing expense. The most frequently used share rent was %, though shares of % and % were common. Of the 104 leases studied, 51 were let on Vi share, 15 on % share, 14 on a 30 per cent share, and 23 on % share. Only 1 lease was found that fell outside these groups — a lease at % share having no special provisions to account for the lower rental. The leases studied indicated that a one-year period was the standard length for hay and grain leases. Only 10 of the 104 leases were written for periods exceeding one year. In 7 of these, provisions were made for additional consideration from the tenant. For example, 1 lease stipu- lated that the tenant plant not less than 200 acres in grain ; 2 leases pro- vided for part of the acreage to be summer-fallowed each year ; others provided that the landlord get all or part of the stubble and pasture ; Bul. 655] Farm Tenancy in California 61 and still another provided for the tenant to pull trees, remove stumps and roots, and to smooth the land. Most of the higher rents (that is, 30 per cent and 33 % per cent) were found to be for one-year leases, there being 30 leases running for one year having the higher rents, while only 2 leases written for more than one year were let on shares of 30 per cent or above. Expressed as a percentage of all leases for the group, it was found that 48 per cent of all leases let for one year or less had share rents of 30 per cent or more, while only 20 per cent of all leases let for more than one year had share rents of 30 per cent or more. Over 60 per cent of the leases studied that were written in the San Joaquin Valley were let on Vi shares. The one exception to this condition was found in the area around Riverdale, Fresno County, where the ma- jority of the hay and grain leases were for % share. Out of 13 leases for the Riverdale area, 12 were written for % share and only 1 for Vi share. About 24 per cent of the hay and grain leases in the San Joaquin Valley showed share rents of Vs- By comparison share rents for hay and grain- lands in the northern part of the state were written for y s share while Vi-share leases were less common. Especially was this true of hay and grain leases in Modoc, Lassen, and Mendocino counties. With the excep- tion of San Diego County the usual rental share for grains and grain hay in the southern portion of the state was found to be Vi in the sack or bale and delivered. In San Diego County Vs share was more fre- quently noted than Vi- This adjustment in rental shares may be due to lower yields or higher cost conditions or a combination of both. Lands rented for grain or grain hay in the Imperial Valley are gen- erally on Vi share if the tenant pays all water charges, but if the landlord furnishes water, the share may be Vs- In the latter case the tenant is required to pay the gate charges of 25 cents per day. The landlord's share of the crop is generally delivered at the farm. The landlord pays all taxes and assessments. In general, where lands are irrigated and the investment in irrigation facilities has been capitalized into prevailing land values, the share rent tends to be larger. For certain districts in Fresno and Merced counties the share rent is % on irrigated lands or % on unirrigated lands. When hay is delivered baled, the share may be reduced from % to Vi or from %to%. Hops. — Lands used in raising hops are leased for both cash and share rents. In Mendocino County the share basis predominates. The pre- vailing rent in that area is Vi of the crop in the bale. One lease in that district provided for a Vi share in bale if the price received was $0.20 a 62 University of California — Experiment Station pound or more or y 5 in the bale if the price was less than $0.20 a pound. The tenant usually furnishes the string and labor while the landlord furnishes land, poles, wires, and roots. Lease periods in Mendocino County, as is also true of Sonoma and Sacramento counties, depend upon the relative fixed investment made by the tenant. Where the tenant puts up poles and wires, the lease period is usually from three to five years or longer, but when these facilities are furnished by the landlord, lease periods are often for only one year. In Sonoma County it was found that cash rents predominated over share rents in the leases studied. Rents for lands without poles, wires, or roots varied from $14.00 to $20.00 per acre, whereas lands with poles, wires, and roots brought from $24.00 to $60.00 per acre, most rents being between $25.00 and $35.00 per acre. Ladino Clover. — Rents for land put into Ladino clover are peculiar to the uses for which the crop is grown. In the Sacramento Valley where this crop is utilized in the feeding of spring lambs, the rents are of two types — cash rents per acre and cash rents per head. Water costs are an important item in growing Ladino clover and this affects the rental rates. In several cases the yearly rent for established stands was $20.00 per acre with all water furnished. In other cases where tenants planted and developed the crop, rents were $6.00 and $7.00 per acre. All water costs were paid in these latter leases by the tenants. When rents are on a per-head basis, they range from $0.60 to $0.75 per ewe and lamb per month. When the lambs are sold, the rents per ewe are about $0.30 per month. Several leases were noted where rents of 1% cents per day per lamb were asked. Leases of established stands tend to be short, running only for a few months during the season from April to October. In the San Joaquin Valley, rents for established stands of Ladino clover are generally figured on a per-head basis. This is especially true in the Fresno, Merced, and Oakdale districts. Rents for dairy cows and feeder steers are from $1.50 to $2.00 per head-month, and for lambs the rents are from 1 to iy 2 cents per day per lamb. Rents per acre ranged from $15.00 to $20.00 per year. When Ladino clover is planted and developed by the tenant, the lease period may range from three to five years, and rents are generally figured on a per-acre basis. Annual rents per acre in the San Joaquin Valley ranged from $5.00 to $6.50 per acre with the tenant paying all costs of development of the crop. Several examples of sliding-scale rents were also noted. Some were based upon the average monthly prices of milk fat, some on the average Bul. 655] Farm Tenancy in California 63 monthly prices of 92-score butter, and some on the average monthly prices for medium beef or lamb. The following scales were used in de- termining rents in several leases for Ladino clover in Fresno and Merced counties, the scale being based upon San Francisco Federal-State Market News quotations. Example of the sliding scale based on butter quoted at : 92-score butter in Monthly rent cents per pound per acre 20 $0.50 21 0.75 22 1.00 23 1.25 24 1.50 25 1.75 Example of the sliding scale based on medium beef or lamb quoted at : Medium beef or lamb in Monthly rent cents per pound per acre 4 $0.50 5 0.75 6 1.00 7 1.25 8 1.50 9 . 1.75 In each of these cases the tenant pays all costs including water. Rents were paid monthly in advance, the rent for the current month being based on the average monthly prices quoted for the previous month. Oats. — Lands leased for growing oats follow the same general pro- cedure as that followed in granting the use of land for barley and wheat. The most commonly used share was % with shares of % and % less frequently demanded. The % share is generally recognized in all areas, with the evidence indicating less variation in rental rates over the state than is the case with barley and wheat. Likewise, oat leases are written mainly for periods of one year ; only 24 per cent of the leases studied were written for periods exceeding one year. Rice. — Leased ricelands are found in two distinct areas in California. The larger area extends from Sacramento County northward and in- cludes Sutter, Butte, Glenn, Colusa, Yolo, and Sacramento counties. The other area includes portions of San Joaquin, Merced, Fresno, and Kings counties. Sizes of leased acreages vary from 40 to 320 acres with occasional acreages under lease above 320 acres. At present, share rents predominate, the cash leasing of former years giving way to share leases in the belief that they are more equitable and that rentals are easier to collect. Share rents of % were dominant in leases studied for both rice-growing sections of the state. This was especially true for the southern area where 11 of 13 leases called for y 3 64 University op California — Experiment Station shares. In the northern section Vi shares also dominated but to a lesser extent, there being 18 out of 37 leases written for % share ; 11 leases at Vi share ; 5 at % share ; and 2 at % share in the northern area, Only one cash lease was found, this one in Butte County calling for a rental rate of $6.00 per acre. By coincidence one of these leases at %-share rent was written in the same year, in the same locality, and had identical yields and price re- turns as had another rice lease which was written for a Vs-share rental. In each case the tenant furnished everything except land and taxes. No reason can be given for this deviation in rents except possible differences in relative bargaining power between tenants and landlords, or some unusual cost conditions which had to be met by tenant or landlord. In some cases cognizance is taken of the tendency for yields to de- crease on lands planted to rice several years in succession. For example, one lease provided for a share of 40 per cent on the first-year lands and 30 per cent on second-year lands. In other cases the high cost of prepar- ing ricelands is taken into consideration, the share demanded for the first year being less than the share demanded for the second and third years. The tenant usually puts in the contours and builds the field ditches for irrigation. Material for ditch boxes is furnished by the land- lord, the tenant doing the carpentering and placing the boxes in the ditch banks. The stubble and straw are usually reserved in the same pro- portions as the threshed grain or else entirely retained by the owner. The landlord usually supplies only land and buildings, and in some cases a part of the water. The tenant supplies work stock, power, imple- ments, seed, labor, sacks, and water. Clauses usually found in leases for ricelands include disclaimers of damage by landlord in the event of nondelivery of water when supplied from a community ditch; cultural directions such as the planting of clean seed ; and protective measures such as keeping up ditches, pulling water grass, and protection of the crop from birds. Sudan Grass. — Although the growing of Sudan grass is not widely practiced in California, several examples of leases were noted which provided for the growing of this crop. They will serve to indicate the relative rental rates demanded for lands suited to raising Sudan grass. In Fresno and Merced counties both cash and share rents were fre- quently used. Share rents of % were most common. Cash rents ranged from $4.00 to $6.00 according to whether the tenant or the landlord furnished water for planting and cultivating. Where the owner has developed the stand of Sudan grass the usual rate in Fresno and Merced counties is from $8.00 to $12.00 per acre per Bul. 655] Farm Tenancy in California 65 year. The tenant pays all water costs and furnishes all labor involved from the date of lease onward. Such leases are often made in conjunction with dairy or grazing enterprises. Sugar Beets. — The growing of sugar beets is almost always done under contract with a sugar-beet company. Marketing responsibility is reduced to a minimum, and emphasis is placed on production of high yields of beets with a high sugar content. Of the 516 leases studied, 382 were written for crop-share rents and 134 for cash rent. Of the 382 leases for crop shares, 246 were for % share, 52 86 for % share, 29 for % share, 53 8 for % share, 5 for % share, 5 for 15 per cent or less, 2 for % share, and 1 was based upon a sliding scale. This latter lease provided that if the price paid were less than $4.50 a ton, a rent of y 5 share should be paid, whereas if the price were $4.50 or more a ton and the yield 17 tons or more per acre, the rent should be % share. This lease also provided for the landlord to get a like share of beet tops and pasture. Cash renting was the basis for about 26 per cent of the leases studied. This percentage varied considerably in certain districts (for example, 3.5 per cent in Ventura County, 15.0 per cent in Yolo County, and 52.0 per cent in Monterey County). The amount of cash rent paid annually varied from as low as $9.00 and $10.00 in Tulare County to as high as $55.00 per acre in Monterey County. Most of the 134 cash leases provided for rents between $20.00 and $35.00 per acre. When comparisons were made among the major sugar-beet-producing counties of California, it was found that the crop-share rent was the dominant rental basis in all counties except Monterey. In the latter county, cash and share rents were about evenly divided among the 185 leases studied for that area. This may be contrasted with Ventura County where only 2 out of 57 leases were based on cash rental. It was generally noted that sugar beets grown in districts characterized by field-crop production were rented for crop shares, while in truck-crop districts cash renting was the usual basis for sugar-beet leases. There was a marked difference in the usual amount of rent paid in various counties. In Los Angeles, Ventura, and Monterey counties all share rents in 1938-39, except in one case, amounted to Vi share or higher, whereas in Sacramento, Sutter, Solano, and Yuba counties over 41 per cent of the share rents paid in 1938-39 ranged below 34 cr0 P share. The same differences were maintained in the level of cash rents. In Yolo, Solano, and Sacramento counties most cash rents for sugar-beet land ranged between $17.50 and $21.50 per acre, whereas in Lcs An- geles, Orange, and Monterey counties cash rents for beet lands ranged between $20.00 and $40.00 per acre in the majority of the leases studied. 52 Contains some rents at 22y 2 per cent. 5S Contains some rents at 30 per cent. 66 University of California — Experiment Station These differences in rents may be justified by the differences in yields in the two districts and by the relative degree of competition from al- ternative crops grown in each. According to the empirical formula (p. 40), the relative share to which each party is entitled is determined by the proportional value of his contribution to the farm enterprise. Therefore, if the land in use has a higher value in one district than in another, it is likely to increase the proportion of the income to which the landlord is entitled. Not only does the kind and amount of rent vary among counties but the proportion of land operated by tenants in the counties also varies. For instance, in Yolo and Monterey counties about 66 per cent of the acreage planted in 1938-39 to sugar beets was operated by tenants, while in Ventura County only 40 per cent of the sugar-beet land was in the hands of tenants during the same year. Size of farms operated by tenants and owners varied according to the tenure and according to the county. For instance, the sizes of all classes of sugar-beet farms in Yolo County exceeded those in the corresponding classes of beet farms in Monterey and Ventura counties. In Monterey County, tenants paying crop-share rents operated an average of 73.5 acres ; in Ventura County the average was 52.8 acres for share tenants, and in Yolo County it was 116.0 acres for share tenants. A similar rela- tion existed among cash renters and owner-operators in the three coun- ties. In each county the average owner-operated acreage was less than the average acreage operated by tenants. In Monterey County 127 owner- operators farmed an average of 43.0 acres each in sugar beets, in Ven- tura County 68 owners farmed an average of 48.9 acres each, and in Yolo County the average for 138 owner-operators was 73.5 acres each. No conclusive evidence indicated a common length for sugar-beet leases, but in general, the lease periods to individuals are one year while leases to corporations may be written for as long as ten- to fifteen-year periods. In most cases the tenant furnishes everything except the land. The landlord more often than not receives all beet tops and pasturage be- cause beet tops are usually fed on the land or plowed under. This was especially true for the delta region of the Sacramento and San Joaquin valleys and for Monterey, Orange, Los Angeles, and San Diego counties. The sugar-beet leases in the delta area also provided for the landlord's share to be delivered to the mill free of charge. Another item commonly appearing in sugar-beet leases for periods exceeding one year is a pro- vision for rotating crops by the tenant. Where the landlord provides Bul. 655] Farm Tenancy in California 67 water, materials, and equipment, the share rent is correspondingly higher. For example, several one-year leases provided for the landlord to receive shares of 50 per cent when everything except labor was fur- nished. When tenants pay share rents the compliance payments paid under the provisions of the Agricultural Adjustment Act are shared between tenant and landlord in the same proportion that the crop is shared. When tenants pay cash rents the compliance payments are received entirely by the tenant. Ownership is the basis of payment and the tenant is as- sumed to have 100 per cent ownership of the crop when he pays a cash rental. Wheat. — Lands leased for wheat raising are rented almost exclusively on a crop-share basis and include lease provisions that are common to leases for other small grains. A compilation of rental rates as shown by 161 leases indicated that shares of 14, %, and % ai *e the most com- monly used rents. A few leases called for rent shares as high as %, and 