Farm Leases and Big Data: Issues That Cannot Be Settled By a Handshake Deal
Updated: Jul 9, 2020
This post should not be considered legal advice.
Before we get started on the topic, I have to issue a nerd alert because I find most of the issues related to data gathered from precision ag, yield monitors, etc. to be utterly cool and dealing with the ownership issues of the data even cooler. With that said, on with this post.
Earlier, Ashley Newhall posted an overview of legal issues associated with farm data ownership which may have gotten you thinking about these issues. Recently reading Todd Janzen’s ag law blog got me thinking about data ownership and farmland leases. Todd has written a good series on this issue and you would be wise to check it out.
Farm data is valuable information. This data includes yield data, the amount of inputs utilized, soil mapping, nutrient levels, etc. The form this data could take is currently endless. This information has value to both landlords and tenants; tenants because the data will help make better management decisions in inputs to use and apply, landlords because this data is useful to pass on to future tenants to demonstrate the history of the rental land. Both parties will see value in the information when it comes time to renegotiate rental rates. Landlords and tenants will both have an idea of what the farm is producing and the level of inputs required. This data gives both parties a good idea of what the farm is capable of producing.
Todd’s posts give you a good sense of three clauses which should be included in a written farmland lease. Those clauses include:
Define what the data is;
Layout early on who owns this data; and
Specify how data is shared or not shared among landlord and tenant and that data is transferred to the landlord at the end of the lease.
Take a moment to consider these potential clauses for your lease and how they will affect you. You will potentially want data defined broadly to include all forms of data collected on the farm, as Todd suggests.
Ownership is also going to be important because this really is a developing area of the law. We currently have limited court decisions and limited laws directly on point with who owns data generated in these situations. Laying out in the lease who specifically has ownership right to this data will take away a lot of the existing uncertainty in the law.
I agree with Todd that the lease needs to contain language giving the landlord ownership of the data at the end of the lease. This data will be valuable to the next tenant, and the data history will potentially have value in rent negotiations. I could see a day in the future when landlords without access to this data could be forced to take lower rental rates than those with access. Another potential inclusion here would be language requiring the tenant to keep this data confidential.
Whether you like it or not, agriculture is changing and the data generated on farmland is becoming more valuable. Farmland leases may be handshake deals in many cases but as the industry grows more complex, handshake deals may become less and less common. As a landlord or a tenant, you need to consider how to clarify data ownership in your existing farm leases, especially since renegotiation periods are almost upon us.
For additional info on agricultural leasing, see the University of Maryland Extension’s Grain Marketing – Agricultural Leasing page.