630.7 I (fib no. 677 cop. 8 UNIVERSITY OF ILLINOIS LIBRARY AT URBANA-CHAMPAIGN AGRICULTURE . TA - s ~ C1RCI AGR; - UNIVERSITY OF JLL/NOJS y 5 -^ x-/ x; Farm Lease Practices in East-Central Illinois BY FRANKLIN J. RE1SS u n CONTENTS PAGE The Survey Sample 4 Characteristics of Farm Leases 6 LEASE ARRANGEMENTS 10 Share Rents 10 Seed Costs 12 Fertilizer Costs 14 Harvesting Costs 16 Spraying Costs 19 Cash Rents 21 Items Special to Livestock-Share Leases 25 Landlord's share of livestock expenses 27 Ownership of machinery and equipment under livestock-share leases 30 Management Participation 34 Characteristics of Written Leases 37 Reimbursement Guarantees 39 Rights Reserved 41 Value of Landlord's Buildings 43 Labor and Repairs on Improvements 43 The Farm Residence 44 Personal Information 49 Lease Changes Desired 52 Summary and Conclusions 54 A list of tables is on page 56. Urbana, Illinois September, 1961 Publications in the bulletin series report the results of investigations made or sponsored by the Experiment Station 1- Farm Lease Practices in East-Central Illinois FRANKLIN J. REISS' EAST-C KNTRAL ILLINOIS is characterized by a cash-grain type of farm- ing, by highly productive and high-valued land, and by a high rate of tenancy. Slightly over one-half of all farms in the area are operated by full tenants while another one-fifth of the farms are operated by part owners who own part and rent part of the land they operate. In some counties of east-central Illinois about 75 percent of all farmland is operated under lease. Farm leases, therefore, are important in the economic environment of both landlords and tenants in this area. This publication is a report on a survey of farm lease practices con- ducted in 22 counties of east-central Illinois. Questionnaires were mailed to a selected sample of tenants and landlords in the winter of 1958-59, and most of the answered questionnaires were returned by the end of February. The object of the report is to provide information to help landlords and tenants develop lease agreements and working relationships which will (a) give each party opportunity for the development and use of his resources and (b) provide for an equitable sharing of the income produced by the use of these resources. Share leases, under modern agriculture, have become complex instruments that are not easy to evaluate, either from the standpoint of their fairness or from the stand- point of the economic incentives they contain which affect the efficiency and volume of farm production. Landlords seek the labor and machine services of tenants. Tenants seek the use of land and land improvements owned by landlords. In one sense we can speak of this interaction as a market, the farm-rental market. All too often, however, this market is characterized by incom- plete or inadequate information on the part of one party or the other, or both, concerning prevailing prices and market supplies. The "prices," of course, are seldom expressed in simple, cash figures but are found as a composite of the many and varied sharing arrange- ments which make up share leases in this area. 'FRANKLIN J. RKISS, Associate Professor, Department of Agricultural Economics. 4 BULLETIN No. 677 [September, THE SURVEY SAMPLE Just as there are wide variations in lease practices and lease terms, there are also wide variations in the characteristics of farms under tenant operation. In order to get a representative sample of the leases and rental arrangements used in the area, a random selection of land- lord and tenant names was made by taking the name from every eighteenth tract on the county ASC rolls. If the eighteenth tract was that of an owner-operator, the name was omitted and the next one was chosen by proceeding down the list another eighteen tracts. The names of the landlords and tenants were alternated to yield a sample list con- taining approximately equal numbers of each. The results of this procedure are summarized in Table 1. A total of 2,606 questionnaires were mailed out, approximately half of them going to landowners. Of the total number of questionnaires mailed out, 154 proved ineffective for the reasons given in the table. Of those presumably delivered, 464 were completed and returned by tenants and 329 by landlords. This was a very gratifying response of almost 1 out of 3 on the basis of the effective number of questionnaires mailed out. This response to a single mailing can be interpreted as a measure of the interest in and need for farm lease practices information in the area. The questionnaire, covering almost eleven 81/2 by 1 1 mimeograph pages, was by no means an easy one to complete. It called for details in the lease agreement and details on the farm operation as well as personal information on both parties. Since the purpose of the study was to observe and report farm leasing practices, the unit of observation was a single leasehold and the contractual relationship between owner and tenant on this tract of land. Because some landowners own more than one rental property and some tenants rent tracts from more than one owner, each respond- ent was requested to report on only one leasehold. A random procedure Table 1. Description of Sample and Rates of Response Total number of questionnaires mailed out 2 ,606 Total number of nonusable questionnaires" 154 Effective number of questionnaires sent out 2 ,452 Number of completed questionnaires 793 From tenants 464 From landlords 329 Percent usable returns 30 . 43 Percent usable returns based on effective questionnaires 32 .34 A few questionnaires were not delivered because of incomplete or incorrect addresses: a few were returned blank or incomplete: a few were not properly classified as landlord or tenant; and, in a number of cases, tne addressee was deceased or retired. 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS was specified to make the choice of which leasehold would be the basis for their response. The wide range in the size of rented tracts reported suggests that our randomizing techniques were successful. The geo- graphical location of the leaseholds reported is shown in Fig. 1. The Location of the leaseholds by county. Each dot () represents one usable questionnaire reporting on one farm lease. The numbered sections indicate the state economic areas as denned by the bureau of the census. (Fig. 1) 6 BULLETIN No. 677 [September, isolated responses from the periphery of the 22-county area, including one from Indiana, are a product of our random selection techniques. CHARACTERISTICS OF FARM LEASES What a farm lease is Farm ownership may be visualized as the holding of a bundle of rights in farmland. The various rights which make up this bundle may be thought of as separable from the bundle. For example, the right to possess and use land may be temporarily transferred by the owner to a second party. The legal agreement or contract, written or unwritten, which testifies to this transfer is a farm lease. When written, to be a legally valid document this contract or lease must contain at least five essentials: (1) It must designate the parties to the lease; (2) it must accurately describe the real property in which the rights of possession and use are to be transferred; (3) it must specify the term of this transfer, that is, the date that it is to begin and the date on which it is to end; (4) it must specify the rent or consideration which is to be paid for this transfer of rights; and (5) it must carry the signatures of the two parties, indicating their acceptance of its contents. Functions of a lease Perhaps the major function of a lease on farmland is to separate the rights of possession and use from the total obligations of owner- ship. Thus, a farm lease makes it possible for a tenant farmer to be the operator of an adequate acreage of farmland without meeting the capital and other requirements for owning that land. Another important function of a lease is to specify the terms and conditions which surround the transfer of rights in real property. That is, it should record the rights and the privileges, the duties and obliga- tions, and the commitments of each party under the contractual rela- tionship. The lease should contain any restrictions