13 leases were noted which called for shares of % ; all of these latter were found in the Lancaster-Palmdale section of southern California. In general, the larger shares held for the better-yielding lands, espe- cially those under irrigation. Most leases required the tenant to deliver the landlord's share in new, first-grade sacks at the nearest warehouse or shipping point. In some sections of the state, tenant and landlord share the stubble or the returns from sale of it, while in other sections (south- ern California and Solano, Yolo, and Sacramento counties) , the landlord usually receives all stubble and straw. In some instances where straw is shared, the landlord may require the baling and delivery of his share. Over the state as a whole, it was noted that wheat share rents tended to be lowest in southern California (mostly %), intermediate in the San Joaquin Valley (mostly %), and highest in the Sacramento Valley and in the northern plateau counties (mostly %). The usual crop share in the Imperial Valley was found to be Vi for wheat and other grains as contrasted with the % share to be found more frequently in other south- ern counties. In San Luis Obispo County, a share of ^ was found most frequently, although about 25 per cent of the leases studied for that county called for y 5 share. A few cash leases found in San Luis Obispo County provided for rents of from $2.25 to $5.00 per acre per year, with most cases at $2.50 and less. Only one other example of a cash lease for wheatland was found, that one being in Butte County at a rate of $4.00 per acre. In common with other grain crops, leases for wheatlands are usually for a period of one year or less. The 161 leases studied indicated that 68 University of California — Experiment Station about 71 per cent of this number were written for one year or less, 21 per cent called for two-year terms, and only 8 per cent of these leases provided for terms of three years or more. Where yield data were available for the leases studied, such data in- dicated little relation between estimated yields and the rent share. LEASING LAND FOR TRUCK CROPS Vegetables are generally raised under conditions that make a distinc- tion between small-scale market gardening of an intensive nature for the purpose of supplying vegetables to nearby cities, and large-scale truck-crop production for the purpose of supplying more distant mar- kets. Vegetable lands near large cities are generally small plots ranging from 5 to 15 acres and are leased chiefly on a cash basis. Leases run from three to five years (table 15) with cash rents per acre per year usually between $40.00 and $50.00, according to the nearness to large cities and the productivity of the soil. For example, in the Venice district in Los Angeles County cash rents ranged from $20.00 to $70.00 with most rents at $30.00 and $35.00 per acre per year, whereas in the Colma district near San Francisco cash rents ranged from $15.00 to $75.00 per acre with rates of $30.00 to $35.00 most prevalent. Leases for crops such as potatoes, onions, artichokes, cantaloupes, sweet potatoes, tomatoes, cabbage, cucumbers, and cauliflower are let on both cash and share rents. Acreages usually ranged from 20 to 100 acres or more, with the tenant concentrating on the production of a few specialized crops. The length of lease is variable, custom in some com- munities favoring the annual lease, while in other sections leases from three to five years are common. Both cash and share rents vary over a considerable range. Cash rents ranged from $10.00 to more than $75.00 per acre per year, with $30.00 to $40.00 including the more common figures (table 14). The higher rates apply to the more productive and better-located lands ; the lower rates apply to more remote or less pro- ductive lands. This is especially true in the coastal valleys where both soils and climate favor high yields. Lands in the Salinas Valley when leased for truck crops brought from $20.00 to $75.00 per acre annually. Lands on the lower valley floor are considered to be the most productive and are commonly double-cropped. They rent most often at $55.00 and $60.00 per acre, whereas lands above the valley floor, somewhat less pro- ductive, are single-cropped and usually rent from $25.00 to $35.00 per acre. In the Santa Clara Valley, lands leased for truck growing rented from $25.00 to $70.00 per acre per year, the amount depending upon available Bul. 655] Farm Tenancy in California 69 TABLE 14 Annual Rental Kates Paid for Lands upon Which Truck Crops Were Grown, 1937, 1938, 1939 Share rents Cash rents Crop Range Typical* Number of leases Range Typical* Number of leases 1/5-3/5 1/4-2/5 1/5-1/3 1/5-1/3 1/5-2/5 1/5-1/3 1/5-1/2 1/4-2/5 1/5-1/2 1/4-1/2 1/4-1/3 1/4 1/4 1/4 1/4 1/4 1/4 1/3 1/4 1/4-1/3 number 22 37 14 17 21 35 59 42 102 51 dollars 15.00-60.00 25.00-50.00 20.00-35.00 25.00-40.00 15.00-40.00 15.00-30.00 10.00-40.00 15.00-70.00 10.00-85.00 10.00-35.00 15.00-35.00 10.00-35.00 15.00-35.00 5.00-65.00 5.00-35.00 5.00-40.00 15.00-40.00 dollars 35.00-50.00 35.00-40.00 25.00 25.00-30.00 25.00 20.00 20.00-30.00 35.00-50.00 30.00-50.00 25.00-30.00 20.00-25.00 20.00 25.00 20.00-35.00 20.00-35.00 15.00-20.00 25.00 number 37 15 29 22 Cabbage 26 Cauliflower 19 Carrots 48 72 118 Melons 33 36 108 Peppers Potatoes: White 39 72 Sweet 56 108 63 Total 400 901 "Typical" is taken to be the modal value or that value which is most frequent in the sample. TABLE 15 Length of Leasing Period Commonly Used in Renting Land for Truck Crops Length of leasing period Crop One year or less Two years Over two years number 6 4 2 15 16 13 16 19 18 21 number 3 3 12 2 7 3 5 11 3 number 18 10 Brussels sprouts and broccoli 41 20 Carrots 21 Celery 55 116 Melons Onions Peas 11 9 43 Potatoes : White 9 12 37 9 Total 130 49 411 70 University of California — Experiment Station water, whether or not double-cropped, and proximity to town. Rates of $35.00 and $40.00 per acre were commonly found, with those rents ex- ceeding $40.00 mostly in the vicinity of Cupertino, Mountain View, Centerville, and Alvarado. Small acreages in Marin County are being developed for market gar- dening. These plots bring relatively low rents, ranging from $10.00 to $20.00 per acre, whereas across the San Francisco Bay in nearby San Mateo County vegetable lands commonly rent for $25.00 and $35.00 per acre. Lands leased for truck crops in the Sacramento and San Joaquin valleys bring somewhat less rent than do those in the more specialized coastal districts. Only in the Sacramento — San-Joaquin Delta do rents approximate those received in the better coastal districts. The rich or- ganic soils and the climate of the central delta are favorable to the rais- ing of most vegetable and truck crops. The better soils bring rents ranging from $20.00 to $40.00 per acre, with $25.00 and $30.00 being common figures. Lands outside the delta district and in the valleys proper bring much lower rents. For example, it was found that in Fresno, Kern, and Merced counties rents for truck land ranged between $10.00 and $30.00 per acre, with most cases between $15.00 and $20.00. The cost and availability of irrigation water are important items in determining the desirability of lands for truck growing in the San Joaquin area. In Sacramento County and outside the central delta district, it was found that truck lands were commonly leased for $12.50, $15.00, and $18.00 per acre. These rents are typical of the sums charged for the use of alluvial soils adjacent to the Sacramento and American rivers, as contrasted with the relatively higher rents charged for the use of organic soils in the central delta. Lands in San Bernardino County leased for truck crops are chiefly confined to the Chino Valley. Both cash and share rents are prevalent, cash rents being usually from $10.00 to $30.00 per acre, or % when the share basis is followed. In Los Angeles County, rentals for vegetable lands varied from' as little as $12.50 to as much as $70.00 per acre. In the San Fernando Valley section, lands rented at from $20.00 to $35.00 per acre, the lower sum being most frequently found in the west end of the valley. Rents for truck lands in the El Monte section ranged from $25.00 and $30.00 per acre, and in the Venice district rents ranged from $20.00 to $70.00 per acre per year. In the Sawtelle — San-Pedro area the better soils with high organic content commanded rents from $50.00 to $70.00 per acre, Bul. 655] Farm Tenancy in California 71 whereas in the Clear water-Bellfiower section rents were mainly between $20.00 and $40.00 per acre. In nearby Orange County, cash rents for truck lands ranged from $7.00 to $40.00 per acre, with most rents between $25.00 and $40.00 in the Buena Park and Santa Ana districts, and lower rents more fre- quently found near Anaheim. Cash rents for truck lands in the Santa Maria Valley were found to range from $10.00 to $30.00, with the majority of leases studied calling for rents between $12.00 and $20.00. Farthest south in the state is Imperial Valley where both cash and share renting is practiced in leasing lands for truck crops. Cash renting is predominant. Rents range from $15.00 to $40.00 per acre, with most renting on the western side of the valley at $25.00 and $30.00 and lesser rents ($15.00 to $20.00) on the eastern side of the valley. Share rents when used are generally %, with variations at % or y s to suit special conditions. When renting on shares the landlord usually pays for water and taxes with the tenant paying the remaining costs including irriga- tion turn-on charges. In some cases the landlord pays for packing and selling his share, with the tenant paying all water charges. In other cases the landlord receives his share after packing expenses are de- ducted, the landlord to pay water charges and taxes and the tenant to pay turn-on charges in this latter case. Throughout the state the general practice is for the landlord to fur- nish land, permanent improvements (which may include buildings, wells, pumping plants, tanks and towers, and other facilities), and to pay the taxes and insurance on these properties. Materials and skilled labor for repairs and upkeep of the landlord's properties are usually furnished by the landlord, with the tenant supply- ing the required unskilled labor. In some instances the tenant may make minor improvements for which he is compensated. The tenant almost always furnishes the equipment, implements, labor, supplies, and materials required for farming operations. Important de- viations from these generalized practices occur in certain districts for particular crops or for particular situations. These deviations will be pointed out wherever pertinent. Artichokes. — The leasing of lands on which artichokes are grown is done almost entirely for cash. Rents range from $15.00 to $60.00 per acre per year, and leases are mainly for three- and five-year periods. In the Castroville area, in which it is said the major part of the top-grade artichokes produced in California are grown, rents ranged from $50.00 to $60.00 per acre. 72 University of California — Experiment Station In the Santa Cruz district, rental rates varied from $25.00 to $40.00 per acre, and in the Watsonville area rents on artichoke land were most often at $20.00 and $25.00 per acre. In the Colma district $35.00 and $40.00 per acre were the prevailing rental rates for artichoke lands, while farther south in San Mateo County in the Half Moon Bay and Pescadero districts a rate of $20.00 per acre was most common. In southern California there are several small sections in which con- siderable artichoke production has developed. In Orange, Los Angeles, and Santa Barbara counties the prevailing rents for lands devoted to artichoke production ranged from $15.00 to $35.00 per acre. Asparagus. — Usually asparagus leases run from ten to fourteen years in length where the tenant plants the crowns and develops the beds. This is due to the peculiar nature of the crop. Yields are low for the first two or three years after planting, and production does not reach its peak until the seventh or eighth year on average soils; on the best delta soils, peak production may not be reached until the tenth or twelfth year after planting. Yields decline rapidly thereafter and, if soils are good, replanting is again in order. Otherwise, alternative crops are planted until such time as the land is again ready for asparagus. Both share and cash rents are demanded for lands used in asparagus growing. Where the lands have been in production and the tenant takes over a producing stand, cash rents are often used and range from $25.00 to $50.00 per acre per year. Share rents are more commonly used, both for short leases on producing stands and for longer leases entailing- planting of new asparagus crowns and subsequent cultivation. Share rentals charged for asparagus lands ranged from y 5 to %, with no one share commonly used. Shares tend to be larger ( % ) on short leases of one year or less and smaller ( 1 / 4) on longer leases. Higher rents were also demanded where landlords furnished requisites in addition to land. For instance, one lease where a share of V2 was paid provided that the landlord pay one half of the packing and trucking charges. Another lease where a % share was given provided that the landlord supply the asparagus plants and his share of the water. A few leases provided for sliding-scale rentals based on the price received for the crop. One lease provided that if the price per pound received is less than 2 cents, a share of 25 per cent is paid ; if 2% cents a pound, a share of 27% per cent is paid ; if 3 cents a pound, 30 per cent is paid ; and if above 3 cents a pound is received, 33% per cent is paid. Broccoli and Brussels Sprouts. — In common with other garden vege- tables, lands leased for producing broccoli and Brussels sprouts were found to rent entirely for cash. Land most suitable for sprouts tended Bul. 655] Farm Tenancy in California 73 to command slightly higher rents than was true for broccoli. In the Colma, Half Moon Bay, Santa Cruz, and Castroville districts, the 29 leases studied rented for $20.00 to $35.00 per acre when broccoli was being grown, while 22 leases for land on which Brussels sprouts were grown provided for annual rents of from $25.00 to $40.00 per acre. For broccoli $25.00 per acre was most frequent, and for sprouts $25.00 and $30.00 per acre were equally typical. Considerable care must be used in interpreting rental figures for such crops as broccoli, sprouts, cabbage, cauliflower, and other typically frost- resistant, winter-grown crops. These vegetables are grown as a means of utilizing relatively high-rent lands during the 3 or 4 winter months when temperatures are unfavorable for other crops. They constitute only a part of the annual production upon which rents quoted above are paid. Cabbage and Cauliflower. — Cabbage and cauliflower are grown on lands that were found to be rented exclusively on a cash basis. Leases studied included only those for the areas in which the major portions of each crop are grown. San Mateo, Imperial, Los Angeles, and Orange counties grow most of the cabbage produced in California. The usual rental rates paid in these counties were $25.00 and $30.00 per acre, though some leases studied provided for rents as low as $15.00 and others as high as $35.00 and $40.00 per acre. For land devoted to cauliflower production, the usual rental rate was $20.00 per acre. Leases studied included those for Alameda, Los Angeles, Monterey, and Santa Barbara counties, in which most of the California cauliflower crop is grown. Rental rates in these counties varied from $15.00 to $30.00 per acre, as contrasted with a slightly higher figure for renting land devoted to growing cabbage. Carrots. — Lands devoted to raising carrots are usually leased for cash rents, though share rentals were frequently found in certain districts. For the state as a whole, cash rents varied from $10.00 to $40.00 per acre per year, while share rents were predominantly set at %. The cash basis was used almost exclusively over the share basis in the Salinas Val- ley. There rental rates ranged from $20.00 to $40.00 per acre, with most leases studied providing for rents of $20.00 to $30.00 per acre. In Santa Barbara County a few crop-share leases for carrot land were noted, these few at % share. The more frequently used cash-rental rates varied in this region from $15.00 to $35.00 per acre. The most common rate was set at $25.00 per acre. Cash renting was followed exclusively in San Mateo County for leas- ing land for carrot growing. Bents varied in this county from $25.00 to $60.00, the figures of $35.00 and $40.00 being most prevalent. 