Renting your land sustainably

Introduction

Farmland rental is widespread and growing. Approximately 60% of Ontario's farmland is owned by people who work on the farm^{footnote 1[1]} and 40% is owned by non-users. Non-farming landowners can benefit from the opportunity to influence the land management practices of their tenants by encouraging the sustainable management of their land.

Forages (e.g., hay, pasture, alfalfa, clover, grasses) and grazed livestock (particularly cattle and sheep) produce agricultural and environmental benefits valuable to landowners, such as improved soil health. However, these benefits require longer timelines (rotations) than year-to-year decision making allows and as a result are more difficult to implement on rented lands.

Part One of this factsheet outlines advantages to landowners of encouraging the production of forages and grazing livestock on their land.

Part Two of this factsheet outlines the advantages to landowners of signing long-term (10 years or longer) written leases that include specific land-management clauses, with farmers committed to producing forages and grazing livestock on rented land.

Part one: benefits of encouraging the production of forages and grazing livestock on your land

Declining forage production

Ontario has experienced widespread conversion of forages to grain and oilseed production. The total area of Canadian crop and pasture land used for the production of soybeans, wheat and corn increased from 28% in 1976 to 57% in 2011. This resulted in a rapidly shrinking area of land for forage production, as shown in Figure 11^{footnote 1[1]footnote 2[2]footnote 3[3]}. Between 2006 and 2011, Ontario lost 288,946 hectares (714,000 acres) of forage crops associated with livestock^{footnote 1[1]}.

Agro-ecological impacts of continuous row crop production

The growing of fewer forage crops in favour of continuous grain and oilseed production (three or fewer crops in rotation) exposes farmland to degradation such as soil erosion and nutrient runoff. This can make farmland less valuable for agricultural production and future rental^{footnote 4[4]footnote 5[5]}.

A large proportion of Ontario's grains and oilseed harvest is used for livestock feed. Having livestock and crop production occur at different locations can result in nutrient depletion of soil in croplands and a concentration of nutrients at locations of livestock production^{footnote 6[6]}. The contrast in nutrient flows between integrated and separated livestock, feed and forage production systems is shown in Figure 2.

Benefits of producing forages and grazed livestock

Soil nutrient improvements

Landowners that allow livestock grazing on their rented land can benefit in a number of ways. Forage-based livestock production improves soil quality by creating cyclical nutrient flows as shown in Figure 2. Additional improvements to soil quality include nitrogen fixation by legume forages, year-long soil cover that reduces nutrient leaching and accommodates mineralization and enhanced microbial diversity from livestock manure^{footnote 6[6]footnote 7[7]footnote 8[8]footnote 9[9]footnote 10[10]}. These improvements can reduce dependence on fertilizers and herbicides.

Another advantage is that forage residues typically increase soil organic matter (SOM) and available nitrogen^{footnote 10[10]}. Similarly, the manure deposited by grazing livestock can also improve SOM levels. A study by Sarah Rotz^{footnote 11[11]} found that SOM levels increased to 4.4% when livestock were present compared to 3.3% when livestock were absent. SOM improves the resilience of soil during drought, as well as increasing the availability of nutrients, and improving general plant health and performance. Encouraging land management practices that increase levels of SOM will benefit landowners by improved soil quality.

Reduced erosion and improved drainage

As shown in Figure 3, forages provide year-round soil cover which enhances water infiltration while reducing erosion and nutrient leaching. Yungblut^{footnote 10[10]} reported that including 2 years of hay in a 4 year crop rotation decreased erosion rates by 60%-70%. Similar conclusions have been drawn by Fraser^{footnote 12[12]} and Clark^{footnote 6[6]}. Another benefit is that forage roots improve the porosity of soils, which increases infiltration, drainage and resilience of soils during droughts, while also reducing soil compaction^{footnote 10[10]footnote 12[12]}.

From left:

• Conventionally-tilled field in a corn-soybean rotation: negligible infiltration and clearly showing runoff and soil erosion.
• Perennial forages: very high infiltration, and no runoff or erosion.
• Field with 30% residue cover: increased infiltration and less runoff.
• Conventionally-tilled field in a corn-soybean rotation: negligible infiltration and clearly showing runoff and soil erosion.
• Long-term no-till field: high level of infiltration which greatly reduces runoff and soil erosion.

The value of farmland for cultural heritage and biodiversity

Integrated forage and livestock production can help maintain characteristics of the rural landscape and a region's cultural heritage. This supports farmland's value for recreational and tourism purposes^{footnote 13[13]}. Forage-based livestock is an attractive and culturally significant feature in Ontario's countryside and can provide additional on-farm revenue through agri-tourism.