on the tenant's right of use and possession, the conditions under which these rights may be revoked and the agreement terminated, and protections for both parties against default by the other party. Types of leases Three major and two minor types of farm leases are generally recognized in Illinois. Contrary to the English scene from which much of our tenure law has derived, cash leases are a minor type in Illinois and certainly a minor type in east-central Illinois. The second minor 1961} Table 2. - FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 7 Distribution of Usable Questionnaires, by Type of Lease and Respondent Size of ownership tract Number of questionnaires by type of lease Respondent Crop- share Crop- share- cash Live- stock- share Cash Labor- share and others Total (acres) Under 120 Tenant Landlord 72 56 42 17 1 1 2 2 1 1 118 77 120 to 200 Tenant Landlord 53 46 121 71 14 20 3 2 2 4 193 143 201 or over Tenant Landlord 26 14 88 60 34 33 2 3 2 153 109 Subtotal Tenant 151 251 49 7 6 464 Subtotal Landlord 116 148 54 4 7 329 Grand total Number Percent 267 34 399 50 103 13 11 1 13 2 793 100 type is variously designated and includes what are commonly called labor-share leases, profit-sharing agreements, and father-son farm op- erating agreements. Both of these minor types were represented in our sample and in the response to our mail questionnaires. However, they were present in such small numbers accounting for less than 3 percent of our total response that they have been dropped from further analysis. A complete distribution by type of lease and type of respondent is given, by size of farm, in Table 2. The major lease types in Illinois are (1) crop-share, (2) crop- share-cash, and (3) livestock-share. The first two are similar except for some form of supplemental cash rent. Both usually give the land- owner the same share of crops grown as the rent for the farm, but the crop-share-cash leases include a cash rent payment in addition to the rent share of the crops. This cash rent is most frequently a payment per acre on tillable land used for hay and pasture, crops which do not readily lend themselves to a share rent. Supplementary cash rents may include cash payments for acreages in nontillable pasture. Supple- mentary cash rents may also be applied to the acreage occupied by the farmstead. However, there is a small but growing tendency to apply a direct cash rent, instead of a supplementary acre rent, to the farmstead or to the farm buildings. 8 BULLETIN No. 677 [September, Livestock-share leases extend the practice of giving a share rent to include part or all of the livestock enterprises. Although they are not intended to be legal partnerships, these leases have many of the char- acteristics of partnerships. They usually call for an equal sharing of returns from all crop and livestock enterprises. To balance off the tenant's labor input, the landlord contributes more items of equipment and some operating capital. He usually shares equally with the tenant in purchased feed and in other livestock expenses. The distribution of lease types, as indicated by our completed ques- tionnaires (Table 2), may be compared with the distribution reported in the 1954 census of agriculture. The area studied in this project includes approximately the same counties as those designated by the census as economic areas 6a and 6b, the exceptions being that areas 6a and 6b include Christian and Shelby counties on the south and do not include Grundy and Kankakee counties on the north (see Fig. I). 1 Out of the 20,000 farms that the 1954 census reported as full tenant operated in these areas, 3 percent were all-cash leases, 62 percent were share leases with some cash rent, 21 percent were crop-share leases only, 10 percent were livestock-share leases, and 3 percent consisted of other types of tenancy arrangements. By way of contrast, our sample contains proportionately more crop-share leases and fewer crop- share-cash leases. However, this difference can be explained by noting that the census distribution did not include the leases covering the rented portion of part-owner farms, while these leases were recognized by our sample. The prevalence of crop-share leases on small tracts (less than 120 acres) indicates that such leases may be employed in proportionately greater frequency by part-owner operators who rent such tracts to enlarge their scale of operations. Because of the small number of cash, labor-share, pnd other leases, the analysis reported in this publication will be limbed to the three major lease types crop-share, crop-share-cash, and livestock-share. The data for each of these lease types are subdivided into three groups according to the size of the leaseholds: under 120 acres, 120 to 200 acres, and 201 acres or more (see Table 3) except for the livestock- share lease analysis, which is limited to those tracts 120 acres or larger. Because of these restrictions, the remainder of this report will be based on a total of 767 questionnaires. 'Leases-type areas are closely related to but not identical with economic areas. Christian and Shelby counties lie in a lease transition zone between cen- tral and southern Illinois, while Grundy and Kankakee counties are within the crop-share-cash lease area of east-central Illinois. See Fig. 1, page 9, of Illinois Circular 781, Farm Leases for Illinois. 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS a> ^ J3 . 2 O> cn ^ 4) J^ CO Tf t^ PO -H PO - C j^ 1* S 2 ^ O O OO IO PO <* -H 1 * C ~~ U W 1 S * 0) u cu cn "S * c 1 ^ Ov \O ro O OX CS O 2 b \O H i ^ u . O ^ "g-o J ^^ rt f -8 u " o c OJ O S "3 O^ j= cn CS 1 i o - O. 3 s c O ^O cu O PO 00 -H VO 00 -H s I c ^ U g CS >-< if) oo t^. X >- CO n O u OS >0 3 O\ ^O f t B *O ~ 1 tJ ^T f S -o * l^ 1 co tt 3 cn E CU umber reporting leased ti Average size of leased trz Average number (for all reported in this stud} other land farmed 6 . . Total land farmed .... umber reporting other lai Average number (for onl ing extra land) of a land farmed ercent reporting other Ian The averages given hen iscd tracts reported on. b The other land farmed om one or more other landlor Z Z CL, i i 10 BULLETIN No. 677 [September, Size of leasehold and size of operating units The average size of the tracts studied in this survey was 193 acres (Table 3) . However, over half of the operators who participated in this survey were farming land other than that included in the leaseholds reported in our questionnaire. If the extra land farmed by these operators is taken into account, then, on the average, each tenant farmed an additional 114 acres which he either owned or rented from one or more other landlords. Thus the total size of the average oper- ating unit represented by the tenant operators in our sample was 307 acres. Further details concerning characteristics of the leaseholds, the tenants, and the landlords will be reported in the latter part of this analysis after the examination of the share of various costs and returns each party received or contributed. LEASE ARRANGEMENTS The frequency with which given arrangements for sharing costs and returns were found to have been used is reported in the tables begin- ning with Table 4. Unless it is otherwise indicated, the percentages for each given item are based not upon the total number of leases in each type but upon the number of completed questionnaires which answered the question on that item. For example, according to Table 2 there were 267 crop-share leases. The first column in Table 7 reports that 18 per- cent of the crop-share leases called for the landlord to pay one-half of the cost of combining grain sorghum. The 18 percent in this case applies not to all of the 267 crop-share leases but only to the 50 of them which reported that a provision had been made concerning this cost. In effect, on this particular item we were dealing with a sample of 50 crop-share leases because most of the farms did not grow grain sorghum and the item therefore did not apply to most of the leases. The information reported suggests that if any of the other 217 of the 267 crop-share tenants had grown grain sorghum, about 18 percent of them might have required the landlord to pay half of the