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Formulas are a function of land productivity, improvement ownership, and water rights. The State Land Board's charge is 25 percent cash rent based on crop sharing. The industry standard is 1/3 to 2/3 share.
There are four formulas for four different scenarios: tier 1, tier 2, tier 3, and dry crop. They four formulas are similar in that they are based on land productivity, market rates, and 5-year average pricing. They differ regarding fallow and ownership adjustments.
Formulas
- Formula for irrigated crop land (tier 1 -- SLB owns land, water, and improvements): USDA 5-year commodity county average yield multiplied by USDA 5-year price of crop commodity multiplied by 25 percent landowner share = cash rent equivalent
- Rate = cash rent equivalent
- Example using Bent County yields and corn: 120x$3.80x25% = $114/acre
- Formula for irrigated crop land (tier 2 -- SLB owns land and water; SLB does not own improvements): USDA 5-year commodity county average yield multiplied by USDA 5-year price of crop commodity multiplied by 25 percent landowner share minus $40 for adjustments for improvements = cash rent equivalent
- Rate = cash rent equivalent
- Example using Bent County yields and corn: 120x$3.80x25% - $40 = $74/acre
- Formula for irrigated crop land (tier 3 -- SLB owns land; SLB does not own water or improvements): USDA 5-year commodity county average yield multiplied by USDA 5-year price of crop commodity multiplied by 12.5 percent landowner share = cash rent equivalent
- Rate = cash rent equivalent
- Example using Bent County yields and corn: 120x$3.80x12.5% = $57/acre
- Formula for dry crop land: USDA 5-year commodity county average yield multiplied by USDA 5-year price of crop commodity = gross multiplied by 25 percent landowner share multiplied by 50 percent for biannual fallow assumption = cash rent equivalent
- Rate = cash rent equivalent
- Example using Bent County yields and corn: 18x$4.79 = $86.22 x 25% x 50% = $10.78/acre