74 University op California — Experiment Station In the Sacramento — San-Joaquin Delta both cash and share rents were demanded for lands planted to carrots. Cash rates varied from $15.00 to $35.00 per acre, the higher rents being* paid for land devoted to carrot-seed production. Share rents were noted to be set almost en- tirely at i/4, with a few at %• The most frequent rental rates prevailing for carrot land in the San Joaquin Valley ranged from $12.00 to $18.00 per acre. Most leases stud- ied were for lands located in Fresno and Merced counties. Farther south in the Imperial Valley it was found that cash renting was the usual basis for leasing lands devoted to carrot production. Rental rates varied from $10.00 to $35.00 per acre according to the productivity of the soil and whether or not double-cropped. In addition, the type of crop with which carrots are double-cropped also helps to determine the rental rate. When early carrots are double-cropped with late melons, the more valuable melon crop tends to set the yearly rent level somewhat higher than is true when carrots are combined with a field-crop rotation. A similar relation exists in the Salinas Valley where carrots and lettuce or carrots and onions are frequently double-cropped. Under such conditions it is difficult to attribute the proper share of the yearly rent to each crop. Celery. — Both cash and share rentals are paid for the use of lauds upon which celery is grown. Most share renting is confined to the Sac- ramento — San-Joaquin Delta where such rents are commonly % and %. The landlord may pay a part of the packing and selling costs when % share is demanded in place of y 5 . In some cases it was noted that the landlord furnished irrigation water and advanced funds sufficient to cover production costs, the amount advanced to be repaid out of crop proceeds. Cash-rental rates in the delta region ranged from $15.00 to $40.00 per acre; the greatest number of leases studied provided for rents of $30.00 and $35.00 per acre. Elsewhere in the state the cash basis was universally followed in renting celery land. In the Salinas Valley such rental rates ranged be- tween $25.00 and $55.00 with most examples studied found between $40.00 and $55.00. Farther south in Los Angeles County, celery lands rented at rates from $25.00 to $70.00, although there was considerable difference in ren'tal rates within the county. For instance, in the El Monte district, celery land brought rents of $25.00 and $30.00 per acre ; in the Venice district from $25.00 to $50.00 per acre; and in the Saw- telle — San-Pedro district the better soils high in organic matter brought from $50.00 to $70.00 per acre. Most rents charged for celery land in the Chula Vista district of San Diego County ranged from $25.00 to $35.00 per acre. Here, as is true Bul. 655] Farm Tenancy in California 75 elsewhere in the state, producers of celery fertilize heavily to obtain high yields. The landlord furnishes only the land and the tenant all else. Lease terms are usually of three years in length with a few extending for five-year periods. Lettuce. — The two districts producing the bulk of the California let- tuce crop are the Salinas -Watsonville area and the Imperial Valley. Few crops are so largely grown by tenant operators as is lettuce. Estimates by packers, realtors, and banking officials have indicated that from one half to two thirds of the lettuce grown in the Salinas and Imperial val- leys is produced on leased land. For the state as a whole, it was noted that land suitable for lettuce pro- duction leased for yearly rents ranging from as little as $10.00 per acre to as much as $85.00 per acre. In general, the higher rentals ($30.00 to $85.00) were found in the Salinas Valley and in San Mateo County, whereas in Santa Barbara and San Luis Obispo counties lesser rents ($20.00 to $35.00) per acre were most frequently demanded. A similar rental scale prevailed in the Imperial and San Fernando valleys (that is, from $15.00 to $35.00) and a somewhat lower rental scale (from $10.00 to $25.00) was most usual in the Sacramento and San Joaquin valleys. Data taken from 118 leases and supplemented by field study in each of the principal lettuce-producing districts indicated that cash leasing of lettuce land is the state- wide practice. Most lease periods were between three and five years in length, but some leasing for one-year periods was practiced in the Sacramento, San Joaquin, and Imperial valleys in addi- tion to the usual three-year period. A considerable variation in rental rates was not only true for the state as a whole but within each of the various districts as well. In the Salinas Valley the best soils on the valley floor rented at from $45.00 to $85.00 per acre. Such lands are double-cropped with spring lettuce followed by fall lettuce or carrots. When lettuce is grown in rotation with sugar beets and Small White beans or peas, an adjustment in rental rates is usually made. A straight yearly cash rent of from $30.00 to $40.00 per acre was often paid ; other leases provided for a somewhat different basis for payment in that from $40.00 to $60.00 was paid for acreage when planted to lettuce and a i/i-crop share was paid for acreage when put into beans or peas. On the less productive lands above the val- ley floor in the Salinas Valley, single-cropped lettuce land rented mostly for $30.00 and $35.00 per acre. Heavy applications of fertilizer are used as a standard practice in most lettuce-growing districts of California. Leases very seldom in- 76 University of California — Experiment Station eluded fertilizer clauses stipulating the kind and amount of fertilizer to be used. As one farm owner stated, "If the tenant does not fertilize, he gets no crop ; no fertilizer clause is necessary because every grower wants a profitable crop." When renting for cash the tenant is entirely respon- sible for deciding what and how much fertilizer to use. Most leases for lettuce land in the Salinas Valley were written for three-year terms, but five-year leases were also frequent, and several for eight and ten years were noted. Rents, usually payable six months in advance, are paid in May and November. Quarterly payment of rent was also followed in several cases. Such payments were made in February, March, August, and November. Elsewhere in the state annual and semi- annual payment of rents predominated more so than in the Salinas Valley. Cash-rental rates for lettuce lands illustrate the influence of double cropping and the value of both crops in setting the rental level for the land. For instance, lettuce is often double-cropped with melons in Kern County and in the Imperial Valley. The rent in such cases was found to be from $15.00 to $20.00 per acre in Kern County and from $25.00 to $35.00 per acre in the Imperial Valley. When lettuce and peas or carrots were double-cropped, the corresponding rental rates were found to be $12.00 to $15.00 in Kern County and $15.00 to $25.00 in the Imperial Valley. Time of maturity is another factor that helps to set relative rental rates in a given district. In the Imperial Valley a combination of winter lettuce and early melons commanded rents from $20.00 to $35.00 per acre on the west side of the valley, but on the east side, rental rates for corresponding crops were found to be from $15.00 to $25.00 per acre. A considerable amount of "local" lettuce is grown in the Sacramento and San Joaquin valleys and in the garden districts adjacent to Los Angeles and San Francisco. Local lettuce does not enter transconti- nental trade but is consumed in cities and towns adjacent to the areas of production. In the Sacramento and San Joaquin valleys, such lands rented from $10.00 to $12.50 per acre for less desirable areas and at $15.00 to $18.00 per acre for areas having plenty of water for irrigation and freedom from drying winds. In the market-garden districts, higher rental rates varying from $35.00 to $75.00 per acre prevailed. In all areas studied specific leases, with few exceptions, provided for the tenant to furnish everything except land. In a few cases the landlord furnished water for irrigation. Melons. — Most of the melons (cantaloupes, watermelons, Honeydew, Honey Ball, and Persian) produced in California are grown in the Im- Bul. 655] Farm Tenancy in California 77 perial and San Joaquin valleys. Share and cash renting of melon lands was practiced in both sections. Several landlords and tenants have stated that cash renting was preferred. Landlords prefer to receive a fixed cash rental (at least one half in advance) rather than assume a part of the risk involved in growing and marketing melons. The tenant often prefers to be unhampered in determining when and how to sell the crop. This is especially true at the beginning of the shipping season when a difference of a few days in marketing the crop may influence price re- turns considerably. The share basis was often used when the tenant was unable to finance the advance payment of a cash rent and supply the necessary operating capital as well. Crop shares paid for leasing land for melon growing were usually Vi an cl %• A share of Vs was sometimes paid when special pro- visions were involved. For example, one lease provided for the landlord to pay his share of the irrigation and picking costs ; another required the landlord to pay for gasoline and oil used in double-disking 30 acres of land infested with Johnson grass. Cash renting was found to be more frequently practiced than share renting. The amount of rent paid varied from $10.00 to $25.00 per acre in the San Joaquin Valley and from $12.50 to $35.00 per acre in the Imperial Valley. The higher rents ($20.00 to $35.00) were paid for lands with high-yielding capacity and having an adequate water supply, or for lands located such that the crop matured earlier than the main crop in the district. The latter condition is especially true for lands on the western side of the Imperial Valley. Since the growing of melons and cantaloupes involves the use of a considerable amount of water in conjunction with sufficient sunlight to insure sweetness of flavor, the question of supplying and paying for water is one of importance. Tenants in the Imperial Valley commonly pay all water and turn-on charges. The usual water charge is $0.50 per acre-foot and the gate, or turn-on charge, is $0.25. In the San Joaquin Valley, it was noted that in several cases where the landlord furnished water the cash rents were $20.00 >and $25.00 per acre, whereas similar lands for which tenants furnished all water were rented at from $3.00 to $5.00 less per acre. Length of lease periods was found to vary from one to five years with most leases being written for one and three-year periods. Onions. — Onions are grown on lands that rent for both crop share and cash. Leasing periods varied from one to three years. Where double cropping of onions with other crops was practiced, the three-year lease was most frequently used. 78 University of California — Experiment Station The crop-share basis was used mainly in Monterey, Sacramento, San Joaquin, Solano, and Yolo counties. The usual rent in these districts was 14 share in the sack and delivered to the roadside or to a designated storage or shipping point. In the delta region, when the landlord fur- nished everything except labor, the prevailing rent was 35 to 40 per cent of the crop. In the southern San Joaquin Valley and in southern California, cash renting was the prevailing basis for renting onion lands. Double crop- ping was usually practiced in these areas and rental rates were therefore influenced by the value of the second crop to be grown. In Merced and Kern counties, yearly rental rates varied from $15.00 to $27.50 per acre with most leases above $20.00 being for land growing seed onions. In Los Angeles and Riverside counties the prevailing yearly rates ranged from $15.00 to $35.00 per acre with the majority of the leases studied falling between $20.00 and $25.00 per acre. p ea s. — Leguminous crops such as peas are grown often for their value as replenishers of soil nitrogen as well as for money return. When peas are grown as part of a rotation plan, the crop-share basis is mostly used. When peas are double-cropped with melons or lettuce the cash basis is most often followed. Such rents are somewhat higher than those de- manded when peas are double-cropped with peas (that is, an early and a late crop) . Thus, the rental rates consider the residual benefit of nitro- gen to the owner's land as well as the value of the crops grown. Unless such an equitable adjustment is made, tenants having short leases (one to three years) at relatively higher rents will repeatedly grow crops of higher acre value. Both cash and crop-share rents are paid for lands leased for growing peas. The tenant generally furnishes everything required for production except land. Leases ranged from one to five years, with those over one year being written for lands upon which peas were a part of the rotation plan. The most frequent share rent in use was found to be %. Where the landlord furnished a part of the water or paid a part of the harvesting and packing costs, a % crop share was the usual payment. Some leases provided for the tenant to crate and deliver the landlord's share. Cash rates for the state as a whole varied from $10.00 to $35.00 per acre. Where double cropping was practiced the cash basis was generally used for paying rents. In the Imperial Valley both an early and a late pea crop are produced on lands renting at from $10.00 to $18.00 per acre per year. In San Luis Obispo County, one of the centers of winter-pea production, cash rents were found to vary from $10.00 to $25.00 per acre. Out of 52 leases studied for that county, 33 called for cash rents Bul. 655] Farm Tenancy in California 79 ranging from $15.00 to $17.50 per acre, while only 3 of the 52 leases provided for payment on the crop-share basis. In Monterey County both share and cash renting were followed. The most frequently used shares were ^ and %. Cash rates ranged from $15.00 to $30.00 per acre with sums between $20.00 and $30.00 being most common. Very little use of the share basis was noted for Santa Clara, San Mateo, and Alameda counties. In these counties lands used for growing peas commanded rents from $10.00 to $35.00 per acre, the lesser sums ($10.00 to $17.50) being common for rolling lands adjacent to the foothills and higher amounts ($20.00 to $35.00) more frequent for level land with high capacity for yields. In nearly all cases where the share basis was followed, the usual prac- tice was for the landlords to take all pea-vine pasture. When the cash basis prevailed the tenant usually received the right to such pasturage. A few leases provided for the tenant to plow under all vines and crop residue. Peppers.— Most of the peppers (bell, chili, and pimientos) produced in California are grown in Orange, Los Angeles, and San Diego counties. Cash renting is the prevailing practice and one-year leases are the rule. This latter is an exception to the usual practice in renting lands for truck growing. Rental rates ranged from $15.00 to $35.00 per acre with the majority of the leases studied providing for rents around $25.00. Potatoes. — Lands devoted to the growing of white and sweet potatoes are leased both on a share and cash basis. Share renting was more fre- quently practiced in the San Joaquin Valley, and cash renting was more common in Los Angeles, Modoc, Riverside, San Bernardino, San Diego, and San Mateo counties. The usual crop-share rents were % and % for sweet potatoes and V4 and y 5 for white potatoes. With few exceptions, cash-rental rates ranged between $15.00 and $35.00 per acre per year. Most of the leases studied provided for rents of $20.00 or more per acre. Unusual conditions, such as those under which the tenant develops the land and water, or where very high yields are obtained temporarily from land formerly in alfalfa, are characterized by out-of-the-ordinary rental rates. For example, in Kern County certain tenants plowed and leveled the land, put in ditches, and developed the necessary water and irrigation facilities in return for annual rental rates of $5.00 to $7.50 pep acre. Under ordinary circum- stances these rental rates would have ranged from $15.00 to $30.00 per acre. Other examples were noted in the Tulelake district of Modoc County where sums ranging from $50.00 to $65.00 per acre were being paid for land that had been formerly devoted to growing alfalfa. High 80 University of California — Experiment Station yields due to the accumulation of soil nitrogen have made these rela- tively high rental rates possible. Lands in the San Joaquin Valley, devoted to growing white potatoes, brought slightly lower rents than when rented for growing sweet po- tatoes. Out of 33 share leases in this area, 15 leases called for payment of % crop share or more. Each of these 15 leases was for land devoted to growing sweet potatoes. None of the 18 leases for lands upon which white potatoes were grown called for rental shares exceeding ^4- Cash- rental rates in the San Joaquin Valley, with few exceptions, ranged from $15.00 to $30.00 per acre, with almost all of the 24 cash leases call- ing for rents between $20.00 and $30.00 per acre. No differentiation was apparent in these leases between cash rates for white and sweet potatoes. In San Bernardino County, cash-rental rates for potato land ranged from $10.00 to $30.00 per acre, with a few leases being written for Vi and !/2 cr0 P share. In two cases (in the Chino Valley) owners furnished seed, water, and one half of the fertilizer, and the tenant furnished all labor, equipment, and one half the fertilizer on a 50-50 crop-share basis. Rental rates for potato lands in Los Angeles, San Diego, and San Mateo counties varied from $20.00 to $35.00 per acre, with most leases providing for rates at $25.00 or above. In some cases the landlord fur- nished water when the higher ($25.00 to $35.00) rents were asked. No general policy was followed in disposing of crop residue. In some cases the landlord received all income from hog feed and in other cases it went to the tenant. Generally potato vines were dried and burned on the land for the ash, but in several cases they were hauled off the land. Tomatoes.