High input prices in recent years have significantly reduced profit margins for rice producers in the Mid-South. The negative impact of tightening profit margins is felt most acutely by rice producers renting cropland. A significant portion of rice ground in the region is rented using crop share arrangements, and the most common lease used is a net crop share lease. The terms of crop share leases differ by crop and region. Typically for rice in the Mid-South, the landlord supplies the land and pays all below-ground irrigation expenses (well, pump, gearhead fixed expenses) in exchange for a share of the crop. The tenant pays all above-ground irrigation expenses (irrigation power unit fixed expenses, irrigation energy), supplies all machinery, and pays virtually all variable costs. The rice drying cost is the only variable cost shared between the two parties. Other crop share leases exist where specific costs like fertilizer are shared, but these lease types are less common than the net crop share lease.
Net crop shares are very similar throughout the Mid-South. In Eastern Arkansas, the landlord’s share of the rice crop is typically 25%, but 20% crop shares are also common (ASFMRA, 2024). In Northeastern Louisiana, the landlord’s share of the rice crop is typically 20%. Crop share leases are used less frequently in Northwestern Mississippi relative to cash leases, but when a crop share lease is used, the landlord’s share of the rice crop is also typically 20%.
Crop share arrangements tend to change little over time, but increasing crop prices, rising input costs, or new technologies make it occasionally necessary to reevaluate the equitability of crop share arrangements for both parties (NCFMEC, 2011). This article demonstrates the contributions approach as a method to calculate equitable crop and cost shares for rice rental leases. The first step is to calculate the percentage contribution provided by each party in value of non-shared expenses. Remaining shared inputs and income are then shared in the same percentages as the collective non-shared contributions made by both parties.
Table 1 demonstrates how the contributions approach reflects the typical net crop share lease used in the Mid-South. In this example, the only cost item shared is drying costs. All other cost items are contributed solely by the landlord or the tenant. Total non-shared contributions equal $1,311, of which the landlord provides $250 (19.1%) and the tenant provides $1,061 (80.9%). The assumption then would be that drying costs and crop income would appropriately be shared at the same 19.1 / 80.9 percentages, which approaches the 20% landlord, 80% tenant split seen in many net crop share leases in the Mid-South.
Table 2 shows how the contributions approach may be applied to a crop share arrangement where several cost items are shared between the landlord and the tenant. In this table, the two parties share fertilizer, herbicide, and drying costs. The sharing of fertilizer and herbicide costs between the two parties is in accordance with the concept that yield-increasing inputs should be shared in the same percentage as the crop is shared (NCFMEC, 2011). An argument can be made that irrigation energy costs also fall into this yield-increasing input category. However, the cost of items to be shared or not shared in a crop share lease are based on negotiation between the tenant and the landlord.
Note in this example that the landlord’s share of the crop becomes larger when more cost items are shared between the two parties. This result occurs because the total proportion of contributions made by the landlord (particularly the land contribution but also irrigation wells) becomes larger when more costs are shared between the two parties. The equitable crop shares for each party, based on Table 2, are 24.5% of the gross returns for the landlord and 75.5% of the gross returns for the tenant.
| Table 1. Rice Net Crop Share Lease (Only Drying Expenses Shared) | |||
| Cost Items | Annual Cost a | Landlord Contribution | Tenant Contribution |
| Non-Shared Items: | $/acre | ||
| Land ($5,963/acre * 3.619%) b | 216 | 216 | |
| Machinery Fixed Expenses | 79 | 79 | |
| Machinery Repairs and Maintenance | 18 | 18 | |
| Irrigation Fixed Expenses (Well, Pump, Gearhead) | 34 | 34 | |
| Irrigation Fixed Expenses (Power Unit) | 22 | 22 | |
| Irrigation Repairs and Maintenance | 8 | 8 | |
| Survey and Mark Levees | 5 | 5 | |
| Labor | 55 | 55 | |
