How do you price a lease?

[NTBugtraq]

Do you do it per tap, per tree, per gallon of sap? And of course, how much, 5%?

Cheers,
Russ

[TheMapleMoose]

I lease a small grove (550 taps) and I'm paying the landowner .50 per tap. Nice big trees, convenient location, and very accommodating landowner make .50 ok for me. A larger producer was here this spring (18k taps) and he is on leased land and pays .32

[NTBugtraq]

Is that an annual payment?

Cheers,
Russ

[maple flats]

I pay almost $.80/tap annually. I have inflation figured in, When these 2 leases were written, I gave $.75/tap and then each year it increases (or falls?) based on the rate of inflation (or deflation) that Social Security declares each year. To each, I pay in syrup as much as they want, at my gallon rate regardless of what sizes they want, then the balance is paid in a check. Both are 10 yr. written leases.

[NTBugtraq]

Well, not to put too fine a point on it, but I'm using trees that are beside my property. The land has never been developed, there's no road access to it, and while owned, it is north of a swamp that stop their farming from coming into the piece I tap. I'm not out to give someone money for nothing, as I don't feel I am doing anything to their bush (beyond cheapening the first 6' if they felled it for timber), but I wanted to get a feel for what I might be up against should they make a demand. Sounds way more reasonable than trying to purchase the land (something I was considering).

Today I got offered 20 acres to tap nearby. Not close enough that I could run it to my storage, but not far enough to make it a huge effort (once I buy the right equipment to transfer from a local storage tank to something I take there).

I'm curious, the figures you both have given make it sound incredibly cheap to lease taps...and I kinda get the feeling the money the property owners get might cover their local property tax, but not much more...do they balk at all about the lines and wires? Or are you leasing land that's practically unused?

Cheers,
Russ

[TheMapleMoose]

Short of going in and cutting it all down for fire wood I suppose it is unused. Definately unfarmable, which is what they are in the business of. In my case the lease payment is more of a formality, as 300$ a year would barely cover the taxes, and is seemingly change to a million dollar farming operation. I think it's more of a hobby/interest to them to have someone tapping on them. Kind of a way for them to be "involved" without actualy having to hang any pipe, and make any syrup. I do give them some syrup and candy in addition to my payment. As far as balking about the tubing; they told us to treat it like our own woods.....so that's what we did, although going light on the thinning because it's not our land after all.
That is my situation, and I'm sure very different from Flats'

[heus]

I don't lease taps but if I did I would be willing to pay $1 per tap.

[maple flats]

Another thing I do for the lease, is that I help the landowner get an Ag Assessment, based on my farm income. Once in place the landowner gets far more reduction in taxes and what my lease payment is. On my larger bush, he told me his property taxes dropped to about 1/3 what they were without the Ag Assessment. This of course may only be true in NY, the land of high taxes, the spend and tax state.

[heus]

Dave that's a great point.

[Big_Eddy]

... as I don't feel I am doing anything to their bush (beyond cheapening the first 6' if they felled it for timber),....
Russ

Depends on the neighbors plans for the trees. Tapping can significantly change the value of an individual tree. If the butt log is suitable for veneer, you could get $3-4K for a prime butt log. Once it's tapped, no veneer plant I know of will accept it. The veneer plants only want the butt logs.

Offering some syrup in exchange for the privilege of tapping a neighbour's trees seems like a cost effective way to maintain good relations. As mentioned above, many folks would rather see their woods tapped - and a little syrup at the end of the season just sweetens the deal.

[wiam]

Depends on the neighbors plans for the trees. Tapping can significantly change the value of an individual tree. If the butt log is suitable for veneer, you could get $3-4K for a prime butt log. Once it's tapped, no veneer plant I know of will accept it. The veneer plants only want the butt logs.

I agree that veneer is worth way more, But there are very few trees in any woods that will go as veneer.

[Cabin]

Another thing I do for the lease, is that I help the landowner get an Ag Assessment, based on my farm income. Once in place the landowner gets far more reduction in taxes and what my lease payment is. On my larger bush, he told me his property taxes dropped to about 1/3 what they were without the Ag Assessment. This of course may only be true in NY, the land of high taxes, the spend and tax state.

In PA it is Act 319. We pay less on our 22 acres of farm land than we pay on a 3 acre home site. Not counting the houses on both.

[Scribner's Mountain Maple]

The price you pay per tap is pretty insignificant. So long as your not going above $2 per tap. I gladly pay $1 to lease land that is above my sugarhouse.

It is also relevant when considering price per tap to keep location and trucking in mind.
- If the sap runs into your sugarhouse without pumps. (i.e. the property your leasing is above your sugarhouse and is an adjoining propert) it is worth more
- If you have to truck the sap and set up remote pumping stations, that is a much bigger PITA.

I think I would pay up to $1.50 per tap if the sap ran into the sugarhouse. And on the flip side, I wouldn't pay more than .75 for anything I have to haul.

Once the lines are set up, vac is in place, the cost of the lease will be a pretty insignificant annual expense. (for 500 taps you can make 150 gal of syrup, at bulk price or $30 per gal, that's $4500. Pay the landowner $1 per tap, that still leaves you $4k profit annually once the equipment is paid off.

Get a long term lease. 5-7 yr min, 10 yr ideally. Record it with the town in case the land is sold.

The Proctor Research website has a sample contract that is a really good starting point to set up a lease.

Good luck,
Ben