— A large portion of the tomatoes grown in California is produced for canning purposes. Certain counties (Alameda, Contra Costa, Sacramento, San Benito, San Joaquin, and Santa Clara) raise over three fourths of the cannery crop. Rents for tomato lands in these counties are influenced mainly by the probable tonnage per acre. Cer- tain other counties (Imperial, Los Angeles, Monterey, Orange, San Diego, Santa Barbara, and Ventura) produce over three fourths of the tomato crop that enters the fresh market. Rental rates for tomato land in these counties are influenced relatively more by the time of crop ma- turity (very early or very late) than by tonnage produced. Both cash and crop-share renting were followed to an equal degree in most all sections of the state, and for both the canning and the market crops. Out of 210 leases studied, there were 102 crop-share leases and 108 cash leases. Crop shares paid varied from % to %, with 56 of the 102 crop-share leases providing for % share; 18 leases called for % share ; 14 for % share ; 12 for y 3 share ; and 2 for % share, Bul. 655] Farm Tenancy in California 81 Where rents asked exceeded % share, the owner in all cases was called upon to give additional consideration beyond land. For example, in one case the owner paid for all water and the entire cost of harvesting; in another case the landlord cultivated, furnished work stock, and water for transplanting, while the tenant furnished all labor, cared for the crop, and paid the hauling charges ; in two other cases the landlord paid for all water and one half of the dusting and fertilizer; and in another case the landlord paid for one half the picking cost and all the box rent (1 cent per box). In general, however, the tenant furnishes everything except land. Cash-rental rates varied from $5.00 to $40.00 per acre per year. As between districts, typical cash rents varied from $10.00 to $15.00 per acre in Contra Costa County, from $15.00 to $20.00 in the Dixon -Wood- land area, $15.00 to $30.00 per acre in Sacramento and Alameda counties, $20.00 to $30.00 in Santa Clara County, $10.00 to $25.00 in San Mateo County, and from $10.00 to $35.00 in San Benito County. In the last district, rents from $10.00 to $17.50 were more common in the Hollister area, whereas in the Gilroy area, rents of $15.00 to $35.00 per acre prevailed. Farther south in the Salinas Valley, rates of $30.00 and $35.00 were most frequent. Rates in Los Angeles County varied from a range of $15.00 to $25.00 per acre in the Venice and San Fernando districts to a range of $20.00 and $30.00 per acre in the El Monte and Van Nuys dis- tricts. Cash rates varied more widely in Orange County than elsewhere in the state. Examples were found which varied from $5.00 to $40.00 per acre. The lower rates ($5.00 to $15.00) were typical in the Anaheim dis- trict whereas higher rates ($15.00 to $35.00) were more typical in the Santa Ana and Buena Park districts of Orange County. Rental rates for tomato lands in San Bernardino, Riverside, and Imperial counties were mostly from $10.00 to $25.00, with rates in the Imperial Valley generally a little higher than those in the other two counties. In all districts visited during field study and in all leases studied, the dominant lease period was found to be three years. A considerable number of one-year leases and a few five-year leases were also noted. Vegetable and Flower Seeds. — Leasing lands for the production of vegetable and flower seeds is often practiced in the Sacramento Valley, the San Juan Valley of San Benito County, the Salinas Valley, the Santa Clara Valley, the Santa Maria and Lompoc valleys of Santa Barbara County, the Cotati area in Sonoma County, and in Lake County. Lands leased for growing seeds are rented on both the crop-share and cash-rental basis, with the crop share being the more frequent form of 82 University of California — Experiment Station renting. In such cases a % or Vs share is the usual payment, the latter more often being the rental share for lands within irrigation districts. In both cases ( Vi or y s ) the tenant generally delivers the owner's share to a designated warehouse or on board cars at the nearest shipping point. The usual cash-rental rates were found to range from $15.00 to $40.00 per acre. In the Sacramento Valley a range of $15.00 to $25.00 covered most cases, but in the Sacramento — San-Joaquin Delta sums of $25.00 to $40.00 were more typical. In the Santa Clara Valley, most rental rates were between $25.00 and $35.00 per acre, as compared with slightly higher rental rates of $30.00 to $40.00 per acre in the nearby Salinas Valley. In Los Angeles and Orange counties, cash-rental rates for vege- table and flower seeds ranged from $15.00 to $35.00 per acre, the latter rates being mainly for flower seeds. Of particular importance as factors in setting the rental rates for land devoted to seed production are questions of past history of the land, both regarding yields and crops grown. Yields are a necessary considera- tion, but freedom from impurities is also of major importance in deter- mining total price returns. Indeed, this latter factor is so important that seed companies often rent land from a farmer under an agreement whereby the company supplies roots and does the harvesting, while the farmer prepares the land, irrigates, and cultivates under the direction of the company's field men. In such cases, rents may run as high as $50.00 to $75.00 per acre. The usual practice, however, is for the tenant to do all the work of planting, cultivating, and harvesting, and for the seed company to penalize for impure seed by paying a lesser price for the seed LEASING ORCHARDS, VINEYARDS, AND BERRY LAND Orchards. — The leasing of orchards is the exception rather than the rule. No county, even among those containing extensive acreages of fruits, possesses a large proportion of leased orchards. This is especially true for the large citrus belts of southern California and the deciduous areas in central and northern California. Citrus groves are operated almost universally by owners and seldom by tenants. When such leases are given, share rents are relatively large owing to the considerable investment made by owners in these groves. For example, the few citrus leases available for study provided for rental shares mainly at 50 per cent or more. No leases were found to be let on less than 40 per cent of the crop. The leasing of deciduous orchards, although not a general practice, was somewhat more frequently found than for citrus groves. Both or- chard and vineyard leases follow a fairly uniform type, no marked Bul. 655] Farm Tenancy in California 83 differences occurring as between one kind of fruit and another. The wording of leases may vary considerably but similar provisions pre- vailed in most leases studied. Leasing orchards on the crop-share basis was the rule, although some cash renting was to be found in most deciduous sections. Apparently the share basis is preferred by the landlord because he may then retain supervision over the handling of his property and the disposal of its product. Cash-rental rates when used are not only highly variable for similar orchards in different districts but between similar orchards in the same TABLE 16 Annual Rental Rates Paid for Lands upon Which Orchards, Vineyards, and Berries Were Grown, 1937, 1938, 1939 Share rents Cash rents Crop Range Typical* Number of leases Range Typical* Number of leases Deciduous orchards 1/5-2/3 1/6-1/2 1/3 1/4 number 220 171 dollars 22.50-75.00 20.00-65.00 12.50-65.00 15.00-40.00 dollars 35.00-40.00 -t 35.00-50.00 25.00 number 84 16 Strawberries 98 37 Total . 391 235 * "Typical" is taken to be the modal value or that value which is most frequent in the sample. f Dashes indicate data not available. t Includes Boysen, Young, Logan, and other blackberries and raspberries. districts as well. The rental rate for a specific property is determined by conditions common to most farm leasing, namely, the producing capacity of the property ; the extent, nature, and condition of equipment ; rela- tive bargaining power of the parties; age and condition of the trees; price situation for the fruit ; the demand for such properties to lease ; and the degree of economy possible in growing and marketing the prod- uct. Cash-rental rates, as exemplified by the 84 orchard leases studied, varied from $22.50 to $75.00 per acre (table 16) . The lower rates ($22.50 to $40.00) applied mainly to prunes and plums, whereas peaches, pears, and apricots brought generally higher rates ($35.00 to $75.00) per acre. When renting for cash the landlord supplies orchard, buildings, and some equipment, which may include a tractor, lug boxes, drying trays, and spraying machine, while the tenant meets all operating costs of labor, fuel, feed, and such materials as spray, dip, and packing. Usually the tenant pays for irrigation water, although exceptions were noted in which the landlord paid for all or a part of the water. Cash-rental pay- 84 University of California — Experiment Station ments are usually made in two or three equal installments, one paid at the beginning of the lease, and the remainder when returns are coming in for fruits sold. Under the more commonly used share method, the landlord furnishes orchard, buildings, improvements, tractor, implements, lug boxes, trays, dipping apparatus, and spraying machinery, while the tenant provides the labor, feed, and materials such as spray, dip, paper, and nails and boxes for packing. Orchard leases written on this basis generally have in mind a 50-50 division of the gross returns. When the tenant furnishes more and the landlord less, the share rents are scaled down correspond- ingly. For example, out of 220 orchard leases studied there were 59 calling for Vi shares, 47 for y 3 shares, and 43 for y 2 shares. The remainder ranged from % to % shares with 3 leases being based on sliding-scale rentals. Almost without exception orchard leases for shares under % called for the tenant to furnish everything except or- chard and buildings, whereas those orchard leases for y 3 share and over generally called for more contributions by the landlord than the orchard and buildings. Slight differences existed among the various fruits regarding the more commonly used share rents. Almond groves were mostly let on % shares with some at x / 2 shares; apples chiefly at y s and y 2 shares; apricots chiefly at % shares, although some leases were written for rents ranging from y 5 to y> shares ; cherries were mostly at ^4 and !/3 ; figs from y 5 to % ; peaches from % to y 2 , with most cases between Vi and % ; pears from % to y 2 ; plums at % to y s ; prunes from % to %, with most leases at !/£ and % ; an d walnuts ranged from % to y 2 , with most cases at % and y 2 . Several examples of sliding-scale rentals were found. Two ex- amples are shown below — one for prunes and one for peaches. The prune lease was figured on the base selling price : Base price, in Share rent, cents per pound in per cent 1 None 2 20 2V 2 30 Over 2% 33y 3 The peach lease was figured on gross income : Share rent, Gross income in per cent $10,000 or less 25 More than $10,000: First $10,000 25 Above $10,000 50 While each of the above sliding-scale rents represents an attempt to make rentals more equitable to landlord and tenant, neither rental con- siders the relative contribution of owner and tenant to the enterprise. Bul. 655] Farm Tenancy in California 85 The annual lease is overwhelmingly favored (table 17), such leases being most widely used in all districts studied. Many annual leases con- tain provisions for renewal. Some two- and three-year. leases were oc- casionally noted. Very few of five years or more were found. These longer leases are usually given to corporations having good financial backing and are carefully worded to insure proper care of the orchard. More orchard leases were written for periods exceeding one year than was true for vineyards. Out of 243 orchard leases there were 49 leases providing for periods exceeding one year in length. One such lease TABLE 17 Length of Leasing Period Commonly Used in Kenting Orchards, Vineyards, and Berry Land Length of leasing period Crop One year or less Two years Over two years number 194 171 number 1 16 7 number 14 Deciduous orchards 33 98 9 Total 365 24 154 covered a period of twenty consecutive years. This was a 30-acre apple orchard leased to the same tenant on a sliding-scale basis in which both yield and price received were considered. During the twenty -year pe- riod the average yearly rent per acre was $75.00, the actual rent paid varying from as low as $33.00 in the poorest year to as high as $135.00 per acre in the better years. Instances of variation in leasing provisions are common. In some counties several prune, pear, and apple orchards were noted to have been rented free for care and taxes. Such leases often provide for the tenant to move on 30 days' notice in case the property is sold. A variation of the foregoing procedure, in some instances, was found to be responsible for lower-than-expected rental rates. For example, owners wishing to keep properties freely available for sale may give only one-year leases but at rental rates adjusted somewhat lower to compensate the tenant for risk of moving. In these instances, orchards ordinarily renting for 40 or 50 per cent of the crop may be let for 25 and 33% per cent. Other leases pro- vide for rents varying with the method of harvesting. In this type of lease, the landlord may receive 33% per cent if the fruit is dried, or 40 per cent if sold green, and 50 per cent if sold on the tree. In other cases the landlord may pay for drying his share of the fruit or often only for 86 University of California — Experiment Station the labor involved in drying his share. In Santa Clara and Sonoma counties the general plan provides for a 50-50 basis if the landlord sup- plies land, orchard, buildings, some equipment, and part of the spray materials ; or from 25 to 40 per cent of the crop if the tenant furnishes everything except land, trees, and buildings. A few leases were found to be based on a division of net income ; one such lease for 42 acres of Elberta and Lovell peaches near Lodi provided for payment of 50 per cent of the net returns. The allowable costs in this case were determined from a prearranged budget agreed upon by both parties. Where orchard heating is practiced, the landlord often pays his share of the oil cost; a typical lease for J. .H. Hale and Lovell peaches in Merced County provides for a share rent of 40 per cent and for the owner to pay his share of heater oil. When commercial fertilizers are used the landlord usually furnishes the materials and the tenant the labor of applying. In other cases the landlord may pay only for a share of the fertilizer. Provisions for covercrops usually require the landlord to furnish seed and the tenant to plant and turn under. When new lug boxes and trays are needed, the prevailing practice is for the land- lord to furnish the materials and the tenant the labor of putting them together. Where boxes are rented the landlord often pays his share of the box rent. These examples of practices illustrate only a part of the com- plex relation between landlord and tenant, but they will serve to indicate the wide variation in prevailing leasing terms and the bargaining that is involved in working out a mutually satisfactory lease. Vineyards. — As was true of orchards, the share basis is the predomi- nant method in use for the leasing of vineyards. In the few cash leases found, it was noted that annual rents per acre varied from as low as $20.00 to as much as $65.00, with no particular figure indicated as most prevalent. Share rents demanded for producing vineyards are commonly from % to V3 with most of the leases studied being written for 14 of the crop, there being 80 of the 171 vineyard leases studied written for this figure. The muscat varieties were the exception to this rule, all those leases running from y s to % share. In most all cases the tenant was re- quired to deliver the landlord's share to the roadside or to a designated shipping point. Leases for juice grapes commonly provided for delivery at a designated winery. Several leases provided for the tenant to culti- vate and prune according to specifications set down by the landlord. In several cases the landlord paid the power bills incurred for irrigation. Each time this was done the lease was characterized by a somewhat larger share rent than the average. BuL - 655 J Farm Tenancy in California 87 The method of harvesting practiced caused considerable variation in rental shares. One lease for 18 acres of Malvoisie (Cinsaut) grapes in Fresno County provided for a rent of 30 per cent if the crop was sold f.o.b., 35 per cent if sold roadside, and 40 per cent if sold on the vines. Another lease in the same county provided for payment of 33% per cent of the crop if sold f.o.b., and added $0.75 per ton to the rental share if sold roadside or $2.75 per ton if sold on the vines. Another lease for Thompson Seedless grapes in Fresno County provided for a rent of 33 Vs per cent if sold as raisins, 40 per cent if sold green, and 45 per cent if sold on the vines. Several leases provided for payment of rent computed on the sliding-scale basis. An example of this rental basis is given below. (See p. 39 for another example.) Base price, in Share rent, cents per pound in per cent Less than 3 30 3 to Sy 2 35 sy 2 to 4 40 4 to 41/2 45 Over 4y 2 50 Most of the leases for raisin grapes provided for the landlord to fur- nish trays and sweat boxes. Other raisin leases required the landlord to furnish slip joint or portable irrigation pipe, and stakes and wires, while still other leases provided for the landlord to advance money for prun- ing, harvesting, and power costs. In most cases these additional pro- visions were offset by larger share rents (for example, from y± to Va or 35 per cent). The periods for which vineyard leases are written vary from one year to eight or ten years. Leases on established vineyards, however, were written mainly for periods of one year or less. Out of 187 leases for vine- yards, only 16 were written for periods exceeding one year. Longer leases were made chiefly for wine grapes ; raisin and table grapes tended to be rented for the shorter periods. Strawberries. — Most of the strawberries produced in California are grown in Santa Cruz, Monterey, Sacramento, Los Angeles, and San Bernardino counties. It has been estimated that more than two thirds of the crop is grown on leased lands. 54 By far the greatest number of renters are members of the Japanese race. The people of this race seem to be particularly adapted to the growing of strawberries, which require spe- cialized knowledge and experience. Cash renting was found to be the customary practice in all districts. Rental rates for 98 leases varied from as low as $12.50 to as high as $65.00 51 Secretary of Japanese Businessmen's Association, Watsonville, California. 