lease questions

[PerryFamily]

I was approached by a landowner about leasing an existing sugar bush. The bush is approx 1200 taps , has power available for vac pump, needs all new tubing but is very close (-1mile) to my sugar house.
I am walking the piece this morning. The landowner would like syrup in Lew of money.
The syrup is for his commercial interests not just pancakes.
Question:
What would be a proper amount of syrup? ( he mentioned 20%)
Just want to have peoples ideas.
Thanks

[SWEETER CREATIONS]

A few questions
1. are you replacing the tubing ?
2. are you paying for the electricity to run the pump ?
3. is he delivering the sap to the sugar house ?

[SWEETER CREATIONS]

I asked these questions as i currently pay $ 1.00 per tap on our leases. At that rate $1200.00 is about 40 gallon of syrup. I think 20 % is a little high if you are the one doing all the previous questions I asked earlier. Mike

[Sunday Rock Maple]

Assuming you are replacing the tubing (which is fine -- you just need a long term lease) and you put high vacuum in you should be able to get 0.4 to 0.5 gallons of syrup per tap. To make the math easy and to be conservative, assume you only get 363 gallons of syrup. That's $10,000 worth at $2.50 per pound or $8,000 gross for you minus your fuel cost per gallon and time. In a similar situation, I think I'd do it.

[PerryFamily]

Thanks
Yes I would be replacing the tubing
Yes I would pay for the electricity
Definitely I would need a long term lease
I believe I will have to pickup but not positive on that.

Headed there to walk it now.

[PerryFamily]

Walked the bush for 2.5 hrs. I would say pretty easily 1200 taps. With a ladder and some creativity closer to 1400. Power is on site although disconnected and only 30 amp service so there could be some cost there. There is also 2 dairy pumps on site. A surge and another I am not sure of the make. Also a 1100 poly and a 250 stainless bulk tank there too.

As far as tubing it it a gut job, new wire, pipe and tubing.

We tentatively agreed on 20% of the crop and 10 yr lease not sure how to handle the equipment other than to buy outright.

This is a good deal I think.

[Sunday Rock Maple]

Congratulations!

[n8hutch]

I can see where some people would think that 20% is a lot, but in some ways if you have a bad season and only get 150 gallons of syrup at least you wouldn't have paid 1200.00-1500.00$$ or more to lease the taps for the season.

[PerryFamily]

9749975097499750

Here is the pump that is there, any ideas on specs and info?

I too thought that 20% was kinda high at first but it will fluctuate with production.

[maple flats]

With a % rate, be sure to keep all production separated so you know. For that reason, I prefer a per tap rate, but do what you must.

[Tinbucket]

So what would be better paying a dollar per tap or giving the 20% of your syrup I have a similar situation and trying to figure out what to do also I want to lease it for 10 years is that something I should get in writing


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[PerryFamily]

Absolutely have a written lease.
Mine is only verbal at this point until all the specifics are ironed out.
It a lot of money to shell out with no formal agreement.

[wiam]

Seems like so much per tap is simpler

[lew]

A certain amount per tap also protects the land owner from a nonproductive sugarmaker, as well as gives the sugarmaker more profit for more effort and expenditures.

[PerryFamily]

Thinking about doing the repayment of syrup in stages
10% yr 1
15% yr 3
20 % yr 5 maxed at 20%.

Other things I have considered about this deal:
Less than 1 mile from the sugar house
Power is @ the old sugar house
1100 poly tank on site
250 bulk tank on site
Lapierre double vertical on site ( needs rebuild)
2 dairy pumps on site ( 1 surge not sure of the other)
Most of the bush is accessible by vehicle

I also think from walking the area the tap count could grow significantly as there were tons of trees that have never seen a tap.

Trying to make a educated decision and appreciate all the input.

[halfast tapper]

The state of Vermont has a formula for leasing per tap. A friend of mine leases 7000 taps on state land. They take the going rate for bulk syrup per pound for fancy and for commercial, they average the two into a price per pound , then they take 25 percent of that price and that is the tap rate for that year. He has been very happy with it. As syrup price goes up so does tap price , same if price of syrup goes down, so does tap price. It is very fair to producer and owner of land. As we all know it is hard to come by a good orchard now a days, so I think a consistant price every year will keep the landowner happy. If you have a bad couple of years the landowner doesn't take a big hit either and start thinking this isn't worth it. Yes the sugarmaker will have to still spend the money for taps even on a bad year , but that is the price of doing business.

[Sunday Rock Maple]

I agree that keeping the land owner happy can not be overstated. We've all heard horror stories of what can go wrong.....