Producing forages and grazed livestock increases local biodiversity by providing habitat for small mammals, grassland birds and pollinators, including some species-at-risk^{footnote 10[10]footnote 14[14]}. Pastures are important nectar sources for pollinators; a study in Saskatchewan found that pollinators supported by forages are worth up to $23/hectare^{footnote 10[10]footnote 14[14]}. Well-maintained pastures can provide wildlife with areas for nests, shelter and migration stops^{footnote 14[14]}.

Weed control

Livestock grazing on forages can effectively control weeds by removing undesirable species and reducing weed seeds^{footnote 6[6]footnote 10[10]}. Forages require very little herbicide application, which can reduce local prevalence of herbicide resistance.

Part two: creating a lease agreement to encourage the production of forages and grazing of livestock on your land

Signing long-term leases with producers of forages and grazed livestock will support the sustainable management of your farmland. The benefits may justify reduced rental rates or long-term contracts with producers implementing complex crop rotations and grazing livestock. Carefully structured leases can ensure that rented farmland is well-managed, retains its environmental integrity and returns to landowners with added value.

Typical impacts of farmland rental

As there are few incentives for farmers to invest in the long-term health of rented land, it tends to undergo fewer practices to increase soil health, which can reduce soil fertility and increase soil erosion^{footnote 1[1]footnote 5[5]footnote 11[11]footnote 15[15]}. The possible causes of this trend may include the use of short-term rental agreements, absence of written leases, rising rental rates and competition in the rental market^{footnote 11[11]}.

Short-term agreements and high rental rates increase pressure to maximize revenue by continuously producing corn, soybeans and wheat (without rotations of hay), and to produce on unsuitable land (e.g., sloping or eroded land). Cyclically high prices for grains and oilseeds, and rising rates for rented farmland can make it difficult for farmers to economically justify producing forages on rented land^{footnote 10[10]} at several points in the commodity price cycle. These practices can lead to a decline in soil health^{footnote 11[11]footnote 12[12]footnote 16[16]}.

Long-term leases

Landowners can benefit from specific, written leases that ensure livestock graze on forages on rented farmland^{13footnote 16[16]}. Landowners can make a long-term investment in their land by renting to farmers who will produce forages and graze livestock.

To ensure good management, leases should:

• ensure long-term rental (10 years or longer)
• be formally written (rather than a verbal agreement)
• stipulate that farmers will produce forages and/or graze livestock

Land and soil stewardship are long-term investments and long-term leases create incentives for renting farmers to invest in the agro-ecological health of farmland^{footnote 11[11]}. Few renting farmers - particularly those with verbal and short-term rental agreements - can be confident that they will enjoy long-term benefits if they invest in soil health^{footnote 11[11]}. Similarly, grazing livestock comes with substantial up-front investments (e.g., installing fencing, housing, water pumps, etc.) that can take up to a decade to depreciate. Therefore, renting farmers need to be supported through long-term leases and potentially lower rental rates that reflect their investments in land quality improvement, and allow them to produce forages and graze livestock. More information on writing lease agreements can be found on the Ontario Ministry of Agriculture, Food and Rural Affairs website.

More thorough leases

Although it is common practice to rent farmland through handshakes and verbal agreements, formally-written leases are not a sign of distrust, but rather demonstrate accountability and responsible management.

In addition to being long-term, lease agreements could stipulate that renters produce forages, use complex rotations and graze livestock. Additionally, leases can include the following components to encourage good management:

• Reward farmers for establishing pasturelands through discounted rental rates^{footnote 12[12]}. Alternatively, increasing rental rates in relation to local markets as indicators of good management have been met (e.g., increased levels of SOM) over the time of the lease.
• Make direct reference to preferred management practices, for example; "tenant agrees to comply with OMAFRA's Best Management Practices (BMP) publication series" and refer to recommended pasture rotations and fence maintenance.
• Leases could stipulate that renting farmers will host landowners for an annual on-farm meeting to demonstrate improvements to farmland health. Collaboration between farmers and landowners can help ensure successful, long-term rentals.

Conclusion

Structured, long-term farmland leases that encourage the production of forages and grazed livestock can benefit landowners by improving the long-term ecological health and value of farmland. While many of the benefits of forages and grazed livestock are difficult to quantify, innovative long-term leases can set rental rates that consider improvements to the long-term ecological health, productivity, beauty and capital value of rented farmland.

Additional resources:

For further reading on structuring effective leases and determining fair prices for your rental land, OMAFRA has several relevant factsheets and publications available on our website, including:

• Factsheet Lease Agreements - Pasture Leases , 2013.
• Factsheet Lease Agreements - Land Leases , 2016.
• Best Management Practices series:
  • BMP20E: Managing Crop Nutrients, 2008.
  • BMP14E: Nutrient Management Planning, 2006.