combining cost. Similar qualifications and interpretations apply to all items in which the number reported is less than the number of such leases in the study. SHARE RENTS The 22-county area studied in this report is fairly homogeneous in soil quality and productivity. In addition, one can expect an even higher degree of homogeneity in rented land because it is well estab- 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 11 lished that the poorer, cheaper land tends to remain in the hands of owner-operators. Therefore, one would expect a high degree of uni- formity in rent shares on rented land in this area. Table 4, reporting the share of harvested crops received by the landowner, shows that this is true. Livestock-share leases showed the highest degree of uniformity in rent shares, with virtually no exception to the 50-50 sharing of all crops, including forage crops. The pattern of 50-50 sharing was well maintained among the other leases in the case of corn, but not so completely in the case of soybeans and small grains. A supplementary analysis was performed on the 92 questionnaires that reported lease arrangements with a two-fifths rent share on one or more of the grain crops (the supplementary analysis can, in part, be checked against Table 4). The analysis showed that these leases fell Table 4. Share of Harvested Crops Received by Landlord Item Crop- share leases Crop-share- cash leases Livestock- share leases Per- cent Num- ber Per- cent Num- ber Per- cent Num- ber Rent share of corn One-half 94.7 248 12 2 262 240 18 4 262 187 21 4 212 196 21 3 220 84 5 6 33 128 98.2 1.5 .3 91.7 7.8 .5 87.2 12.5 .3 86.4 13.4 .2 37.0 .3 .9 61.8 392 6 1 399 363 31 2 396 266 38 1 305 336 52 1 389 119 1 3 199 322 99.0 1.0 98.9 1.1 98.8 1.2 100.0 96.6 1.1 2.3 100 1 101 94 1 95 79 1 80 96 96 85 1 2 88 Two-fifths 4.6 Other 7 Total Rent share of soybeans One-half 91.6 Two-fifths 6.9 Other 1.5 Total Rent share of wheat One-half 88.2 Two-fifths 9.9 Other 1.9 Total Rent share of oats One-half 89 1 Two-fifths . 95 Other 1.4 Total Rent share of hay One-half 65.6 Two-fifths 3.9 Other 4.7 None .. 25.8 Total.. 12 BULLETIN No. 677 [September, into three groups. Twenty-two, 1 or almost a fourth, of the 92 leases called for rent shares of two-fifths on the corn crop. The remaining 70 leases provided for half -share rents on corn and, primarily, for two-fifths shares on one or more of the small grains and soybeans. Twenty-one of the 70 called for half shares on corn, soybeans, and wheat with a two-fifths share limited to the oat crop. Two basic distinctions can be drawn between these three groups. First, where the lease called for a two-fifths rent share on corn, the soils were generally less productive than average, the majority being either timber soils or sands and sandy loams. Twelve of the 22 lease- holds in this group were located in Mason county. Second, the 21 leases which limited the two-fifths rent share to the oat crop were on good soils. Probably these were attempts to equalize the sharing of inputs and returns for this particular crop. The remaining 49 leases with a half share for corn and a two-fifths share for small grains and soybeans were again a reflection of lower productivity in the soils on these farms. Many were reported as being timber soils, gumbo, light clay, tight subsoils, or sandy loams. Many of the leaseholds in this group were located in Sangamon and Moultrie counties. The pattern of sharing such costs as seed and combining on tracts which commanded a two-fifths rent share differed from those on which a half-share rent prevailed. These differences in cost sharing will be discussed under the appropriate headings. SEED COSTS It is customary, under each of the three major types of share leases, for the landlord to share equally in the cost of crop seeds. This is particularly true for the livestock-share leases, under which 97 per- cent of the landlords paid half the seed costs for corn (Table 5). Under both the crop-share and the crop-share-cash arrangement, from nearly 13 to 23 percent of the landlords paid none of the cost of seed corn, soybean seed, or seed wheat. This nonparticipation can be explained, in part, by the fact that the landlord was receiving only a two-fifths share of the crop as his rent. For example, among the 22 leases which provided for a two-fifths rent share on corn, two of the landlords paid a two-fifths share on the seed corn and three paid one-half, but 17 1 The analysis of leases with y$ rent shares included 3 questionnaires received after the main analyses had been prepared ; hence Table 4 shows slightly fewer leases on i/s shares for both corn and soybeans than are cited in the text. 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 13 paid nothing. A similar arrangement prevailed with soybeans and wheat. The oat crop showed the greatest departure from the general rule of equal sharing in the cost of grain crops seed. Only 62 percent of Table 5. Share of Seed Costs Paid by Landlord Crop- Crop-share- Livestock- share leases cash leases share leases ItAtn Per- Num- Per- Num- Per- Num- cent ber cent ber cent ber Seed corn All 3.2 8 1.3 5 1.0 1 One-half 80.7 205 85.6 333 97.0 97 Other arrangements .4 1 .3 1 None 15.7 40 12.8 50 2.0 2 Total 254 389 100 Soybean seed All 5.3 13 2.9 11 1.3 1 One-half 79.7 197 81.3 309 97.4 74 Other arrangements .4 1 .3 1 None 14.6 36 15.5 59 1.3 1 Total 247 380 76 Seed wheat All 6.9 14 2.9 8 1.4 1 One-half 73.5 150 73.2 199 95.8 69 Other arrangements .5 1 .7 2 None 19.1 39 23.2 63 2.8 2 Total 204 272 72 Seed oats All 6.3 13 3.0 11 One-half 62.1 128 45.6 167 96.9 95 Other arrangements 1.0 2 .8 3 None 30.6 63 50.6 185 3.1 3 Total 206 366 98 Alfalfa seed All 29.4 57 21.2 76 9.2 9 One-half 63.4 123 72.1 258 90.8 89 Other arrangements .3 1 None 7.2 14 6.4 23 Total 194 358 98 Other legume and grass seed All 32.6 70 19.9 75 9.2 9 One-half 61.4 132 73.1 275 90.8 89 Other arrangements None 6.0 13 1.6 5.3 6 20 Total 215 376 98 Seed treatment All 12.7 26 11.9 42 4.1 4 One-half 65.7 134 71.6 252 94.9 93 Other arrangements .5 1 .3 1 None 21.1 43 16.2 57 1.0 1 Total 204 352 98 14 BULLETIN No. 677 [September, the crop-share and 46 percent of the crop-share-cash landlords (Ta- ble 5) paid one-half of the cost of seed oats. The cost of legume and grass seed was either shared 50-50 by the landlord and tenant or borne entirely by the landlord. The extent of participation by the landlord in legume and grass seed costs may have been related to the level of cash rent or to the share arrangement on the hay crop. Our analysis has not revealed the existence or extent of this possible relationship. Sharing in seed costs introduces an oppor- tunity of sharing in management. Table 16 reports this sharing between tenant and landlord. FERTILIZER COSTS Since fertilizers are a variable expense with equal benefit to land- lord and tenant under a 50-50 sharing of crops, the standard rule for sharing fertilizer costs is for each party to share the cost in the same proportion as he shares the crop. Hence, a 50-50 sharing of fer- tilizer costs was almost universal for mixed fertilizers, anhydrous ammonia, and liquids, as reported in Table 6. Where the oats crop is shared in a different proportion than the other crops are, the sharing of the fertilizer costs may be an exception because of the carryover effect of the fertilizer used on oats. The instances in which either tenant or landlord pays for all of the fertilizer cost may be caused (a) by lack of knowledge or appreciation of the value of fertilizer by the other party or (b) by agreements to offset some other costs. Neither, however, is a recommended practice. Application costs generally are the tenant's responsibility, but they were shared equally in 93 percent or more of the cases on anhydrous am- monia or liquid fertilizers applied by custom operators. Primarily because of their long-term effects, limestone and rock phosphate reveal a different pattern of cost sharing from that for the annual fertilizers. Soilsmen estimate that these materials may have an average useful life of approximately eight years. Common practice in farm accounting is to charge them off over a period of five years. Because of this long-term effect, tenants have hesitated to invest in these materials without some guarantee either of continued tenure, which would allow them to reap the benefits of such investment, or of reimbursement for the unused value if and when they left the farm. There is some reason to believe that, as time goes on, more and more leases will require a proportionate sharing, 50-50 or 40-60, of these fertility costs. At present, over half of the landlords are supplying all of the limestone or rock phosphate. 