88 University op California — Experiment Station per acre (table 16). Comparison of rates prevailing in the various dis- tricts showed that higher rates ($55.00 and $65.00 per acre) were mainly confined to the Watsonville district, slightly lower rates ($40.00 to $50.00) more common in the Salinas district, intermediate rates ($20.00 to $35.00) more prevalent in the Florin area of Sacramento County and in the Chino Valley area in San Bernardino County, and lower rents ($20.00 to $25.00) were found mainly in the Venice area of Los Angeles County and in San Mateo County. The lowest rates were noted mainly around Santa Cruz where hilly land rented for $12.50 and $15.00 per acre, and in the San Joaquin Valley. Heavy fertilization, intensive cultivation, and the perennial nature of the crop tend to set the minimum lease period that is practical in leasing land for strawberry growing. The usual lease period in all areas studied was uniformly from three to five years. A few exceptions extended to eight- and ten-year periods. Three- and four-year leases allow for the maximum yields from one planting, while eight- and ten-year leases allow the development of two plantings. Leases for periods exceeding three years often provide for the planting of bush berries after the first strawberry beds have begun to decline in yields. In some areas, notably the Salinas Valley, growers believe that it is unprofitable to replant strawberries until several years have intervened between beds. In such cases the tenant puts the land into bush berries for the remainder of his lease period. Rental rates for leases of five years or longer are usually adjusted for this situation. Differences in leasing practices were found to exist not only between districts but within each district as well. For instance, of the 310 acres leased to Japanese growers in the Watsonville district during 1938, about one third was operated by joint action of two or more families per farm unit ; K about one third of the area was operated on the basis of one family per unit ; and the remaining one third was operated by families with hired help who worked on a crop-share basis. 50 During the same year there were 45 leases in force for three-year periods at yearly ren- tals of $55.00 and $60.00 per acre, while 15 leases for five-year periods brought annual rentals of from $25.00 to $40.00 per acre. Water is an important consideration in the leasing of lands for grow- ing strawberries. Not only must there be a sufficient amount available but it must be at hand at a time and in such quantities as are needed for best results. This consideration has influenced the type of lease and the amounts of rent paid for leasing strawberry lands. For instance, in the 65 Each family handles from 5 to 7 acres as a unit. "" Secretary of the Japanese Businessmen's Association, Watsonville, California. Bul. 655] Farm Tenancy in California 89 Salinas -Watsonville areas there were two types of leases in use. The first is exemplified by several three-year leases in which a rent of $55.00 per acre was paid for the first year and from $60.00 to $65.00 was paid for each of the remaining years. In each case water was furnished by the landlord. The second type of lease in use provided for a five-year term at a yearly rental of from $25.00 to $40.00 per acre with the tenant furnish- ing the water (that is, paying for pumping costs). In both forms of leases mentioned, the stipulation is made that if wells fail to deliver an agreed-upon amount of water, the tenant may have the well drilled deeper or have a new well drilled after notifying the landlord and giving him 10 days' notice. The landlord is liable up to and including $1,000.00 for all costs in providing the agreed-upon amount of water. Bush Berries. — The bush berries considered in this section include raspberries and Logan, Young, Boysen, and other blackberries. It was noted that all leases for lands devoted to commercial production of bush berries were leased on a cash-rent basis. No share renting was found, though some growers contacted in the progress of this study recalled occasional leases for share rent in past years. Apparently the cash basis is the prevailing practice. Rental rates provided in the 37 leases studied varied from $15.00 to $40.00 per acre. In the Santa Clara Valley, $25.00 per acre was a com- mon figure ; in Sacramento County rents of $15.00 to $18.00 were mostly in evidence ; and in the Salinas Valley rental rates ranged from $25.00 to $40.00 per acre. Bush berries are often planted on land formerly devoted to the grow- ing of strawberries, especially so where lease periods run longer than three years in length. In such cases the lower income for the fourth and fifth years may be compensated for by a lower average yearly rate for the entire term. For instance, in the Salinas Valley where rents of $40.00 to $65.00 per acre prevailed for three-year leases of strawberry land, the alternative annual rents for five-year leases may be from $25.00 to $40.00 per acre when bush berries are grown in the fourth and fifth years. Leases for land on which both strawberries and bush berries are grown often provide for plowing up and burning, or otherwise disposing of the vines and residue at the termination of the lease. LEASING POULTRY FARMS The leasing of poultry farms is relatively infrequent. Owners prefer to sell them outright rather than rent to tenants. Most leasing of poultry farms is occasioned by temporary owners and agents, such as lending !)() University of California — Experiment Station agencies, realtors, and feed companies. Such organizations lease the properties while awaiting an opportunity for sale. In general poultry production requires small acreages, from 2 to 10 acres being the usual size of leased properties, with 5 acres the most common size. The lease period varies from one to five years, with leases of three years and less being most often used. Cash rents predominated in all sections ; only one instance of a share lease was noted (table 18) . This one, a l^-acre place in Santa Cruz County, had a capacity of 1,200 fowls and rented for a 10 per cent share of the gross. Rent was payable TABLE 18 Eental Eates Paid for Poultry Farms, 1937, 1938, 1939 Share rent Cash rent per month Total District Farm and dwelling Per 1,000 fowls leases* Hay ward per cent m dollars 20.00-60.00 25.00-80.00 15.00-50.00 15.00-35.00 15.00-40 00 dollars -t 15.00 10.00 number 8 14 11 Sacramento Santa Cruz 9 15 Total 57 * Supplemented by estimates of authoritative individuals in each district. t Dashes indicate data not ascertainable. I One lease only. monthly. The owner stated that his share averaged about $25.00 per month for the year 1938. The remaining (14) leases for poultry farms in Santa Cruz County called for monthly cash rents ranging from $15.00 to $40.00. Size of plant varied from 500 fowls on % acre to 2,000 fowls on 5 acres. It was noted that in almost all cases studied, rents paid for leasing poultry farms include a portion of the rent for use of the farm dwelling. This may not be rightly charged against the poultry enterprise, but it was observed in almost every case that rents paid included the use of a dwelling as well as the farm and facilities. This practice is so commonly followed in leasing poultry farms that in some sections, notably Sacramento and Santa Cruz counties, rents for smaller farms are based more on the type of dwelling and its loca- tion than on the capacity of the poultry facilities. One realtor stated that he based his rental rate mainly upon what amount of rent the same dwelling would bring if it were located in town. The leasing of poultry farms in the Santa-Rosa — Petaluma district of Sonoma County likewise takes into account the type of dwelling in set- Bul. 655J Farm Tenancy in California 91 ting rental rates. Cash rents are based on distance from town ; age, size, and quality of the plant ; and the size and desirability of the dwelling. By contrast with other less commercial poultry districts, however, the rental scale in the Petaluma district adhered closely to a rate of $10.00 per 1,000-fowl capacity. Information gained from 11 leases followed this rate very closely and confirmation was obtained from several lessors and feed companies in the district. They agreed that prevailing rents were approximately as follows : Acres Capacity in fowls Monthly rent 3 to 5 500 to 1,000 $15.00 5 to 7 1,500 to 2,000 20.00 5 to 7 2,500 to 3,000 25.00 to 30.00 5 to 7 3,000 to 3,500 30.00 to 35.00 7 to 10 4,000 to 5,000 $40.00 to 50.00 Although they did not consciously follow the method of charging $10.00 per 1,000-fowl capacity, one notes upon examination how closely this rate would approximate the prevailing rents. In Los Angeles County, data obtained from 14 leases indicated that rents for poultry farms ranged from $25.00 to $80.00 per month, accord- ing to acreage, plant capacity, nearness to town, and the size and quality of poultry facilities and the dwelling. Quality of dwelling and location were indicated as being the most important considerations in setting the rental rates for smaller farms (that is, 1,000 fowls and less) , whereas the quality and capacity of the poultry facilities were more important in determining the rent for larger farms. When rental rates were examined on the basis of plant capacity, it was noted that a rate of about $15.00 per 1,000 fowls approximated the scale for several larger plants. This rate did not hold for smaller farms, there being no rents found below $25.00 per month. In all districts it was found that monthly cash rents were customarily used. Length of leases varied from one to five years with shorter periods being more typical. Likewise, in all districts it was the practice for land- lords to furnish land, buildings, and improvements. In some cases, im- plements and equipment were also furnished by the landlord. In all cases noted the tenant furnished fowls, labor, feed, power; also tools and equipment when these latter two items were not a part of the land- lord's contribution. LEASING DAIRY FARMS The leasing of land and facilities for dairying is widespread in Cali- fornia, being especially common in Alameda, Contra Costa, Fresno. Humboldt, Imperial, Kings, Marin, Merced, Monterey, San Joaquin, San 92 University of California — Experiment Station Luis Obispo, San Mateo, Santa Cruz, Sonoma, and Stanislaus counties. In general, there are four types of dairy enterprises which characterize the dairy industry in California. They may be designated as (1) a com- bination dry-farmed grain, hay, and dairy enterprise requiring from 5 to 20 acres per cow, according to the quality of the pasture ; (2) a com- bination of irrigated alfalfa or meadow and a dairy enterprise requiring from 1% to 3 acres per cow, according to the available water and yield of grass or alfalfa obtained ; (3) the intensive, or dry-lot, type of dairy enterprise which is entirely dependent upon purchased feed and con- TABLE 19 Eental Eates Paid for Dairy Farms, 1937, 1938, 1939 Share rent Cash rent District With alfalfa With grass pasture Dairy facilities North coast per cent 25 -33M 33^-50 33^-50 25 -33^ dollars per acre 13.50-25 00 15.00-30.00 20.00-35.00 15 00-20.00 dollars per acre 1.75-7.50 1.50-6.00 1.50-8.00 dollars per cow 3.00- 7.50 Central valley * Central coast Southern California: Los Angeles 10.00-18.00 Other 5.20-14.00 * Dashes indicate data not ascertainable. Source of data: Compiled from 172 leases and supplemented by estimates of authoritative individuals in each district. centrates; and (4) the dual-purpose type of the high mountain areas that combines dairy production with beef. From field studies and from examination of 172 leases, it was found that cash renting was widely practiced over the state as a whole. Well over one half of the leases studied provided for payment of cash rent. In some sections, notably in the Imperial Valley and in Humboldt County, share renting was dominant. (See p. 38.) Elsewhere in the state, share renting was practiced mainly when landowners furnished a part of the herd or a part of the feed. For example, several leases in Santa Cruz County provided that the owner furnish land, buildings, and stock, while the tenant furnished the labor and operating capital. The rental share under this agreement was 50 per cent of the returns from milk, cream, and veal. This type of lease is often unsatisfactory to tenants because no provision is made for culling the herd. Thus, production per cow tends to be lower than is true where culling is practiced. A similar lease in Marin County provided for the landowner to receive 50 per cent of the income from milk and cream and also to receive 24 of the best heifer or bull calves each year. Bul. 655] Farm Tenancy in California 93 In 14 leases, mostly in the San Joaqnin Valley, the landowner had agreed to furnish land, buildings, and feed for % share of the dairy in- come, the tenant agreeing to furnish the herd, the labor, and operating capital. Seven additional leases were noted in the same area in which the landowner furnished the land, buildings, and one half the herd for a % share of the dairy income, the tenant providing labor, operating capital, and one half the herd. Under this arrangement the landowner also re- ceived one half the income from veal. In the majority of leases for shares, however, the landowner furnished the land, buildings, and repair ma- terials, while the tenant furnished the herd, labor, feed, equipment, and operating capital. Under this arrangement the landowner usually re- ceived one third of the dairy income from milk and cream, while all in- come accruing from the sale of veal went to the tenant. Share payments may be made as a flat rate for the products sold each month or as a monthly share of the expected annual production. In the latter the monthly rent may be %2 the expected annual production or, as is true in Humboldt County, the monthly share may be a graduated portion of expected annual production. (See p. 38.) Some dairies are rented on standing rents of 4 to 6 pounds of milk fat per acre per month. In most sections of the state, the usual practice was to pay both cash and share rentals at monthly or quarterly intervals. Instances of semi- annual and annual payments were noted, but to a lesser degree. Share rents were usually paid by dividing the monthly creamery check, the creamery company sending separate checks, representing the agreed in- come division, to landowner and tenant. Cash rents, however, are usually paid in advance, whether computed as a flat rate or on a sliding-scale basis. No universal unit was in use for computing the rental rate. In some counties a cash sum per acre was the prevailing unit ; in other sections most rents were computed on a per-cow basis. Still other rentals were simply a lump sum regardless of the size and production of the herd carried by the tenant. In still other leases, rents were computed on the wholesale prices of 92-score butter, while a similar type of lease provided for rents computed on the prices of milk fat. It matters little what the actual unit may be when computing the rental rate as long as the carrying capacity of the land and facilities, the production of the herd, and the relative cost situation are taken into consideration. Cash-rental rates were highly variable from district to district, reflect- ing mainly the differences in the amount and value of the land under lease for each of the four types of dairy enterprises. For this reason a comparison of rental rates on a per-acre basis is meaningless unless con- fined to a particular area in which a given type of dairying is practiced. 