Works cited

Bayer, Wolfgang, and Ann Waters-Bayer. Crop-Livestock Interactions for Sustainable Agriculture. Gatekeeper Series No. 13. International Institute for Environment and Development: Sustainable Agriculture and Rural Livelihoods Programme. 1989.

Bernt Solymár. A Stewardship Guide to Grasslands in Southern Ontario: An Introduction for Farmers and Rural Landowners. Rep. N.p.: Ontario Barn Owl Recovery Project. 2005.

Bowman, Bruce, Tom Bruulsema, Chris Attema, Dave Armitage, Christine Brown, Christoph Kessel, Keith Reid, HJ Smith, Donna Speranzini, Ted Taylor, Anne Verhallen, Christoph Wand, and Marinus Marsh. Best Management Practices 20 - Managing Crop Nutrients. Rep.: Ontario Federation of Agriculture, Ontario Ministry of Agriculture, Food and Rural Affairs. 2008.

Brown, Christine, Robert Chambers, Steve Clark, Harold Cuthbertson, Jake DeBruyn, Hugh Fraser, Don Hillborn, Harold House, John Johnson, Kevin McKague, Keith Reid, Jack Rodenburg, Bob Stone, Ted Taylor, Christoph Wand, and Daniel Ward. Best Management Practices 16 - Manure Management. Rep.: Ontario Ministry of Agriculture, Food and Rural Affairs. 2005.

Cannella, Mark, and Ben Waterman. Vermont New Farmer Project. Rep. University of Vermont. July 2014.

Clark, E. Ann. " Benefits of Re-Integrating Livestock and Forages in Crop Production Systems ," Journal of Crop Improvement 12.1-2 (2004): 405-36.

Douglas Yungblut. "The Value of Forages in a High Commodity Price Environment", Rep. N.p.: Ontario Forage Council. 2012.

Fraser, Evan D.G. " Land Tenure and Agricultural Management: Soil Conservation on Rented and Owned Fields in Southwest British Columbia ," Agriculture and Human Values 21.1 (2004): 73-79.

Ian McDonald. " Exploring Trends in Farmland Ownership and Rental ," Crop Talk N.p., 1 June 2013.

Jamieson, Andrew, Keith Reid, Donna Speranzini, Tom Bruulsema, Fred Dobbs, Shannon Stephens, Phil Davies, Christine Brown, Christoph Kessel, Kevin McHague, HJ Smith, Ted Taylor, Jennifer Winter, and Ivan O'Halloran. Best Management Practices for Phosphorus. Rep. Agriculture and Agri-Food Canada, Ontario Ministry of Agriculture, Food, and Rural Affairs and the Ontario Federation of Agriculture. 2012.

JunJie Wu. " Land Use Changes: Economic, Social, and Environmental Impacts." Choices: The Magazine of Food, Farm, and Resource Issues. N.p. 2008.

McGee, Bill and Kumuduni Kulasekera. Hay: Area and Production, Ontario by County, 2003 - 2014. Raw data. Ontario Ministry of Agriculture, Food and Rural Affairs. 2016.

Odriozola, I., G. Garcia-Baquero, N. A. Laskurain and A. Aldezabal. " Livestock Grazing Modifies the Effect of Environmental Factors on Soil Temperature and Water Content in a Temperate Grassland ," Geoderma (2014): 347-54.

Robin Mearns. " When Livestock Are Good for the Environment: Benefit-sharing of Environmental Goods and Services ," World Bank/FAO Workshop: Balancing Livestock and the Environment. N.p., Sept. 1996.

Sarah Rotz. "Farmland Flexing and Land Grabbing: Connecting the Dots". Conference paper presentation to the XIV World Congress of Rural Sociology, Ryerson University. August 2016.

Sklenicka, Petr, Kristina Janeckova Molnarova, Miroslav Salek, Petra Simova, Josef Vlasak, Pavel Sekac and Vratislava Janovska. " Owner or Tenant: Who Adopts Better Soil Conservation Practices? " Land Use Policy 47 (2015): 253-61.

Statistics Canada. " Census of Agriculture." 1976-2011.

Weersink, Alfons and James Deaton. "A Current Look at Farmland Rental Rates and Arrangements." Ontario Farmer. N.p., 22 Jan. 2013.

This factsheet was written by Marion Davies, Livestock Sustainability Assistant, OMAFRA, Guelph and Christoph Wand, Livestock Sustainability Specialist, OMAFRA, Elora.