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 15 Table 6. Division of Soil Treatment Expenses, Landlord's Share Item Crop- share leases Crop-share- cash leases Livestock- share leases Per- cent Num- ber Per- cent Num- ber Per- cent Num- ber Limestone All .. . 60 7 150 86 11 247 129 90 10 229 68 117 6 191 13 197 9 219 5 149 5 159 3 106 4 113 50.5 39.5 10.0 40.5 48.4 11.1 23.3 71.6 5.1 2.7 92.5 4.8 2.1 97.5 .4 1.6 96.8 1.6 193 151 38 382 150 179 41 370 69 212 15 296 9 306 16 331 5 236 1 242 3 177 3 183 66.3 32.6 1.1 53.2 42.6 4.2 34.8 60.9 4.3 2.2 97.8 1.3 97.4 1.3 1.9 98.1 63 31 1 95 50 40 4 94 24 42 3 69 2 88 90 1 74 1 76 1 53 54 One-half . . . 34 8 Other arrangements .... 45 Total Rock phosphate All . . . 56 3 One-half . . 39 3 Other arrangements. . . . 4.4 Total Potash All . . . 35 6 One-half . . . 61 3 Other arrangements. . . . 3.1 Total Mixed fertilizer All 5 9 One-half .. . 90 Other arrangements. . . . 4.1 Total Anhydrous ammonia All 3 1 One-half , . . 93 8 Other arrangements. . . 31 Total Liquid fertilizer All 2.7 One-half . . 93 8 Other arrangements. . . . 35 Total One of the other arrangements reported (Table 6), which avoids the need for a reimbursement guarantee, is one under which the land- lord pays for the limestone or rock phosphate and under which the tenant pays his share of the annual cost as a cash payment to the land- lord each year. For this purpose, a five-year life is generally used. Thus, the tenant pays to the landlord one-fifth of his one-half share, or one-tenth of the total, every year for five years. In the meantime, the tenant is free to leave the farm without any need for reimburse- ment. The residual effect of potash is between that of the annual fertilizers and that of the long-term materials limestone and rock phosphate. 16 BULLETIN No. 677 [September, From one-fourth to one-third of the landlords paid for all of the potash applications as a single material, presumably as build-up applications. HARVESTING COSTS It is customary for landlords on share leases to share in the har- vesting costs of small grains. However, as Table 7 indicates, there is considerable variation in the way this practice is carried out. Varia- tions were found even among the livestock-share leases, which in this instance departed from the almost complete 50-50 sharing of costs. One alternative to a direct sharing of harvesting costs is an ar- rangement under which the landlord pays a cash sum to the tenant in lieu of an actual share of the cost (see landlord's payments per acre, Table 7). Such cash sums usually approximate one-half of the normal custom rate. Under this arrangement, the tenant is free either to use his own equipment to harvest the crop or to hire this work done. Should a crop-share or crop-share-cash landlord pay toward the combining cost of soybeans? Table 7 does not appear to give a con- clusive answer. However, only 37 to 42 percent of the landlords did not participate in this cost. Also, among those that did not participate were 51 1 leaseholds, or a total of about 8 percent of these two types of leases together, on which the landlord did not share in the combining cost because he received only a two-fifths share of the crop. A similar adjustment must be made in interpreting the figures for wheat and oats. In the latter case, there were 87 farms among those reporting crop-share and crop-share-cash leases on which the landlord did not participate in the combining cost because his rent share was two-fifths instead of the customary one-half. When these adjustments are made, we would conclude that a substantial majority of the land- owners do share in combining costs. Since there is no compelling reason, other than that of overall equitability, why a landlord actually should or should not share in these costs, this might well be a bargain- ing point and an opportunity for offsetting other contributions which the landlord may make. Only a few landlords participated in corn-picking costs, but a technological change toward field shelling or corn combining is bring- ing with it a change in cost sharing. In effect the shelling cost is being transferred from a farmstead to a field operation. We cannot be certain that our respondents interpreted the question on field shell- ing or corn combining as we had intended. Probably a high proportion 1 See footnote on page 12. 1961] FARM LEASE PRACTICES m EAST-CENTRAL ILLINOIS 17 Table 7. Share of Harvesting Expenses Paid by Landlord Item Crop- share leases Crop-share- cash leases Per- cent Num- ber Per- cent Num- ber Livestock- share leases Per- cent Num- ber Combining soybeans All 4 1 .5 2 2.1 2 One-half 52.6 124 52.1 195 53.2 50 Landlord pays less than 11.75 per acre 1.3 3 2.9 11 2.1 2 Landlord pays #1.75 per acre or more 8 3.8 Other arrangements 2.5 6 3.5 13 2.1 2 None 42.4 100 37.2 139 37.3 35 Total 236 374 94 Combining wheat All 51 1.3 1 One-half 47.3 96 44.8 129 51.3 40 Landlord pays less than #1.75 per acre 1.0 2 2.1 6 1.3 1 Landlord pays #1.75 per acre or more 1.0 2.4 7 3.8 Other arrangements 1.5 3 2.8 8 2.6 2 None 48.7 99 47.9 138 39.7 3j_ Total 203 288 78 Combining oats All 51 .52 1.1 1 One-half 36.4 74 36.5 134 52.2 48 Landlord pays less than #1.75 per acre 1.5 3 1.1 4 1.1 1 Landlord pays #1.75 per acre or more .5 1 1.6 6 2.2 Other arrangements 1.5 3 2.8 10 1.1 1 None 59.6 121 57.5 211 42.3 39 Total 203 367 92 Combining grain sorghums All 00 4.5 1 One-half 18.0 9 19.0 16 22.8 5 Landlord pays less than #1.75 per acre 00 00 00 Landlord pays #1.75 per acre or more 1.2 1 Other arrangements 4.5 None 82.0 41_ 79.8 ^7 68.2 Total.. 50 84 22 Combining clover seed All .8 1 1.2 3 1.8 1 One-half 40.5 51 47.2 117 50.8 29 Landlord pays less than #1.75 per acre .4 1 1.8 1 Landlord pays #1.75 per acre or more .8 2 Other arrangements None 58.7 74 1.6 48.8 4 121 1.8 43.8 1 25 Total 126 248 57 (Table continued on next page) 18 BULLETIN No. 677 [September, Table 7. Share of Harvesting Expenses Paid by Landlord (Continued) Item Crop- share leases Crop-share- cash leases Livestock- share leases Per- cent Num- ber Per- cent Num- ber Per- cent Num- ber Corn picking All .9 2 13 201 216 59 5 66 .3 4.7 95.0 2.3 40.7 7.4 49.6 4.3 69.8 1.3 24.6 .9 31.6 .9 66.6 2.3 6.8 90.9 3.6 5.9 90.5 3.5 3.5 93.0 3.4 3.4 93.2 1 17 342 360 5 88 16 107 216 16 259 5 91 7.7 92.3 1.9 63.5 34.6 2.1 90.6 2.1 5.2 88.0 2.2 9.8 64.9 2.7 32.4 63.6 36.4 69.2 30.8 60.0 3.3 36.7 7 84 91 1 33 18 One-half 6.0 Other arrangements None . . 93 . 1 Total Field shelling or corn combining All One-half .. 45.4 Other arrangements 3.8 None .. 50.8 Total 130 3 164 3 50 220 3 62 2 59 126 6 40 46 4 31 35 1 3 34 38 3 32 35 52 2 87 2 5 Shelling corn from crib All 1.4 One-half .. 74.5 Other arrangements 1.4 None .. 22.7 Total 371 3 100 3 211 96 81 2 9 Hay baling All 2.4 One-half .. 49.2 Other arrangements 1.6 None .. 46.8 Total 317 3 9 120 132 3 5 76 84 3 3 80 86 3 3 82 88 92 24 1 12 37 7 4 11 9 4 13 18 1 11 30 Hay chopping All One-half .. 13.0 Other arrangements None .. 87.0 Total Hay pelleting All One-half .. 11.4 Other arrangements None .. 88.6 Total Green chopping All 2.6 One-half 7.9 Other arrangements None .. 89.5 Total Silo filling All One-half 86 Other arrangements None .. 91.4 Total (Table concluded on next page) 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 19 Table 7. Share of Harvesting Expenses Paid by Landlord (Concluded) Item Crop- share leases Crop-share- cash leases Livestock- share leases Per- cent Num- ber Per- cent Num- ber Per- cent Num- ber Hauling landlord's grain to market All 7.8 17 36 4 160 217 1 7 62 70 7.8 8.6 4.7 78.9 1.6 15.7 82.7 28 31 17 285 361 2 20 105 127 16.5 29.7 1.1 52.7 4.2 33.3 62.5 15 27 1 48 91 1 8 15 24 One-half .. 16.6 Other arrangements. . . . 1.9 None . . 