94 University of California — Experiment Station For dairy-alfalfa combinations in the Imperial Valley, it was found that yearly cash rents of $15.00 to $20.00 per acre were commonly paid (table 19), but more often the rent was based upon a monthly payment of from 4 to 6 pounds of milk fat per acre. For dairies based mainly on natural grass in San Diego County, annual cash rents of $8.00 to $12.00 per cow, payable in monthly installments, were common. In this county a few dairies of the dry-lot type paid $5.20 to $12.00 per cow per year. In Los Angeles and Orange counties, much of the dairying is charac- terized by intensive use of small acreages (10, 15, and 20 acres), and in many instances only corrals and buildings are used. Rental rates are roughly figured on a per-cow basis and often include the use of a dwell- ing as well as the usual dairy facilities. Capacity, condition, and nature of dairy facilities and type of dwelling are items of great importance in setting rental rates in these two counties. Practically all of the dairies, however, produce market milk. Thus the buildings and corrals used are of a type that conform to state and county health regulations for that product. In Orange County the usual dairy unit is from 50 to 60 cows for which a yearly rent of from $10.00 to $14.00 per cow is paid. Of this sum % is usually attributed to the use of the dwelling when allocating rent as a cost of dairying. In Los Angeles County the usual unit contained from 60 to 100 cows for which a yearly rent of from $10.00 to $18.00 per cow was paid. Larger units were more often noted in Los Angeles County than elsewhere, some herds of 500 to 600 head being operated with rented facilities. Rents in both Los Angeles and Orange counties are invariably payable monthly in advance. In the coastal section of San Luis Obispo County where rolling grass- land is the basis for the dairy industry, yearly cash rents varied from $3.00 to $6.00 per acre. In the interior of the county, pasture rented at sums ranging from $1.50 to $4.00 per acre. In San Mateo County similar natural grassland rented at rates varying from $2.50 to $8.00 per acre, with most cases studied at $3.00 to $3.50. Rents in this section were gen- erally payable in advance at semiannual intervals. Dairying in the Sonoma-Marin district is chiefly dependent upon local hay and pasture supplemented by purchased concentrates. Here annual rents per acre varied from as low as $1.50 for steep or heavily wooded hill land to as high as $5.00 per acre for open rolling land with water and adequate buildings. Partially wooded hills with plenty of open pas- ture brought rents of $2.50 and $3.00 per acre, while open rolling lands brought $4.00 and $4.50 per acre. Rents may be paid monthly, quarterly, Bul. 655] Farm Tenancy in California 95 semiannually, or annually in advance, there being no set rule followed in the Sonoma-Marin district. Combination dairy-alfalfa enterprises in the San Joaquin Valley brought rents ranging from $15.00 to $30.00 per acre, with $20.00 and $25.00 being the most prevalent rates. Payment monthly in advance was the prevailing practice for most cash leases in the San Joaquin Valley. In Merced County near Los Barios it was found that the sliding-scale basis was the dominant method in use for computing monthly rental rates. (See p. 37 for an example of the sliding scale used in this area.) Similarly, in the Salinas Valley several leases for alfalfa-dairy com- binations provided for rentals to be computed on a sliding-scale basis. The usual method in this area, however, is for a flat yearly payment of from $20.00 to $35.00 per acre to be made. This sum is payable in ad- vance at monthly or quarterly intervals. Farther north in Humboldt County, dany-alfalfa combinations rented at rates from $13.50 to $25.00 per acre. Dairies in this county and in nearby Mendocino and Del Norte counties rented at from $1.75 to $7.50 per acre when based upon natural grass and meadow pasture. When considered on a per-cow basis the yearly rental rates in these three northern counties ranged from $15.00 to $32.00 with two thirds of the cases at from $20.00 to $26.00 per cow. This may be compared with Sonoma and Marin counties where a range of $12.00 to $26.00 per cow prevailed, and most cases were $15.00 to $20.00. A similar examination of rental rates in the Salinas-Soledad district disclosed yearly rents per cow to be chiefly from $32.00 to $43.50, whereas in the Los Banos area per-cow rents ranged from $30.00 to $48.00 per year. Since these figures include payment for feed derived from the land under lease they serve only as a very rough comparison. A more com- parable basis is achieved when the feed enterprise is separated from the dairy enterprise and rents are compared as between different dairy enterprises rather than as between different methods of dairying. To illustrate, a lease in San Diego County for a dry-lot-type dairy stipulated a yearly rent of $5.20 per cow or slightly more than $100.00 per acre for the land, buildings, and facilities involved. Another lease, in Marin County, provided for a yearly rent of $4.00 per acre or an amount of $4.18 per cow after the pasture and feed enterprise had been separated from the dairy proper. Even when this method of comparison is used one must make allowances for differences in the type of dairying fol- lowed and in the quality and degree of utilization of facilities involved. One operator may be producing market milk, another may produce manufacturing milk. One operator may utilize expensive facilities to 96 University of California — Experiment Station their limit of capacity in an effort to lower unit rental costs, while other operators paying lower total costs may allow poor managerial practices to increase unit rental costs. Within these limitations, however, it is possible to make rough comparisons between districts. From a sample of 20 dairies it was determined that the average annual rental per cow for dairy farms 57 in Marin and Sonoma counties was $4.52, whereas in Los Angeles and Orange cbunties the figure was $8.25 58 per cow. Extremes were indicated by a range of from $3.00 to $7.50 per cow in Marin and Sonoma counties as compared with $5.90 to $13.50 in Los Angeles and Orange counties. Length of leasing periods for all leases varied from one to fifteen years. Dairying based on alfalfa tends to have longer leases (three years or longer), whereas dairying based on grazing and pasture tends to have shorter leases (three years or less) . The prevailing period over the state as a whole was found to be from three to five years. In Humboldt County, leases of five years are mostly used; in Imperial County one-, two-, and three-year leases are used ; and in Santa Cruz, Sonoma, San Mateo, San Luis Obispo, Stanislaus, Monterey, Merced, Marin, and Kings counties leases of from three to five years were most prevalent. In almost all instances of cash leasing the tenant furnishes the herd, the labor, operating capital, and dairy equipment, while the landlord fur- nishes land, buildings, repair materials, and seed for replanting alfalfa. Leases often stipulate the manner of handling alfalfa land. Provisions governing reseeding and the period for putting in new plantings are commonly found. The pasturing of alfalfa is often defined, permission to pasture being limited to certain fields, to certain stages of growth, and to certain times of the year. Denying the tenant permission to run live- stock on alfalfa during the rainy season or when fields are wet from irrigation is a common provision. LEASING LIVESTOCK RANGES AND RANCHES Beef Cattle. — In California, as in most of the western states, livestock- men depend upon federal and state-owned lands for grazing and breed- ing grounds as well as upon privately owned holdings. Public domain, state-owned lands, national forests, Indian reservations, corporation holdings, and large privately owned holdings make up the major portion of lands that is available for grazing and leasing. In California there were about 16,576,463 acres of public domain available in 1933, about 797,954 acres of state-owned lands available in August, 1935, about 57 For buildings, corrals, facilities, and the land which they occupy. 58 Excluding rental value of dwelling figured at approximately one fourth of the annual rent. Bul. 655] Farm Tenancy in California 97 19,163,818 acres of national forests in 1935, and about 417,908 acres of Indian reservations in 1935 ; or a total of 36,956,143 acres of nonpri- vately owned lands. 89 There is considerable variation in the character of the land — running the gamut from swampy lowland to precipitous mountain range. There is a resulting variation in the character of feed — in some districts year- round pasture is available, and in others separate ranges are utilized for summer and winter pasture. Rolling grassland, grain and hay stubble, beet tops and pasture, pea vines, and alfalfa pasture constitute the major types of feeds available in addition to natural grass ranges. These varia- tions in landownership, character of land, and type of feedstuff are often found in the same grazing area. The complexity of this relation accounts in a large part for the wide variation in rents paid for grazing lands within a given area. By far the majority of ranges and livestock ranches are leased for cash rents. The landlord furnishes the land, water, and sometimes salt. Where the land is privately owned there may be furnished in addition buildings, fences, and other facilities. Length of leasing periods was commonly two, three, and five years for range land and grass pasture. Some leases covered only one-year periods, others were written for fif- teen years, the statutory limit in California. A few leases were written for ten-year terms with a provision for option of renewal for an addi- tional ten years. While such a procedure gets around the legal limit for farm-leasing periods in California, it is doubtful whether this is a wise practice from either the viewpoint of the landowner or the tenant. Leasing of miscellaneous feedstuffs such as alfalfa pasture, sugar beets and tops, pea vines, lettuce pasture, and hay and grain stubble is done on a seasonal or head-month basis. The season in such cases is determined by the amount and condition of the feedstuff and the number of cattle. A few cattle ranches were reported as being leased for a 50 per cent share. Under this arrangement the landowner furnished the land, im- provements, the stock and equipment, while the tenant supplied the labor required in caring for the stock, maintaining the ranch, and putting up feed. Under this arrangement, provision is also made for replacements and culling to insure return of the original number and quality of stock to the landowner. A variation of this practice was found in a few cases where each of the parties supplied one half of the livestock with each sharing 50-50 in the proceeds. In this agreement the tenant's labor is held to offset the owner's land. 59 Mann, L. B. Cooperative marketing of range livestock. U. S. Farm Credit Ad- ministration Bul. 7:22. table 9. Washington, D. C. 1936. 98 University of California — Experiment Station Carrying capacity of the land varies widely, not only because of differences in the amount and quality of feed but also because of the time for which the range and pastures are in use. Sizes of rented holdings vary from 160 acres to some which exceed 100,000 acres to the holding. Cash rents reflect not only the difference in carrying capacity but also the quality of the feed as well. For these reasons an attempt was made to determine rental rates on a head-month basis for the different classes of range and pasture commonly used. To facilitate analysis and TABLE 20 Typical* Rental Rates per Head-Month for Cattle Ranches and Ranges, 1937, 1938, 1939 District Public domain and national forests Mountain range and pasture Valley and foothill grassland Grain and hay stubble Other crop residuet Northern California dollars per head-monthX 0.15-0.30 0.10-O.20 dollars per head-month 0.60-0.75§ 0.30-O.45|| 0.35-0.70 0.25-0.40 0.25-0.35 dollars per head-month 0.60-1.00 0.25-1.00 0.60-0.90 0.75-2.00 0.35-0.40 dollars per head-month 0.65-0.95 0.40-0.65 0.45-0.60 1.25-1.50 0.50-0.75 dollars per head-month -1 0.75-1.50 0.75-1.50 Southern California: 0.75-2 00 Other 0.75-1.25 * "Typical" is taken as the modal value or that value which is most frequent in the sample. t "Other crop residue" includes sugar-beet tops, alfalfa pasture, pea vines, and lettuce residue. X Rental rates have been classified on a head-month basis to facilitate comparison. See table 21 for rates per acre. § Winter pasture. If Dashes indicate data not ascertainable. || Summer pasture. Source of data: Compiled by authors from 227 leases and supplemented by estimates of authoritative individuals. to make the conclusions more pertinent it was found advisable to sep- arate the 227 leases for livestock ranges and ranches into four separate geographic groups (table 20). In each of these four areas of the state, data have been classified into groups according to the following: (1) public-domain lands and national forests; (2) privately owned moun- tain pasture and range; (3) valley and foothill grasslands; (4) grain and hay stubble ; and (5) miscellaneous feedstuff s. In the northern California area are included the counties of Del Norte, Humboldt, Lassen, Mendocino, Modoc, Plumas, Shasta, Siskiyou, Te- hama, and Trinity. In the coastal counties of this group there are low mountain ranges and many narrow valleys. The climate is mild with annual rainfall exceeding 50 inches. Grass is luxuriant in winter and spring. Production consists mainly of good-quality Hereford breeding stock. A few feeders and stockers are shipped in for winter feeding. Marketings consist mainly of two-year-old grass-fat steers. Bul. 655] Farm Tenancy in California 99 The inland counties of this group have a climate typical of elevations ranging from 4,000 to 8,000 feet. Mountains and high plateaus receive an annual rainfall ranging from 12 inches up to 60 inches, mainly in the form of winter and spring snows and rain. There is excellent sum- mer grazing, and hay produced in the valleys suffices for winter feeding. Data were taken from a total of 90 leases covering lands used in graz- ing beef cattle in the northern California district. Rents were found to vary from as low as $0.02 per head-month for rocky highlands held as public domain to as high as $1.65 per head-month for barley stubble. When considered on an acre basis, the extremes were represented by a low of $0,035 per acre per season for public domain and a high of $5.00 per acre for all-year irrigated pasture (table 21). On the average, public-domain lands rented for $0.14 per head-month, though some areas of good grassland brought as much as $0.82 per head- month. The average seasonal rate per acre for public domain was $0.06, with the poorest range renting for as low as $0,035 per acre and the better at from $0.12 to $0.15 per acre. National forests were rented almost entirely on a head-month basis. The charge varied from about $0.15 per head-month for average feed to as little as $0,105 per head-month for poorer feed. Better range with some open park land or mountain meadow brought $0.27 and $0.30 per head-month. Privately owned pasture and range were rented both on a per-acre and a head-month basis. The average charge per head-month for good fall and winter pasture was $0.65 and $0.75. The average rate for spring and summer pasture was $0.23 per acre for the season. "Where plenty of water and some meadowland were available, rental rates were from $0.60 to $0.70 per acre. Grassland in the valleys rented at amounts ranging from $0.23 to $1.03 per head-month. The average rate per head-month for valley grassland was found to be $0.62, while better areas with fattening feed brought as high as $1.00 and $1.05 per head-month. On an acre basis the average rent paid for grass pasture was $0.56 per year, with rents for the leases studied ranging from $0.19 to $5.00 per acre according to topography, altitude, quality of feed, and the time of year when the grass was avail- able. Grain and hay stubble rented at from $0.45 to $1.50 per acre according to the amount and quality of pasturage (table 21) . The average rent for good stubble was found to be from $0.75 to $0.85 per acre. Small acreages of choice stubble brought as much as $1.50 per acre, while larger acre- ages (500 acres or more) brought less than average prices. When con- 100 University of California — Experiment Station sidered on a head-month basis, the average rent for good stnbble was found to be from $0.95 to $1.05 per head-month. Poorer hay stubble brought only $0.45 to $0.65 and the best grain stubble rented for as much as $1.50 and $1.65 per head-month. The Great Valley area includes El Dorado, Fresno, Kern, Kings, Ma- dera, Mariposa, Merced, Nevada, Placer, Sacramento, San Joaquin, Stanislaus, Tulare, and Tuolumne counties. In the foothill sections of the Sacramento and San Joaquin valleys there is a considerable expanse TABLE 21 Annual and Seasonal Eental Eates per Acre for Cattle Eanches and Eanges, 1937, 1938, 1939 District Public domain and national forests Mountain range and pasture Valley and foot- hill grassland Grain and hay stubble Range Typical* Range Typical Range Typical Range Typical dollars dollars dollars dollars dollars dollars dollars dollars Northern per acre per acre per acre per acre per acre per acre per acre per acre California 0.035-0.15 0.06-0.08 0.05 -0.70 0.20-0.50 0.19 -5.00 0.50-1.50 0.45-1.50 0.75-0.85 Great Valley -t — 0.125-0.50 0.25-0.35 0.125-5.00 0.75-0.80 0.40-1.25 0.60-0.75 Central coast — — 0.08 -0.30 0.25-0.30 0.40 -2.50 1.00-1.50 0.25-1.00 0.50-0.90 Southern Cali- — — 0.075-0.25 0.12-0.18 0.25 -0.90 0.50-0.60 0.25-1.25 0.30-0.80 * "Typical" is taken to be the modal value or that value which is most frequent in the sample, f Dashes indicate data not ascertainable. Source of data: Compiled by author* from 227 leases and supplemented by estimates from authoritative indi- viduals. of rolling grassland used chiefly for year-round and winter grazing. Altitude ranges from 100 to 1,000 feet and yearly rainfall from about 10 to 25 inches, coming mostly during the winter months. "Winters are mild and summers are dry and warm. Feed-crop production is very di- versified and the valleys as a whole comprise the main surplus feed- producing section in California. Production consists chiefly of breeding stock with stockers and feeders shipped in each fall for winter grazing and feeding. Fairly good foothill pasture was found to rent for an average of $0.78 per acre, while land with considerable manzanita and brush rented for as little as $0,125 per acre. On a head-month basis, the average charge was found to be $0.49. Good all-year pasture rented for as much as $3.50 and $3.75 per acre, and the best grass with plenty of water brought as high as $5.00 per acre (table 21) . In the lowland sections of the valleys, rents for poorer lands (with considerable sand or alkali) were generally from $0.30 to $0.75 per Bul. 655] Farm Tenancy in California 101 acre. Good stands of saltgrass or Bermuda grass rented at from $2.00 to $5.00 per acre, but the average yearly rent for valley grassland was between $0.75 and $0.80 per acre. When rates were calculated on a head- month basis, it was found that $0.51 was the average charge, although some tenants paid as little as $0.24 per head-month and others paid as much as $1.43. About two thirds of the leases studied centered between $0.25 and $0.50 per head-month. In the higher altitudes above the foothill sections, privately owned range land rented at from $0.25 to $0.35 per acre in the majority of cases, the average rental rate being $0.32 per acre per season. Open land with good water brought as much as $0.50 per acre, while steep or brushy range rented at $0.20 and $0.25 per acre or less. When figured on a