An economic analysis of leasing efficiency in a major rice producing area of Texas

Abstract

The objective of the study was to investigate various types of crop share leasing arrangements for leasing efficiency in the rice-producing are of the Texas Gulf Coast. The typical leasing arrangements considered were: 'fifty-fifty', 'one-third-two-third', 'one-eighth', and 'one-tenth-nine-tenth'. An attempt also was made to see whether the leases were 'equitable' according to a commonly used criterion. The efficiency of various leases was investigated by comparing optimum plans of the tenant, landlord and the owner-operator. An efficient lease has been recognized as one under which the same farm plan is optimum for both the tenant and the landlord and for the owner-operator. Linear programming was used to determine the most profitable plans of the tenant-operator, the landlord and the owner-operator. Various operating capital restrictions also were imposed to see the effect of the leases on efficiency. The 'fifty-fifty' crop share lease showed a wide divergence between the optimum plans of the tenant and the landlord. With unlimited capital assumption, the landlord's optimum plan became perfectly consistent with the owner-operator. However, the optimum plan of the tenant-operator differed with respect to rotation programs and number of cattle raised. The tenant found it is more profitable to raise more cattle and pay a rent of $1.50 for the pasture land..