73 7 Total Fuel in crop dryers All 1 4 One-half . . 10 Other arrangements. . . . None . . 88.6 Total of those who responded by indicating that the landlord paid half of the cost of field shelling were referring to shelling only. In many cases the landlord on a crop-share or on a crop-share-cash farm did not participate in the costs of hay baling, chopping, and pelleting because he received a cash rent rather than a share rent on the hay crop. There has been some change in the practice of having the tenant haul the landlord's grain to market at no cost to the landlord (Table 7). Almost a fourth of the crop-share landlords were reported as paying one-half or all of such costs. One reason for this change is the higher cost involved in hauling such grain to Commodity Credit Corporation storage bins. Other reasons are longer hauls to more distant markets, and combined costs for custom shelling and hauling. SPRAYING COSTS The use of chemical spray materials for weed, insect, and brush control is another technological change which is profoundly affecting farm lease arrangements. A general question associated with the use of these materials is: What elements of cost should be shared and how ? Table 8 indicates in summary form how the leases in east-central Illinois provided for sharing these costs. One important consideration in determining how to share these costs is the answer to the question: Who receives the benefit? Insofar 20 BULLETIN No. 677 [September, as these practices increase yields, the benefits are shared according to the way the crop is shared. However, insofar as they are substitutes for other costs, such as mechanical control of weeds, they may benefit Table 8. Share of Spraying Expenses Paid by Landlord Item Crop- share leases Crop-share- cash leases Livestock- share leases Per- cent Num- ber Per- cent Num- ber Per- cent Num- ber Pre-emergence spray on corn All .8 53.7 45.5 4.6 37.2 58.2 2.2 22.8 .7 74.3 3.8 61.4 .6 34.2 2.7 39.8 57.5 17.9 32.5 49.6 10.6 20.0 69.4 1 65 55 121 9 73 114 1.5 53.5 1.0 44.0 3.8 33.5 1.6 61.1 .8 19.7 .8 78.7 3.9 62.5 1.2 32.4 1.1 41.5 .5 56.9 14.8 32.9 1.4 50.9 3.9 22.7 1.3 72.1 3 107 2 88 200 12 107 5 195 3.5 82.5 14.0 3.2 71.3 2.1 23.4 2.7 41.1 2.7 53.5 2.5 87.7 1.2 8.6 1.5 63.1 4.6 30.8 27.9 57.4 14.7 15.1 26.4 1.9 56.6 2 47 8 57 3 67 2 22 One-half .... Other arrangements None Total Weed spray chemicals All One-half Other arrangements None Total 196 3 31 1 101 136 6 97 1 54 158 3 45 65 113 21 38 58 117 9 17 59 85 319 2 47 2 188 239 10 160 3 83 256 2 78 1 107 188 31 69 3 107 210 6 35 2 111 154 94 2 30 2 39 73 2 71 1 7 81 1 41 3 20 65 19 39 10 68 8 14 1 30 53 Weed spray application All One-half Other arrangements None. . . . .... Total Insect spray chemicals All One-half Other arrangements None Total Insect spray application All One-half Other arrangements None Total Brush control chemical All One-half Other arrangements None Total Brush control application All One-half Other arrangements None Total . . 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 21 the tenant more than the landlord. Pre-emergence sprays combine both of these effects. When properly used, there may be an actual yield increase over mechanical control of weeds, while at the same time there is an obvious substitution for such mechanical control. Thus, it seems quite appropriate that over half of all the leases re- ported a 50-50 sharing on the pre-emergence chemical. However, the costs of other weed sprays (both the cost of the chemical and of the application) were not so generally shared between landlord and tenant. Insect spray chemicals showed a higher proportion (from over 61 to nearly 88 percent) of 50-50 sharing because there is very little, if any, cost substitution effect in the use of these materials. Depending on which type of lease they held, from 42 to 69 percent of the landlords also shared in the application costs of sprays for insect control. Brush control is largely a question of maintaining the capital value of the farm, but while traditionally the tenant is expected to keep brush under control, landlords recognize that in the competition for labor on crops and livestock, this is a task that is often neglected. Table 8 indicates that over half of them paid for half or for all of the chemical used for brush control and that a substantial proportion also contributed something to the application costs. CASH RENTS Under the crop-share-cash leases, the crop sharing is supplemented by a cash rent on hay, pastureland, and buildings. Of the three types of leases studied in this survey, 267 were crop-share, 399 were crop- share-cash, and 103 were livestock-share (see Table 2). Thus the crop-share-cash leases amounted to more than half the total number. Perhaps even more important, there were half again as many crop- share-cash leases as there were crop-share leases. The cash rents paid under crop-share-cash leases are analyzed in Table 9. Please note that the percentages given in Table 9 do not compare supplementary cash rent leases with crop-share or with livestock-share leases but merely indicate the relative frequency with which a given cash rent was paid among those who paid a supplementary cash rent. On certain soils, good husbandry requires that a certain proportion of tillable land be devoted to forage crops for erosion control purposes and for improvement in soil tilth and water-holding capacity. A cash rent on the acreage in these crops thus represents a return to land above the erosion control and other benefits received from such crops. As a 22 BULLETIN No. 677 [September, o - in .S9J E S 3 Z*o ,i_> SOCNOOOCSVOOOOO !O*-*~Ht^*-iOOOIO c ' : i en 4> ' rt h= - a 2 : "2 8 ' S O. . ^ ^ ^ -*- 1 J2 :::::::::: J2 o : j^ T3 &" u 3 . o^ E "" a> h i. 4) u U O I- 5 s _^ v- gj ::::::: :J| j; : : : : : ijJ " S !2 : : : : jS 5 at Dec "Q, iri u4> = rt x C C Q,O. 4J 3 K^"^^! 3 < tN) m T* s 3 gs|,l || o u .2 o ^ JH ^ 4) E 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 23 result of this return to land, the cash rent paid is lower than the value of the rent share of the grain crops which at other times are grown on this land. However, when a share rent is paid on grain crops and a cash rent is paid on hay and pastureland, this cash rent tends to be well below the normal competitive rent that would be paid for the same acreage under an all-cash lease. It is lower because under the crop- share-cash lease the rent for the more profitable grain acreage is col- lected separately (as a crop-share rent), while under an all-cash lease the rent per acre is an average for all uses of the land. However, if acreages of forage crops are grown in excess of those required by good husbandry, they compete with the more profitable crops such as corn, soybeans, and wheat for the use of the land, and such usage results in a lower return to the land. In such cases, a landlord is justified in charging a higher and more competitive rent on the excess acreage. The rather wide range in cash rent on tillable hay and pastureland reported in Table 9 might indicate a fairly wide range in the degree to which forage crops are competitive with grain crops on these farms. However, there is a strong probability that much of the observed difference in cash rents is due to the extent to which customary rents have been followed or disregarded. Most of the cash rent can be accounted for at the $5, $6, $8, and $10 per acre levels. Leaseholds over 200 acres in size showed a bi-modal distribution at $5 and $10 per acre while those under 120 acres showed an apparent concentration around $8 per acre. Cash rents on nontillable pastureland had similar characteristics to the rents on tillable land, but at a slightly lower level. Rents of $5 and $6 per acre were predominant. The cash rents on buildings and farmstead reveal a changing and somewhat controversial picture. The most common rent in this cate- gory is figured simply by applying the same rate per acre that is applied either to the tillable hay and pasture or to the nontillable hay and pasture, to the acreage in the farmstead. At best, this results in only a nominal compensation for structural improvements on the farm and is generally viewed as rent on an acreage of land which might otherwise be yielding a direct crop return to the owner. Relatively few leases call for a direct cash rent on buildings or other structural improvements. Where such a rent is charged, it is usually in the form of a lump sum such as $100 or $150. This is sometimes referred to as a privilege rent. 24 BULLETIN No. 677 [September, 5 u 00 ? 