head- month basis, privately owned range brought an average head-month rent of $0.49 as compared with $0.17 for national forests. This difference in rents may be due to variations in feed, availability, and location, as well as in ownership. The majority of rents paid for privately owned range land were between $0.35 and $0.70 per head-month, whereas the majority of rents paid for national forests were between $0.10 and $0.20 per head-month (table 20). Grain and hay stubble rented at rates varying from $0.40 to $1.25 per acre, according to the quality, amount, and type of forage available. Sev- eral cattlemen expected to pay not over $0.50 per head-month for stubble and this amount was often scaled down when the stubble was of poor quality. Miscellaneous feedstuffs included Ladino clover at $1.50 to $2.00 per head-month, alfalfa pasture at $0.75 and $1.00 per head-month, and sugar-beet pasture at $0.75 to $1.50 per head-month. In some cases, sugar-beet pasturage and tops were rented at rates based upon the ton- nage of beets harvested. The assumption is made that the pasturage is proportional to the size of the harvest; the greater the tonnage, the larger the rent to be paid. Whether or not this is true depends upon the circumstances surrounding each beet crop. A poor crop harvested often means that a considerable part of the beets lifted have been left in the field. The central-coast area considered in this study includes the counties of Alameda, Contra Costa, Marin, Monterey, San Benito, Santa Clara, San Mateo, San Luis Obispo, and Sonoma. Range lands in this section of the state are characterized by rolling foothills and low mountains. Aver- age yearly precipitation over most of this area ranges from 20 to 25 inches, falling chiefly during the winter months. On the coastal portion of this area there is some additional humidity from fogs and sea-borne 102 University of California — Experiment Station winds. Winters are mild and summers are dry, especially so on the land- ward side of the mountains. Feedstuffs consist mainly of winter and spring grasses, with some hay and small grain grown in the valleys. Pro- duction consists chiefly of both large and small breeding herds supple- mented by feeders and stockers shipped in each fall for winter grazing. Ordinary all-year range in the central-coast area rented for $0.08 to $0.30 per acre, with the usual rate, for the leases studied, at $0.25 and $0.30 per acre. Several leases stipulated rental rates computed on the head-month basis. Most of these ranged between $0.25 and $0.40 with a few on the landward side of the hills calling for rents as low as $0.11 and $0.13 per head-month. Good grassland pasture with sufficient water rented for as much as $2.50 per acre, although the average for all the leases in this group was $1.35 per acre or about $0.90 per head-month. Where grass was thin or water lacking, rental rates ranged from $0.40 to $0.90 per acre for the season. In general, rates for grassland tended to be lower on the land- ward side of the mountains and higher on the coastal side, probably owing to differences in moisture conditions and the resulting differences in amount and condition of feed. Grain and hay stubble rented chiefly at rates from $0.50 to $0.90 per acre per season, with the average, for the leases studied, at $0.58 per acre. In Alameda and Contra Costa counties the best stubble brought as much as $1.00 per acre. Poorer stubble rented at rates more closely approxi- mating the average rate for the entire central-coast area. For the area as a whole, poorer stubble rented for as little as $0.25 and $0.28 per acre. When analyzed on a head-month basis the usual rental rate for stubble was found to be between $0.45 and $0.60, the average rate, for the leases studied, being $0.61 per head-month. This latter figure reflects the in- fluence of relatively higher prices paid for stubble in Alameda and Contra Costa counties than paid elsewhere in the central-coast counties. Where alfalfa pasture was available the usual rental rate ranged from $0.50 to $0.75 per acre per month and from $0.75 to $1.50 per head- month. Sugar-beet, pea-vine, and lettuce pasture are also available during certain periods of the year in some of the counties in this area. The usual rental charge for this type of feed ranged from $1.00 to $1.50 per head-month, according to the amount and quality of the forage. The southern California area is composed of Imperial, Los Angeles, Orange, Riverside, Santa Barbara, San Bernardino, San Diego, and Ventura counties. There are two distinct grazing districts within this section of the state. The most important district comprises the area be- ginning in Santa Barbara County and extending southward along the Bul. 655] Farm Tenancy in California 103 coast to the northern portion of San Diego County. The second district is made up of eastern San Diego, Imperial, Riverside, and San Ber- nardino counties. In the south-coast district, grazing conditions are very similar to those existing in the central-coast area of the state. Rolling foothills and low mountains are typical. Annual precipitation averages between 20 and 25 inches, falling mostly during the winter months. Winters are mild and summers are warm and dry. Good winter and spring grass con- stitutes the principal forage, with considerable supplementary feeding provided from hay, small grains, and irrigated pasture in the valleys. Some sugar-beet and pea- vine pasture is also available in several counties in this district. Production consists mainly of breeding stock and feeders, the latter being shipped in each fall for winter grazing and going later to the Los Angeles market or to feed lots. By contrast, the inland district covering most of San Diego and River- side counties and all of Imperial and San Bernardino counties is char- acterized by semidesert and desert conditions. Rainfall is uncertain, averaging between 5 and 10 inches a year and is often less than 5 inches over much of the district. The climate is warm in the winter and hot and dry in the summer. Agriculture is dependent upon irrigation, and nat- ural forage is poor and sparse. Much of the district is unsuitable for cattle, and grazing is limited chiefly to winter pasturing. This is espe- cially true in the Imperial Valley where considerable winter feeding is practiced in utilizing grain stubble and alfalfa pasture. The rental rates for hay and grain stubble in the Imperial Valley were found to be mostly from $0.30 to $0.75 per acre for the season, while on a head-month basis the rates for the leases studied were fairly well established at $0.50 and $0.60 per head-month. Alfalfa pasture in this section brought rents ranging from $0.50 to $1.50 per acre per month, the better pasture usually bringing $0.75 or more per acre. In the coastal portion of the southern California area it was found that range land rented at yearly rates as low as $0,075 per acre and as high as $0.25 per acre, with average rental rates for typical mountain range being from $0.12 to $0.18 per acre. Analysis of rental rates in the leases showed that average rental rates per head-month were between $0.25 and $0.35 for range lands. Rolling grasslands in the coastal section brought from $0.25 to $0.90 per acre per year, the average rate being between $0.50 and $0.60 per acre per year. On a head-month basis it was noted that rental rates in Los Angeles County tended to be somewhat higher than in the other coast counties. The average head-month rental in Los Angeles County for grass pasture was between $1.35 and $1.40. Several examples in this 104 University of California — Experiment Station county ranged as low as $0.75 per head-month while others were as high as $2.00. By contrast, head-month rentals in coast counties other than Los Angeles averaged between $0.35 and $0.40 for grassland pasture. A few of the latter leases exceeded $0.75 but some were as low as $0.20 per head-month. Hay and grain stubble were likewise somewhat higher in Los Angeles County than in the remaining south coastal counties, the average in Los Angeles County being between $0.60 and $0.80 per acre or from $1.25 to $1.50 per head-month. These amounts may be compared with $0.30 to $0.60 per acre and $0.65 to $0.75 per head-month for hay and grain stubble in other counties of the south coastal district. Sugar-beet and pea-vine pasturage rented for sums ranging from $1.25 to $3.00 per acre according to the amount and quality of the feed. In some leases the rent was computed according to the yield of beets har- vested. For example, several leases were based on rental rates of $0.15 per ton of beets harvested (for example, $2.75 per acre for a 15-ton beet crop). Sheep. — In general, the same geographic areas in California that con- tain most of the cattle-grazing districts also contain most of the lands utilized in sheep grazing. The relative importance, however, of sheep and cattle as competitors for grazing lands varies considerably from district to district. For example, in the central-coast section of California sheep grazing is relatively less important, whereas in the Sacramento Valley sheep grazing is of greater importance than cattle grazing. Though cattle or sheep may be grazed on similar lands, the tendency is for certain sections of a grazing district to be taken over either by sheep or by cattle. Sheep will browse on leaves, shoots, herbs, and other forage usually unpalatable to cattle. Thus, where sheep and cattle com- pete for rented pasture there is a tendency for sheep to occupy the drier, more sparsely vegetated or brushy sections, often at higher altitudes, while cattle are likely to be found where grasses are relatively more plentiful. Leasing periods range from 3 to 6 months for seasonal grazing, the summer period being from May or June through October, and the winter season generally extends from November through April or May. All- year pasture, and in some cases seasonal pasture, is usually leased for one-year terms. In such cases, options for renewal are often stipulated in the lease. In other instances, renewal is based on a verbal understand- ing between the parties. Longer leases of two, three, five, and a few of ten years were also noted. Sheepmen generally leased from private landowners on a per-acre basis or often for a lump sum covering the lease period without specific Bul. 655] Farm Tenancy in California 105 reference to the acreage or the number of stock to be grazed. A few leases from private owners provided for seasonal annual rental rates computed per ewe ; still others provided for rental rates computed on a head-month basis. For Ladino clover, rents were frequently computed on a lamb-day basis. Lands leased under the Taylor Grazing Act and in national forests were almost always rented at so much per ewe for the season. Lambs with ewe are not counted until weaned and well along. In all leases examined cash rent was the method of payment. Rents were usually paid annually or seasonally in advance. In comparing rental rates, figures computed on a per-acre basis are of little practical significance except to illustrate the wide range in carry- ing capacity and desirability of different types of pasture. This may be illustrated by three leases, one in Mendocino County with a yearly rental of $0.22 per acre, one in Ventura County at $0.72 per acre, and a third in Marin County at $1.25 per acre, but in each case the annual charge per ewe was $0.85. The extreme variation in rental rates per acre as pro- vided in the 114 leases studied is represented by $0,015 per acre for mountain range leased under the Taylor Grazing Act and $2.75 per acre for all-year grass pasture leased from a private owner. A comparison of annual rental charges per ewe is more significant than one of acre rates because the amount of feed necessary to maintain an adult sheep is far more uniform than the amount of feed obtainable per acre of land. Even here one must realize that the annual charge per ewe is only a rough measure of the carrying capacity of the land. Consideration of fire hazards is often enough to set rental rates con- siderably below the going rates for lands of similar carrying capacity. This is illustrated in the oil-field districts where sheep grazing is prac- ticed to reduce fire hazards to oil properties ; the same is true in areas where suburban homes or summer cottages are without fire protection. A similar situation arises when forest fires are frequent and livestock- men hesitate to place large flocks in hazardous areas. Other factors such as the length of lease term, the time of year when feed is available, and the type of landownership also operate to reduce the degree of rela- tion between carrying capacity and the rent paid for a given property. Within the limits of these qualifications, however, it is possible to make a rough comparison of rental rates per ewe. Both rental bases (per ewe and per acre) will be given in the following paragraphs ; per-acre figures are given only as description of prevailing rental rates and practices whereas annual charges per ewe are given as a basis for comparing rela- tive costs per ewe on rented grazing lands. In the northern California area the northeastern, or plateau, sec- tion provides excellent summer grazing for sheep. Flocks move in after 106 University of California — Experiment Station wintering on Nevada desert plateaus to the Tulelake feeding area, and to the north coastal counties. Production consists chiefly of small, light- weight, fine-wooled feeders of medium quality. The coastal section of this area provides both winter and all-year pasture. Production there consists mostly of medium, late lambs of good quality from both long- and fine-wooled breeding. These are marketed from June to August as feeder or breeder lambs and yearling ewes. Summer range leased under the Taylor Grazing Act or in national forest reserves rented for lower rates than was true for privately owned TABLE 22 Typical Rental Rates* per Acre for Sheep Ranches and Ranges, 1937, 1938, 1939 District Public domain and national forests Mountain range and pasture Valley and foot- hill grassland Grain and hay stubble Range Typicalf Range Typical Range Typical Range Typical dollars dollars dollars dollars dollars dollars dollars dollars Northern per acre per acre per acre per acre per acre per acre per acre per acre California 0.015-0.09 0.03-0.06 0.025-0.27 0.05-0.15 0.20-2.75 0.40-0.75 0.25-1.25 0.45-0.85 Great Valley -t — 0.125-0.50 0.25-0.35 0.20-2.75 0.50-1.75 0.40-1.25 0.40-0.75 Central coast — — 0.08 -0.30 0.25-0.30 0.50-3.00 1.25-2.50 0.25-1.00 0.50-0.90 Southern California — — 0.075-0.25 0.12-0.18 0.25-0.90 0.50-0.60 0.25-1.25 0.30-0.80 * Includes both seasonal and annual rates. t "Typical" is taken to be the modal value or that value which is most frequent in the sample. t Dashes indicate data not ascertainable. Source of data: Compiled by authors from 114 leases and supplemented by estimates from authoritative indi- viduals in each district. lands. Differences in available feed as well as type of ownership com- bined to give somewhat lower rental rates in such cases. Rates as low as $0,015 and $0,025 per acre or as $0.20 and $0.25 per ewe were noted, although the typical rates for such lands were between $0.03 and $0.06 per acre (table 22) or from $0.30 to $0.40 per ewe (table 23) for the season. Privately owned summer range in the plateau area rented on the aver- age for $0.06 per acre or about $0.48 per ewe, with the lowest rates at $0,025 and $0.03 per acre for the season. Winter range in the coastal counties was leased for an average of $0.26 to $0.27 per acre or about $0.98 per ewe for the season. Winter-pasture rates varied from as little as $0.40 per ewe to as much as $1.15 per ewe for the season. All-year pas- ture in the coastal counties rented at from $0.60 to $2.50 per ewe, with the majority of leases calling for rates between $0.60 and $1.10 per ewe. The Great Valley area is the principal sheep-producing section of California. It is the major year-round grazing area for the state as a Bul. 655] Farm Tenancy in California 107 whole as well as a winter-grazing area for large numbers of feeders from Oregon, Nevada, and northern California. Lamb production consists mainly of grass-fat, milk-fed springers of good quality. Feeds are nat- ural grasses with a large variety of supplementary feedstuffs such as stubble, beet pasture, alfalfa, Ladino clover, and minor crop residues. Seasonal rental rates for winter pasture varied from $0.20 to $0.94 per acre with the average rate for winter pasture at $0.51 per acre. Year- round grass pasture rented for an average of $1.74 per acre or about $1.50 per ewe. Rates per year ranged from $0.20 to $2.75 per acre (table Typical Bental Kates ■ TABLE 23 per, Ewe for Sheep Ranches and Eanges, 1937, 1938, 1939 District Public domain and national forests Mountain range and pasture Valley and foot- hill grassland Grain and hay stubble§ Range Typicalf Range Typical Range Typical Range Typical dollars dollars dollars dollars dollars dollars dollars dollars Northern per ewe per ewe per ewe per ewe per ewe per ewe per ewe per ewe California 0.20-0.60 0.30-0.40 0.20-1.15 0.48-0.98 0.60-2.50 0.60-1.10 Great Valley -t — — — 0.56-3.04 1.00-2.50 Central coast — — — — 0.90-3.75 1.50-2.00 Southern California — — 0.40-1.50 0.60-0.85 0.60-1.80 0.80-1.25 * Per ewe-season and per ewe-year. t "Typical" is taken to be the modal value or that value which is most frequent in the sample. t Dashes indicate data not ascertainable. § Computed on per-acre basis only. See table 22. Source of data: Compiled by authors from 114 leases and supplemented by estimates from authoritative indi- viduals in each district. 