| Management (180 bu/ac * $6.75/bu * 7.5%) c | 91 | 91 | |
| Seed | 136 | 136 | |
| Fertilizer | 160 | 160 | |
| Herbicides | 130 | 130 | |
| Insecticide | 9 | 9 | |
| Fungicide | 10 | 10 | |
| Fuel | 20 | 20 | |
| Irrigation Energy Costs | 129 | 129 | |
| Crop Insurance | 10 | 10 | |
| Scouting/Consultant Fee | 8 | 8 | |
| Operating Interest | 35 | 35 | |
| Custom Machinery Hire | 87 | 87 | |
| Hauling | 49 | 49 | |
| Total Non-Shared Costs | 1,311 | 250 | 1,061 |
| Percent of Specified Costs | 100.00% | 19.1% | 80.9% |
| Shared Items: | $/acre | ||
| Drying | 72 | 14 | 58 |
| Total Shared Costs | 72 | 14 | 58 |
| Total Shared and Non-Shared Costs | 1,383 | 264 | 1,120 |
| Percent of Specified Costs | 100.00% | 19.1% | 80.9% |
| Gross Return (180 bu/ac * $6.75/bu) | 1,215 | 232 | 983 |
| a Annual cost items except Land and Management are rice production costs averaged across 2024 University of Arkansas rice crop enterprise budgets. | |||
| b The land charge is calculated as the average value for irrigated cropland in Eastern Arkansas reported in ASFMRA (2024) ($5,963/acre) multiplied by the rent-to-value ratio for irrigated cropland obtained from USDA NASS Arkansas (2024) ($152/acre cash rent divided by $4,200/acre for irrigated cropland). | |||
| c The management charge is calculated as rice gross return multiplied by the mid-range of charges for professional farm managers (5 to 10%) reported in NCFMEC (2011). | |||
| Table 2. Rice Cost Share Lease (Fertilizer, Herbicide, and Drying Costs Shared) | |||
| Cost Items | Annual Cost a | Landlord Contribution | Tenant Contribution |
| Non-Shared Items: | $/acre | ||
| Land ($5,963/acre * 3.619%) b | 216 | 216 | |
| Machinery Fixed Expenses | 79 | 79 | |
| Machinery Repairs and Maintenance | 18 | 18 | |
| Irrigation Fixed Expenses (Well, Pump, Gearhead) | 34 | 34 | |
| Irrigation Fixed Expenses (Power Unit) | 22 | 22 | |
| Irrigation Repairs and Maintenance | 8 | 8 | |
| Survey and Mark Levees | 5 | 5 | |
| Labor | 55 | 55 | |
| Management (180 bu/ac * $6.75/bu * 7.5%) | 91 | 91 | |
| Seed | 136 | 136 | |
| Insecticide | 9 | 9 | |
| Fungicide | 10 | 10 | |
| Fuel | 20 | 20 | |
| Irrigation Energy Costs | 129 | 129 | |
| Crop Insurance | 10 | 10 | |
| Scouting/Consultant Fee | 8 | 8 | |
| Operating Interest | 35 | 35 | |
| Custom Machinery Hire | 87 | 87 | |
| Hauling | 49 | 49 | |
| Total Non-Shared Costs | 1,021 | 250 | 771 |
| Percent of Specified Costs | 100.00% | 24.5% | 75.5% |
| Shared Items: | $/acre | ||
| Fertilizer | 160 | 39 | 121 |
| Herbicides | 130 | 32 | 99 |
| Drying | 72 | 18 | 54 |
| Total Shared Costs | 362 | 89 | 274 |
| Total Shared and Non-Shared Costs | 1,383 | 339 | 1,044 |
| Percent of Specified Costs | 100.00% | 24.5% | 75.5% |
| Gross Return (180 bu/ac * $6.75/bu) | 1,215 | 298 | 917 |
| a Annual cost items except Land and Management are rice production costs averaged across 2024 University of Arkansas rice crop enterprise budgets. | |||
| b The land charge is calculated as the average value for irrigated cropland in Eastern Arkansas reported in ASFMRA (2024) ($5,963/acre) multiplied by the rent-to-value ratio for irrigated cropland obtained from USDA NASS Arkansas (2024) ($152/acre cash rent divided by $4,200/acre for irrigated cropland). | |||
| c The management charge is calculated as rice gross return multiplied by the mid-range of charges for professional farm managers (5 to 10%) reported in NCFMEC (2011). | |||
References and Resources
ASFMRA (2024). 2024 Mid-South Land Values and Lease Trends Report. American Society of Farm Managers and Rural Appraisers, Mid-South Chapter. https://nationalaglawcenter.org/wp-content/uploads//assets/Conferences/2024-Mid-South-ASFMRA-Land-Values-and-Lease-Trends-Report.pdf
NCFMEC (2011). Crop Share Rental Agreements for Your Farm. North Central Farm Management Extension Committee. NCFMEC-02. https://aglease101.org/wp-content/uploads/2020/10/NCFMEC-01.pdf
USDA-NASS Arkansas (2024). United States Department of Agriculture, National Agricultural Statistics Service, Arkansas Field Office. https://www.nass.usda.gov/Statistics_by_State/Arkansas/index.php
UTIA (2013). Crop-Share Leases. The University of Tennessee Institute of Agriculture. UT Extension PB 1816-E. https://utia.tennessee.edu/publications/wp-content/uploads/sites/269/2023/10/PB1816-C.pdf
Watkins, Brad. “Calculating Equitable Crop Share Leases for Rice in the Mid-South.” Southern Ag Today 5(7.1). February 10, 2025. Permalink
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