00 ~ lt'~ !- '?. S *N ^J 00 J^PjvOvPjxP - E fc*,NO 00 OO ^io^oo ^ *,tO OO ON vj 53 ON CO '" ^'|ONON^.^. B a o ft, 'g ^B ~i 'o fti g Q^ ^ IO CN CN u u 8 8 8 8 u M I 10 > vS's. NO oo oo 5.5 1-Sl-rOO o I-S-OON ON OO t^* OO u a ON < t> a ^^ *" H *"^ fe Q ^* ^4* f*5 tr> ^ ^ ^^ ^~* ^^ -t fe Q ^* ^* ^O c t t2 ft,*. ft,*. 1^^. ft,*. OO NO t^- ON CN c 69 69 V s is - u '3 rn V .O CO 00 S? -.? u - o u U '5'- 8-5 5'?, 5'R^-,-, 8 KOvxO^QvO > u S3 u o i~- O O _O g*. oo oo oo ^ *. OO ON ON ^ *. IO t^- NO V ^ O IO CN CN J C S. ^1 8 1 8 ft,*."* **** ~* O JS m o 69 1 8 "s O E i E i S S J OO ON ^ t^* u'~ PO CN to CN Vj 'J' fO CO CO ON t^. OO TJ< ^* . > to to > q *""* '"^ *-" ' ^>| ^ o ^^ *""* co ^ Q ^^ CN CO ON fe Q "^ ^*^ ^^ ^ cd CN *H ft, *. ft,*, (X,*. ft, *. t^ NO t^" NO Si ^ 69 69 O T3 QJ rt B n OJ w C a * 00 iL 00 -. 8 S' 8 0000 "I cd '-U-O g^OOOv O ilss;8 g5.{oooS l|^c^- _0 tn fd 0-c 'S ft< 'o 0-1 'S ~" ^ CJ JH i- c R = " Ja 0) "^ 'e ?J 8 8 C CN OO O O t^ 69 ON ^ -S ON f5 O cs ^g ON NO O * 5J -S ro Tf t^ CN 5J * O\ f 1 ^ c*^ OO to O O o o lO <"> !>* ^ K e^ ^"^ *~* '" H *"" ftj*. ft,*. ft^*. ft,*. t^ to ON to O 2 69 CN o r C ~ u "- = CO co 5 C ' .E u co *^ * en r~ '.'.'. V ^ !r\ fli !> > 1 o C O f o O VO O CN J f*5 ^ OO <> ON t-^ H -H CS CN - -l CN CS CS -l -H Tfi t^. -H CS ^ S - 8 r^t-000 ^^ _= S o o p<^vOOOO <*5s ^fiOOfOT*. Omt-00 U 4) J= S 2 & g r*j o o oo <*> o -^ O >o 2 o ; cs o -S i O *& * < * i CS PO CS RNOOO 00 a 1 in V o> rt CN H, S "te ~ b S* to ^O p '^ CO NO > ' OO NO 1 NO ^ f ^ f '^ ^^ "^ CN L^ in O c3 '** * t CO fO ^ H ^ I CN PC ^H "^ O *^* ON O a CN k S rt '^ ^^ ^x >^ u O a w U So S ^ CS 1- C ^H D rt w CN ^f t 00 ON NO NO rj< * O ttCN ' ' 'lO ''t-^t^ t-CN-PC " CN PC -( CN IO CN CS -i -i - ON IO B to a T3 ^H at in <^ ^ ^_^ .^ . t ^. ^^ 3 -H > U ^5 ^^ ^^ ^ PQ cs u ~ ^H Tj CN NO 10 -HTtt-lO 00 00 CN CN H ^"" ' ^* CN * ' ^H ^ t rj^ CS ^H^ t M O Q 5 Si a 8 fi o Ou OCSt^OOPO *~ ON OO >O -< J a 2 u *j C cs rt IO ON NO O OO -H CS O CN CN OOt ON O ON ON MH S OONOPO^ -*ONOOO V ^2 b P CM roro OO-H TJ.-NO 00 CN timatec t/J U 1 1 o <- . . : : : : : 2 : : : : : O ^ 1-1 rjt 1-1 1^. PO > O POt^PO*- POI/1PO fNCSOO * i 1/5 fN PO i 11/5 fNfSsOfNi i SO S, H 03 tfl 3 -H fN H fN i-c fN ON 00 00 o> _4J Q. U OOsOPOOOfNPO i/5t^OsOONPO SO^'i't^POsO g O fN O SO fN OO ON l^ fN ON 1-1 fN SO 1^ O PO ON SO fN U > U 0) ~ fN Tj< fN *> r-H Tf^HfN .> 2 i> I s 0) 4 4 a 03 s i ( PO sO i 1 PO SO fN i* fN sO bo a 3 d( 1 ^~* Tj< i i O B| o ^M t>i O X D 03 Ox OO O* o> j (/} C i i PO fN O O ^ OO ON i i O O fN ~HTj> :::: > ...... >. S 5 ) * a"8 '" " -n "^ '" " -o "^ 'S I S *j " ** S :^fe ** 1 l^|| | |,|l | |J|I | V>C4)eCtn .S c4)CCto .SycSUcC 1 " 3 s5-|Je'i uww-^jfl^.h -Mgs-^s'rt "*- 4 .S"S-o""S ^-6 < -; ""S-o"S ^-o "S-o"2 ^-o H C ^t C ^> ^ b(0 _C . C ^ C ^ ^* h/) f^ S'U'O'U'P'OS '^ .E"O"O"^"O"O2 '? 4>*O13'O'OT32 '5 QJ ("* C*. r~. p*. . ^ jfj J .- p r cj I f^ f f^ r r^ f f^ (^ * _ 03 ^f^ ^l^ _ r* r j^ _r^ -. * 4j tintnuitntnC g^tntn^tn^C ^tntntntn cn c hi "1*1 11 ** " ^'E'E'S'E'E ^ ^ ^ i 1 1 1 A J 3 3 3 3 3"S ^fi i 3 3 3 3 3 "5 ^ 4J 4) 3 3 3 3 3*5 ^ fc 03 U. U. U. U. U. O tt^bfaUlUtO MffcUtUifBiUtO O-i t^ ^> ^ Q *^ 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 47 j | "" SO CN CN CN O t^t IT) ttlt~- CN CN so ~H rr> .-4 r*) H r^. ^ j= 1 OO OO *-< SO OO PO 1 Tf CN f i ro t-~ 10 c^ 5 Ov *** *O O SO OO *O r*5 *O ^^ O |CN o 3 | i i i < ICN so r^ ^_ ^_ ^j. ff) U u en U s~^ i rt E C0i0-00- so o^ 4 CN CN CN O O *4* *"- 1 SO * < ^* FO SO CN ^< Tj< IO O 3 c. eu 2 CN t^- in C rt w SO OO X o DO OOCNOOOOtN OC >OOOO sooot^QOOOPO o OO i f*5 so lOOiOUOiO OO ^^ O i ^H ir> o c u IO 1-- * i u e concludet X 8 H . ."U - *-._. a> *- :-g - c :j : :-o : - "O ^_t rt g 'O AJ rt 1 I ill. S i -H Q a> c ' t"! 5 aj : |p. > g : |g- > t! T3 ^ ^ t w c ^ -w 2 KD C cd "O *o O 2P ^ nj *u || j sl^l^l i ^cn jjcucCtn . tnC4* C C en . C c 4^ c C en ._ g ii -jg J2 * -5 t u -jj u'3 o "*''rt u'5 o ii'i^'s.g' ||^i "^ > s.s < | ^&^'i.w & c "STj""S "itf g c"S"^ E u CL*D o, to -a c -o c o."^ 03 1> C -s (ucvctucccy :; *- C u c8 (HrtC aj aj u f o*(flp QJ * J * M cdO>coc J> h-a "O S t- tJT3 vi c X c x x bo _c 2 c ^ "O ** " ^ U C - O. - O* J 4) u >CXXbO j; " C >> C > >< bfi jz O "^ *C "^ "^ "P S i 3 "^ "C OQJCU(U(yCuC **^ 0) Cu "S"S"St '* o'S'S's'S'Sfc '* ^ "S % "% rt " c {"" ^jsjrrt^-g 1njcj:^j:j;rt^g-w SSSSS*-'"'*? Q33 L- Ui U. ?* II L^ ^. Ui i- 1- lw I f" (, t 333~JJ Q33333~CU _ _ _ --______ ft. U O X 48 BULLETIN No. 677 [September, u rt > E 2 S *-* 2 ^ ^2:c:ls j= 3 1 fsi (f) , ^H \o irj >-i ro O * "o C O U h i in V 1 OO<~OOOCSTjif-(OO OO'-ifOTj<>O cs * i cs ^j 0) !/) *^ ^o M-. rt S: o O "M S M o\ V Q, O irjt^-iOOOCvO *OrlO Tf i ^- CS iO H U of u U JH i rt 1 O f*> f*5 ^ i CS 10 f*5 cOOOO'OfO I c CN O CS > I "5 *M _0) 3 V c i_ rt c> U) s CS NO 1/5 CN <^ ^OfOfO fe g rt"U'3o C C^ ^*u i t-5 u rt u "^ rt p " O * ***S C " o rtb"^ O ^\ Or ^'Z O, X^ _ - ~ U 'gjaJi^aJi 2i52iSS^ '< Wrtcrtg fi we rt" E 3 ^ 4 "o-ot'TS u 'z:-o-"-a3 S^S^o 6 * - 13 rtCXc^P '* atja CBiO^D e ^ ^-rt^rt c "D "O "T3 "O "U 2 S u 05 tn tn i t-a)4)w, ^ ^ Q S C 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 49 PERSONAL INFORMATION While farm leases are business contracts, the relationship between landlord and tenant is a highly personal one. The management contri- butions by each of the two parties, which we have already noted in Tables 15 and 16, are evidence of the degree of personal association and relationship inherent in share leases. This is particularly true of livestock-share leases, which in this regard border on partnership rather than impersonal contractual relationships. Thus, the personal characteristics of the landlord and of the tenant may be crucial to the success of the lease agreement. How well is the landlord informed about modern farming? Has he had any farm experience? Is he able to take an understanding attitude toward unfavorable results that are beyond the control of the tenant? How often does he visit the farm? Does he live close enough to the farm that he can keep well informed about its problems and needs? Can he be reached readily to share in management decisions that must be made quickly? These questions suggest some of the reasons why the personal attributes reported in Table 24 may be important to a successful farm lease. Approximately one-third of the leasehold properties are owned by women. Many of these women are widows who have inherited this farm property from their husbands. They may or may not be capable and well-informed managers of their farm property. Where such owners are represented by competent professional management, there may be a very favorable climate for a successful lease experience. One of the problems of great concern to tenure experts in the recent past has been the problem of the absentee owner. Inasmuch as the level, fertile land of east-central Illinois makes good investment property, one would suppose the absentee owner problem would be particularly acute in this area. Measured in terms of distance removed from the farm, the problem does not appear to be particularly signifi- cant. Eighty-five percent of all of the owners reported in this study lived within a maximum distance of 50 miles from their farm property. This is usually less than an hour's drive by automobile. Over 75 per- cent of the rented properties were visited by the owners, or by their agents, five times or more each year. About a third of all the leases reported in this study were between father and son or other related parties. The number of leases between relatives was greatest for the livestock-share and the crop-share leases. One may assume from this that the crop-share-cash leases reported in this study come closest to representing a competitive relationship in the rental market. 