22) , and from $0.56 to $3.04 per ewe (table 23 ) . About 70 per cent of the 54 leases for this area called for annual rates of $1.00 to $2.50 per ewe. Rental rates per acre were generally higher in the Sacramento Valley than in the San Joaquin Valley. This may have been due to the utiliza- tion in the San Joaquin Valley of better pasture by cattle and less de- sirable lands being devoted to sheep. Such a condition is suggested by a comparison of average rental rates per acre in which the figure for Sacramento Valley was $1.82 per acre, while $0.49 per acre was the aver- age yearly rent paid for sheep pasture in the San Joaquin Valley. An- nual rental charges per ewe confirm this relation in that they are on a more comparable basis. The annual charge per ewe in the Sacramento Valley was $1.51 as compared with $1.40 per ewe in the San Joaquin Valley. Thus, while per-acre charges were lower for the leases studied in the San Joaquin Valley, lands leased there were of lower carrying ca- pacity and hence more acres per ewe were needed. 108 University of California — Experiment Station Grain and hay stubble was usually rented by sheepmen on an acre basis, the prevailing rates being $0.40 to $1.25 per acre. Ladino clover is rented mainly at $0.01 to $0,015 per lamb per day. Kental rates and practices followed in leasing other miscellaneous crop residues are simi- lar to those discussed in the previous section for "Beef Cattle" (p. 101). Sheep grazing is relatively less important in the central-coast area than cattle grazing. A considerable number of sheep, however, are pas- tured in some sections of this area. Especially is this true for Sonoma, Marin, San Benito, and Monterey counties. Although year-round grass pasture is the basic feedstuff available, considerable supplementary feed- ing in some counties is derived from hay and grain stubble, sugar-beet tops, pea vines, and lettuce pasture. Steep or brushy pasture rented at yearly rates ranging from $0.50 to $1.50 per acre, and open rolling pasture brought from $1.75 to $3.00 per acre. The average rate per acre for the leases studied was $1.96, with most examples between $1.25 and $2.50 per acre (table 22). Annual rental charges per ewe averaged $1.81, although variations from $0.90 to $3.75 per ewe (table 23) were found in the leases examined. For a de- scription of rental rates and practices followed in leasing stubble pasture and other crop residue, see page 102 under "Beef Cattle." The demand for grazing lands to rent in the southern California area centers around the need for winter pasture. Very early spring lambs are produced along with general feeding in most districts. Old ewes are shipped in each fall and are pastured on alfalfa and grain fields. Both lambs and ewes are fattened out on pasture. Fine-wooled feeder lambs from Arizona, New Mexico, Nevada, and Utah are also fed out during winter months, especially so in the Imperial Valley. Lambs are marketed from January to May and go mainly to Los Angeles and San Diego packers. Winter range in San Diego County leased at from $0,075 to $0.25 per acre, with most leases studied having rates between $0.12 and $0.18 per acre (table 22), or approximately $0.60 to $0.85 per ewe (table 23) for the season. Fo v the southern area as a whole, all-year grass pasture brought rents from $0.25 to $0.90 per acre with resulting annual charges per ewe at $0.60 to $1.80. Grain and hay stubble brought from $0.30 per acre for poorer hay stubble to $0.75 and $0.80 per acre for barley stubble. Sheepmen usually rented stubble on a per-acre basis, but in Los Angeles County several leases were noted in which rents were computed at from $0.05 to $0.15 per head-month. Other miscellaneous f eedstuffs rented at the same rates and under conditions similar to those described on page 104 for cattle grazing in this area. Bul. 655] Farm Tenancy in California 109 SUMMARY AND CONCLUSIONS California lias a low percentage of its farms tenanted (21.7) as com- pared with most other states. Tenancy, however, continues to be a wide- spread practice in California, and there is some indication that it is increasing at a somewhat higher rate than is true for most other states. In 1935 over 37 per cent of all land in farms in California was rented, 22.4 per cent by full tenants and 15.0 per cent by part owners. Certain types of farming are more susceptible to tenant operation. In California this is especially true for cotton, truck, dairy, cash grain, and crop-specialty farms. Likewise, tenant farming is concentrated in the better farming areas both as to location and soil productivity. As a rule, tenants in California operate larger and more valuable farms than do the average owner-operators. About one third of all tenant farmers in California moved to new farms in 1935, and in 19 counties over one half of all tenants moved to new farms in 1935. Moving usually occurs in October and November. There is little or no positive relation in California between the degree of farm tenancy and the degree of tenant mobility. Instead, mobility seems more closely associated with certain types of farming and with certain types of tenants and landlords. Unsatisfactory landlord-tenant relations impart the greatest impetus for tenant mobility. The distribu- tion and use of simple but equitable leasing forms would do much to reduce misunderstandings between tenants and landlords. Farm tenancy has come to have several uses in addition to its tradi- tional function of transferring farms from one generation to another. Tenancy is a means whereby farms, estates, and large holdings may be held primarily for investment and future sale under more advantageous conditions. Tenancy is also a means of obtaining supplementary income from lands held primarily for nonagricultural purposes. Farmers with limited capital may improve their incomes by renting larger and more productive farms. Tenancy permits the rotation of crop specialists who concentrate their skill and capital on the production of a single special- ized crop, or at most, a few. A higher degree of flexibility and liquidity in organization is afforded to those farmers and companies who specialize in crops of a speculative nature. Finally, tenancy permits farmers for whom ownership is difficult or impossible to achieve the status of opera- tor. It is for this latter group that tenure improvement has its greatest significance. Insufficient capital is a barrier to ownership over which relatively few tenants are able to pass. There is little reason to believe that governmen- tal credit, either from existent credit agencies or the Bankhead- Jones 110 University of California — Experiment Station Act, will have any marked effect on the degree of tenancy in California. For the bulk of the tenants, a program of improved conditions of tenure offers the greatest immediate benefit. Knowledge of existing conditions of tenure is fundamental to any program involving changes in the system of leasing farms. A description of existent conditions of tenure centers around the rental basis ; that is, the amount, the form, and the conditions under which the rent is to be paid. In cash renting an agreed sum is paid, a part or all in advance. In 1930 about 57 per cent of all tenanted farms in California were rented for cash. Cash rent may be computed as a fixed sum or on a sliding scale, the latter method being the more desirable for reasons of flexibility and equity. Dairy, truck, poultry farms, and livestock ranches are usually rented for cash, whereas orchards, vineyards, cotton, and cash-grain farms are usually rented for a share of the crop. In share renting the tenant pays an agreed share of the crop or proceeds. During 1930 about 43 per cent of the tenanted farms in California were rented for a share of the crops. Several reasons have been given by both tenants and landlords in favor of either cash or share renting. Observation indicates, however, that the amount, the form, and the conditions of payment in a given area depend upon the type of crop, the conventional leasing practice in the community, the immediate and past situation for the crop, the crop his- tory of the farm, and the individual circumstances of the parties. The determination of an equitable rental rate is one of the most impor- tant factors in promoting favorable landlord-tenant relations. The em- pirical formula is proposed as a means for determining an equitable rental rate, that is, one based upon the value of the relative contributions of each party to the enterprise. Landlords and tenants subscribe to the justice of such a rental basis and rental rates tend toward this relation. Unfortunately, many landlords and tenants are unfamiliar with the simple computations involved in the empirical formula and are there- fore dependent upon arbitrarily determined rental rates. Once set, rental rates tend to be rigid in face of altered circumstances and hence inequitable. Flexibility in rental rates is therefore to be sought as a means of maintaining equitableness. To this end is proposed a wider knowledge and use of the sliding-scale rental basis by which rental rates are periodically altered to conform with changed conditions of earning. Leasing practices in California are highly variable because of the multiplicity of crops and conditions under which they are grown. Rental rates for each farm are largely set by the customary level for the com- munity and by the relative bargaining ability of the landlord and tenant. Bul. 655] Farm Tenancy in California 111 Although leasing practices tend to be conventionalized for each crop and each community, this rigidity has been minimized for the particular farm lease by a process of giving and receiving concessions so as to fit the conventional rental rate to the particular case. Thus, the highly varied nature of farm leasing in California may be taken as evidence of flexibility in its leasing system. An ideal rental rate is not only equitable in the first instance but is continually so. Flexibility in leasing practices may be looked upon as a necessary mechanism for the maintenance of equity between landlords and tenants. Despite the multiplicity of considerations that influence leasing prac- tices in California, there are certain regularities common to particular crops and areas and to the state as a whole. For example, lands leased for growing field crops are customarily rented for a crop share. The landlord usually receives a 14 share of the crop or proceeds, with shares of % and y 5 being common but less frequent than % share. The annual lease is predominant in the leasing of land for growing field crops. Alfalfa leases were the exception to this rule, being most frequently from three to five years. Tenants growing field crops typically furnish everything for farming except land and buildings and are required to deliver the land- lord's share to some designated point. Such a description of the regu- larities and significant variations in leasing practices is fundamental to the construction and distribution of lease forms that will be acceptable to California farmers and landowners. Before instituting any program for the improvement of conditions of farm tenure in California that program should be presented to landlords and tenants for their appraisal and discussion. Agricultural-economic conferences, which are held in most counties each year, would provide the proper mechanism for such discussion. This procedure would indi- cate those measures which are acceptable and expose those measures which are unacceptable. To date such an expression has been made by only one county (Kern). Here it was demonstrated that certain pro- visions of the federal farm-tenancy program were decidedly in favor and certain other provisions were decidedly unfavorable. It is also to be noted that recommendations for changes in the leasing system made without due regard for the human factor contemplate only one half of the problem. Bul. 655] Farm Tenancy in California 113 APPENDIX OF TABLES TABLE 24 Rented Farms as a Percentage of All Farms, 1900-1935 County 1900 1910 1920 1930 1935 Alameda per cent 32.1 2.7 13.0 18.7 12.9 34.9 38.5 29.8 10.7 23.8 28.4 29.2 14.9 21.7 25.1 18.4 13.0 20,7 28.3 62.1 11.0 16.5 30.6 18.2 8.9 32.4 24.3 14.9 18.3 22.9 15.0 11.8 32.8 20.8 8.8 11.5 44.4 36.2 32.9 43.4 37.3 17.6 28.6 16.3 4.3 10.5 32.2 24.5 32.5 29.0 20.9 6.3 23.4 8.8 26.1 25.5 19.7 23.1 per cent 26.7 19.0 16.6 14.5 10.9 30.1 34.3 26.3 9.5 11.8 20.4 32.4 31.8 16.7 22.5 21.2 17.7 14.1 24.9 22.9 58.4 10.3 17.7 21.2 15.6 14.3 32.2 19.3 10.1 16.0 27.4 12.7 10.9 33.2 25.3 6.2 15.7 43.9 24.3 35.9 47.5 37.2 18.5 22.4 15.2 10.9 11.6 28.2 18.6 16.4 20.7 16.3 8.8 12.3 8.8 26.8 25.9 22.0 20.6 per cent 29.6 14.3 18.0 12.9 9.4 29.7 32.8 28.5 12.6 15.0 17.5 33.2 49.3 15.7 18.2 24.9 16.1 13.4 25.5 15.9 43.2 10.4 16.9 23.8 14.7 5.4 33.8 14.9 12.3 11.8 33.1 21.3 15.0 35.3 19.3 7.6 20.2 37.8 24.1 32.1 63.3 41.3 13.1 22.5 13.6 10.4 13.5 30.8 16.3 22.1 19.9 13.5 8.5 14 7 9.1 23.3 29.3 22.4 21.4 per cent 18.3 10.5 17.0 14.9 10.4 27.0 19.2 26.0 7.3 14.8 18.2 29.4 40.5 56.4 26.1 22.2 11.3 21.0 18.6 23.4 42.8 15.4 13.8 27.0 14.5 6.6 30.9 14.9 14.7 9.1 17.9 16.3 11.7 16.1 17.3 5.6 10.8 39.3 20.3 33.4 40.0 36.9 12.2 18.5 15.7 12.0 15.7 17.6 15.1 19.7 13.0 14.5 13.5 20.2 5.5 16.4 22.2 17.5 18.0 per cent 25.9 Alpine * Amador 14.3 Butte 17.6 14.0 27.2 Contra Costa 21.0 Del Norte 20.7 E! Dorado 11.0 Fresno 21.0 Glenn 21.9 Humboldt 27.2 43.8 Inyo 40.8 Kern 30.0 Kings 28.0 Lake 15.4 23.0 27.0 Madera 28.5 Marin 39.8 Mariposa .... 18.4 14.4 35.8 Modoc 17.9 11.1 Monterey 33.7 Napa 13.5 Nevada 16.8 11.2 19.4 Plumas 10.0 Riverside 17.6 23.1 18.3 6.9 San Diego 14.6 San Francisco 11.7 23.7 35.1 39.8 Santa Barbara 32.9 Santa Clara 17.3 Santa Cruz 23.3 Shasta 19.9 Sierra 14.6 17.6 Solano 23.5 Sonoma 17.5 24.2 Sutter 20.3 Tehama 21.4 Trinity 12.5 Tulare 22.1 Tuolumne 16.4 Ventura 18.2 Yolo 29.7 Yuba 23.1 Total California 21.7 * Dashes indicate data not available. Sources of data: 1900: United States Bureau of the Census. Twelfth Census of the United States, 1900. vol. 5:62. 1902. 1910-1920: United States Bureau of the Census. United States Census of Agriculture, 1925. part 3:446. 1927. 1930-1935: United States Bureau of the Census. United States Census of Agriculture, 1935. vol. 1:938. 1936. 114 University of California — Experiment Station TABLE 25 Percentage of Farms and Farm Land Eented and Average Value of All Farm Land per Acre, 1935 County All farms rented Land in farms rented Land in crops rented Average value all farms per acre per cent 26 14 18 14 27 21 21 11 20 22 27 44 41 30 28 15 23 27 29 40 18 14 36 18 11 34 14 17 18 19 10 18 23 18 7 15 12 24 35 40 33 17 23 20 15 18 24 18 24 20 21 13 22 16 18 30 23 21.7 per cent 41.6 12.1 21.3 39.5 40.8 53.4 50.7 35.7 30.0 39.1 41.0 29.2 46.1 86.1 23.9 49.4 32.2 30.3 42.9 44.5 58.5 39.2 28.9 51.0 25.4 5.6 32.8 28.7 22.8 32.6 43.6 15.4 36.7 49.0 31.6 15.0 29.4 32.2 48.0 35.1 58.1 37.4 24.0 28.4 36.7 14.9 42.2 45.4 27.1 45.0 55.7 43.2 19.8 20.6 46.3 38.9 37.0 per cent 37.8 . * 8.4 27.4 7.6 36.4 32.4 22.7 5.1 22.3 24.9 38.0 37.1 25.3 30.8 35.5 16.1 12.3 34.6 40.7 47.2 15.7 15.0 39.1 19.8 5.8 39.5 15.1 9.9 31.9 26.6 10.8 23.4 36.5 18.5 8.9 19.3 31.2 36.5 41.3 60.2 47.0 22.4 35.7 19.2 6.7 20.9 22.5 19.8 28.5 30.3 19.5 10.7 25.8 7.7 20.0 33.7 23.4 29.7 dollars 129.55 37.82 13.72 Butte Calaveras Colusa Contra Costa Del Norte 55.18 13.20 50.99 114.22 59.10 El Dorado .... 24.97 Fresno 81.16 37.80 Humboldt 29.56 Imperial 88.41 Inyo 35.95 Kern 30.05 58.86 47.77 13.32 426.46 34.24 51.61 Mariposa 10.43 21.46 Merced 47.99 18.41 56.47 48.57 73.73 17.70 Orange 545.43 Placer 67.51 Plumas 19.66 128.73 107.15 26.18 434.14 83.54 5,999.69 137.75 22.96 204.68 61.72 171.22 181.26 Shasta 17.87 14.97 Siskiyou 19.31 Solano 83.43 Sonoma 97.03 Stanislaus 92.83 Sutter 103.05 Tehama 17.25 Trinity 14.40 Tulare 88.38 14.38 226.30 Yolo 83.37 Yuba 49.47 76.40 * Dashes indicate data not available. Source of data: United States Bureau of the Census. United States Census of Agriculture, 1935. vol. 1:938. 1936. Bul. 655] Farm Tenancy in California 115 TABLE 26 Mobility* of Tenants on California Farms, 1935 Tenants on present farm Land in farms rented Land County- 1 year or leas 5 years or more in cropsf rented / t 3 h Nevada Imperial Shasta Tehama per cent 1, 69.3 62.9 60.4 59.0 57.8 57.7 57.6 56.6 54.5 54.2 54.0 53.8 52.9 52.5 51.0 50.4 50.0 50.0 50.0 48.5 48.5 48.4 48.4 47.9 47.8 47.5 47.2 47.1 46.8 46.1 45.3 44.9 43.8 43.7 42.0 41.0 41.0 39.9 39.8 39.0 38.7 38.1 38.0 37.9 37.5 37.0 36.8 36.8 35.5 35.4 33.9 33.5 33.3 32.2 28.6 23.8 per cent 24.1 9.4 18.8 19.5 19.9 20.4 20.0 19.2 35.3 20.8 21.0 21.6 22.3 22.3 21.2 22.7 30.0 28.3 22.9 26.6 23.4 31.8 17.2 27.4 28.7 22.5 25.2 27.1 28.8 25.8 28.8 31.6 26.8 32.5 23.6 36.8 34.2 28.6 29.0 35.0 36.7 23.8 27 3 50 36.2 42.6 40.0 33.1 41.0 32.6 36.2 19.3 50.0 45.7 66.7 53.0 per cent 22.8 46.1 36.7 43.2 32.2 36.7 39.5 23.9 15.4 15.0 29.4 44.5 41.0 19.8 51.0 39.1 5.6 28.9 35.7 43.6 45.0 46.3 30 28.7 27.1 25.4 48.0 40.8 55.7 49.4 38.9 -t 49.0 50.7 28.4 53.4 45.4 42.2 24.0 31.6 20.0 86.1 39.2 41.6 21.3 35.1 32.6 37.4 42.9 32.8 58.1 14.9 29.2 32.2 58.5 per cent 9.9 37.1 19.2 13.2 Lake 16.1 Riverside Butte 23.4 27.4 30.8 Plumas San Bernardino ■ 10.8 8.9 San Diego 19.3 Madera 40.7 Glenn .... 24.9 Tulare 25.8 39.1 Fresno 22.3 Mono 5.8 15.0 Del Norte 22.7 26.6 Stanislaus Yolo 28.5 33.7 El Dorado... 5.1 Napa 15.1 Sonoma Modoc .... 19.8 19.8 36.5 Calaveras Sutter 7.6 30.3 Kings Yuba 35.5 23.4 Tuolumne 7.7 Sacramento Contra Costa 36.5 32.4 Santa Cruz 35.7 Colusa 36.4 Solano 22.5 Siskiyou 20.9 22.4 18.5 Ventura 20.6 Trinity 10.7 Inyo 25.3 Mariposa Alameda 15.7 37.8 8.4 San Luis Obispo Orange 41.3 31.9 47.0 Los Angeles 34.6 Monterey 39.5 San Mateo 60.2 Sierra 6.7 Humboldt 38.0 31.2 47.2 * Mobility as indicated by length of tenure on present farm, t Includes only land upon which crops were harvested. % Dashes indicate data not available. Sources of data: Cols. 1 and 2 : From United States Bureau of the Census. United States Census of Agriculture, 1935. vol. 2:944. 1936. Cols. 3 and 4: From United States Bureau of the Census. 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