50 BULLETIN No. 677 [September, Table 24. Personal Information on Landlord and Tenant, by Type of Lease Item Crop- Crop- share- Live- stock- Total cash share Ownership of farms Percent of leases Male 60.5 57.7 85.0 62.2 Female 36.1 38.1 14.0 34.3 Male and female 3.0 3.7 1.0 3.1 Institutional .4 .5 .4 Landlord's farm experience None 20.5 26.3 20.9 23.5 1 to 9 years 4.6 6.0 4.7 5.3 10 to 19 years 10.2 4.6 8.1 7.1 20 years or more 62.4 56.6 64.0 59.6 Raised on farm (years not indicated) .... 2.3 6.5 2.3 4.5 Type of owner Sole owner 61.1 60.4 66.3 61.4 Co-owner 24.4 20.2 22.7 21.9 Life tenant 5.3 5.2 4.0 5.1 Trustee, etc 4.2 8.1 4.0 6.2 Institutional, other combinations 4.2 3.9 2.0 3.8 Manager (ownership not indicated) .8 2.2 1.0 1.6 Distance of owner from farm Lives on farm 22.1 7.6 24.8 14.8 Under 10 miles 45.8 47.9 37.6 45.9 11 to 50 miles 17.2 26.9 28.7 23.8 51 miles and over 14.9 17.6 8.9 15.5 Number of visits by landlord or his agent None, or less than once a year 4.2 2.5 2.8 1 to 4 times a year 25.1 21.6 6.0 20.8 5 to 9 times a year 9.3 14.7 6.0 11.7 10 to 14 times a year 9.3 15.7 13.0 13.1 15 to 19 times a year 2.3 6.7 5.0 5.0 20 times or more 19.7 22.4 39.0 23.6 Lives on farm or nearby 23.5 8.9 25.0 16.0 Frequently 6.6 7.5 6.0 7.0 Relation of tenant to landlord Son, son-in-law 22.4 17.1 34.0 21.1 Other kinship 19.2 11.0 7.0 13.3 Not related 58.4 71.9 59.0 65.6 Tenant's length of tenure on this property 8 Less than one year .4 .5 1.0 .5 1 to 4 years 25.5 19.7 39.4 24.2 5 to 9 years 22.0 24.8 29.3 24.4 10 to 14 years 22.4 27.8 17.2 24.6 15 to 19 years 14.3 8.3 6.1 10.1 20 to 24 years 8.5 9.3 4.0 8.4 25 to 29 years 2.7 4.4 2.0 3.5 30 years or more 4.2 5.2 1.0 4.3 * The length of tenure by lease types given in this table does not mean that the entire tenure on a given farm has occurred under the same lease . There is a natural progression for many tenants from father-son partnerships to livestock-share tenants to crop-share or crop- share-cash tenants to part-owners and finally to full owners. Over a period of several years, there is some drop out due to the tenants achieving ownership by purchase or by inheritance or due to death loss, retirement, or leaving the farm. This drop out tends to reduce the number who hold leaseholds more than 10 years. The fact that the number ef crop-share and of crop-share-cash tenants actually increased during the 10 to 14 year period indicates a feeding-in process. Most of the new recruits no doubt came from the ranks of the livestock- share tenants who became crop-share or crop-share-cash tenants after several years. 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 51 It has been said that an ideal tenure system is one that has short leases but an assurance of long tenure. That this is being accomplished by the tenancy arrangements on Illinois farms is evidenced by Table 24. A strong continuity of tenure on the same rental property is sug- gested by the fact that the number of tenants who had held leases on the same property for from 1 to 4 years was almost exactly the same as the numbers who had held their leases for from 5 to 9 years and from 10 to 14 years. That the same frequency does not continue beyond 14 years should be no cause for concern. After a tenancy of 15 years, a tenure change to a status of owner-operator is normal and desirable by most successful tenant families. This fact, plus the effects of death and disability and voluntary occupational change, will account for much of the diminution in the continuity of tenure beyond 15 years. Livestock-share leases show the shortest continuity of tenure due to the operation of a tenure cycle and to the place of this lease in the cycle. Most young farmers enter farming short on both capital and management experience. On farms which need to be operated as live- stock farms, livestock-share leases allow the landlord to share more fully in providing both capital and management than do either the crop-share or the crop-share-cash leases. Since many of these leases are between father and son, there is a change from livestock to crop- share or to crop-share-cash leases when the father dies or when he retires and wishes to reduce his role in the management of the business. At the same time, the tenant has had an opportunity to accumulate the capital necessary to finance all of the livestock and livestock equipment, and he is ready to move up to the more independent status of a crop- share or a crop-share-cash tenant. Table 25 provides information that is descriptive of some of the environment in which farm tenancy operates. Rented land generally is the better and higher priced land in a given area. The poorer, cheaper land tends to go into owner-operation. Most tenants are full-time farmers, but a fourth to a third do some work off the farm. Part-time farming (the operator works 100 days or more a year off the farm) is relatively rare in east-central Illinois, but it is one alternative to enlarging the size of farm as a means of achieving full employment of the tenant's labor. Professional farm managers can provide useful services for absentee owners, women landowners, and others who are unable or unwilling to manage their property themselves. Most landlords per- form their own management function, probably because they frequently 52 BULLETIN No. 677 [September, Table 25. General Information Item Crop- share Crop- share- cash Live- stock- share Total Soil productivity Above average 23 8 Percent 28 3 of leases 43 6 28 7 Average 72 1 67 8 52 5 67 3 Below average 4 1 3 9 3 9 4 Tenant works off the farm 33.2 25.6 23.5 27.9 Days of off-farm work by tenant None 66.8 74.4 76.5 72.1 100 days or less 24 5 21.1 20 4 22 2 More than 100 days 8.7 4 5 3 1 5 7 Farms employing agent or farm manager. . . Landlord taking legal action against tenant Farms using farm bank account 6.1 11.7 17.4 1.7 13.5 10.1 3.0 21.0 12.6 1.3 13 9 are former farm operators or prefer to do so as a retirement activity. Social Security retirement tests may alter this number in the future. Only a very few landlords reported ever having taken legal action against a tenant. The higher proportion among the livestock-share leases indicates the greater complexity of this lease and the greater degree of landlord involvement in areas of potential conflict. On the whole, the small proportion testifies to the effectiveness of the lease arrangements and to the degree of mutual interest between tenant and landlord. LEASE CHANGES DESIRED The last item on the questionnaire invited landlords and tenants to tell "what changes would improve your farm lease agreement or your relations with the other party to your lease." The response indicated that, in general, farm leases and landlord-tenant relations were satis- factory. Only 294 persons made comments. Of these, 210, or 71 percent, either expressed satisfaction with their leases or further ex- plained some parts of their lease arrangements. Only 84 suggested changes. The major suggestions are summarized in Table 26. As some persons made several suggestions, the totals are larger than the number of individuals. There were proportionately more suggestions for changing the livestock-share leases than for the other types of leases. This fact reflects the greater complexity of livestock-share leases, the larger number of items shared by landlord and tenant, and the need for a 1961] FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS 53 Table 26. Major Suggestions Made for Improving Leases and Landlord-Tenant Relations Number of times Suggestions suggested by Tenants Landlords 1 Changes in sharing costs 31 7 ? Written leases 17 3 Better cooperation, more management participation. . 10 6 4 Change in cash rent, cash rent on buildings 3 11 S More and better improvements 11 6 More reimbursement guarantees 8 1 7 More fertilizer, lime, and rock phosphate . . . 8 8 Longer term leases 7 q Improvements in residence 3 10, Up-to-date lease 2 Total number of major suggestions . }00 25 mutual interest in the business and an equitable sharing of inputs and returns. Tenants made more suggestions for changes than did landlords, the ratio being about 2.5 to 1. Individual tenants wanted landlords to share or to share to a greater extent in such costs as combining, hauling the landlord's grain, shelling and combining corn in the field, crop drying, applying fertilizers, legume and grass seeds, and fuel costs (on livestock-share leases). Landlords took the opposite view, principally on hauling grain, combining, and fuel costs. Tenants wanted written leases, particularly with elderly landlords whose farms were likely to be involved in estate settlements. They ex- pressed a hope for 5-year leases, but they were not particularly unhappy with 1-year leases that were automatically renewable and that provided for lease termination notices of 6 months or more. Both tenants and landlords recognized the importance of a mutual interest in the farm business. Some respondents pleaded for more managerial freedom; others invited greater management participation by the other party on an open-minded, interested basis. Some tenants expressed the belief that if professional farm management services were employed by the landlord, greater benefits would result through the greater use of fertilizer, more adequate buildings, and higher quality seed. Only a few tenants asked for a reduction in cash rents. On the other hand, some landlords felt that they had to have higher cash rents to offset high taxes. Landlords renting small acreages looked to cash rents to justify the high capital costs of buildings and extra improve- 54 FARM LEASE PRACTICES IN EAST-CENTRAL ILLINOIS [September, ments. Some tenants preferred to make improvements at their own expense rather than pay higher rent, provided they had adequate re- imbursement guarantees or could take the improvement with them when they left. Fertilizer cannot be moved after it is applied to the soil; therefore, tenants registered a special plea for reimbursement arrange- ments on such costs. SUMMARY AND CONCLUSIONS Crop-share and crop-share-cash leases are the predominant lease types in east-central Illinois, accounting for 84 percent of the leases in the area. Livestock-share leases account for 13 percent, while cash, labor-share leases, and special arrangements make up the remaining 3 percent (Table 2). Prevailing rent shares on grain crops are almost exclusively one- half of the crop (Table 4), except that on some of the sandy or tim- bered soils, the landlord receives only a two-fifths share. The basis for a one-half rent share is an approximate equality between the annual values of the fixed inputs or contributions of both parties land and the improvements on it by the landlord, and labor, power, and ma- chinery by the tenant. Variable costs such as crop seeds (Table 5), annual fertilizers (Table 6), corn shelling (Table 7), and insect control (Table 8) are shared in the same way as the crops are shared, namely 50-50 or 40-60. Only 34 to 50 percent of the tenants shared in the cost of limestone, but 44 to 60 percent shared in the cost of rock phosphate, and 64 to 77 percent shared in the cost of potash applied as a single plant food (Table 6). The increased proportion of tenants sharing in these costs, from that observed in earlier studies, indicates a growing acceptance of the practice of holding the landlord responsible for initial applica- tions of these materials and a growth in the practice of expecting the tenant to share in the cost of repeat or maintenance applications. Livestock-share leases, in which the landlord usually owns a half interest in the major livestock enterprises and receives one-half of the livestock returns, generally also provide for an equal sharing in such costs as legume and grass seeds (Table 5), hay baling and silo filling (Table 7), weed control chemicals (Table 8), livestock expense and purchased feed (Table 12), and feed grinding (Table 13). Most of the livestock-share leases also provided for the landlord to share half of or to assume all of the expense of the purchase of such livestock equip- ment as self-feeders, waterers, and water heaters (Table 14). 1961] HULLKTIN No. 677 Many equipment (Table 14), power, and fuel costs (Table 13) under livestock-share leases are shared in a variety of ways ranging from 100 percent by the landlord to 100 percent by the tenant. These items may be bargaining points or opportunities by which tenant and landlord can achieve a balance of total inputs in line with the way returns are shared. Farms differ from one to another, and the soil defi- ciencies or the fixed improvements contributed by the owner are fre- quently compensated for by contributions of equipment and special facilities. Cash rent on tillable hay and pastureland is found only in crop- share-cash leases (Table 9). The most common rates are $5, $6, $8, and $10 per acre with almost the same frequency for each rate. Cash rent on nontillable land also ranges from $5 to $10 per acre, but most rates are in the $5 to $8 range. Cash rent on buildings, where such occurs, usually takes the form of charging the same acre rate for the area in the farmstead as is charged for tillable hay and pasture. Lump-sum rents on the farm- stead or buildings range mostly from $50 to $250 (Table 9). A little less than half of the farm lease agreements in east-central Illinois are in writing (Table 17). Yet such important considerations as (a) notice to terminate the lease, (b) reimbursement guarantees, (c) rights of entry, and (d) management prerogatives must be in writ- ing to be legally enforceable if they deviate from common law or customary arrangements. Three out of every 4 landlords are farmers, retired farmers, or widows of farmers, or have had some farm experience. Eighty-live percent of the landlords live within 50 miles, or about an hour's drive, from their rental property. Only 1 out of 8 employs an agent or manager (Table 24). In general, both tenants and landlords are satisfied with their lease agreements. Only 84, or 1 out of every 8 tenants or landlords, made suggestions for changes in their leases. Changes desired by tenants include (a) more sharing in variable costs by landlords, (b) written leases, and (c) more capital improvements by the landlord or written reimbursement guarantees for improvements made by the tenant. Landlords wanted higher cash rents to offset higher taxes (Table 26). LIST OF TABLES TABLE PAGE 1 Description of Sample and Rates of Response " 4 2 Distribution of Usable Questionnaires, by Type of Lease and Respondent 7 3 Average Size of Leased Tract Reported and of Other Land Farmed by Tenants on These Leaseholds, by Type of Lease and by Size of Leasehold 9 4 Share of Harvested Crops Received by Landlord 11 5 Share of Seed Costs Paid by Landlord 13 6 Division of Soil Treatment Expenses, Landlord's Share 15 7 Share of Harvesting Expenses Paid by Landlord 17 to 19 8 Share of Spraying Expenses Paid by Landlord 20 9 Cash Rents Paid by Tenants on Crop-Share-Cash Leases. . . 22 10 Proportion of Crop-Share and Crop-Share-Cash Tenants Paying a Given Kind of Cash Rent, by Estimated Value of Landlord's Buildings per Acre, by Size of the Rented Tract, and by Kinship Between Tenant and Landlord; and Amounts of Rent Paid by Level of Building Investment 24 1 1 Landlord's Share in Ownership of Livestock on Livestock- Share Farms 26 12 Landlord's Share of Current Livestock Expenses Under Livestock-Share Leases 28 1 3 Landlord's Share of Other Current Expenses Under Livestock- Share Leases 29 14 Landlord's Share in Ownership of Machinery and Equipment Under Livestock-Share Leases 31 to 34 15 Management Participation Under Livestock-Share Leases. .. 35 16 Management Participation Related to Crop Production, by Type of Lease 36 and 37 17 Characteristics of Written Leases, by Type of Lease 38 1 8 Percent of Written Leases Containing Reimbursement Guar- antees to Tenant, by Type of Lease 40 19 Rights Reserved by Tenant and Landlord, by Type of Lease 41 20 Estimated Value of Landlord's Buildings per Acre and per Leasehold Tract 42 21 Landlord's Share of the Cost of Labor and Repairs on Farm Structures, by Type of Lease 44 22 Age of Farm Residence on Rented Tracts, by Type of Lease 45 23 Cost-Sharing Arrangements on the Farm Residence, by Type of Lease 46 to 48 24 Personal Information on Landlord and Tenant, by Type of Lease 50 25 General Information 52 26 Major Suggestions Made for Improving Leases and Landlord- Tenant Relations . 53 10M 9-61 74384 UNIVERSITY OF ILLINOIS-URBANA Q630.7IL68 CDnft 30112019530416