How do I value standing crops when buying farmland?

Question

Turnrow Capital · Accepted Answer

Standing crops are valued as expected gross revenue minus remaining costs to harvest and haul, discounted for yield and price risk — then handled in the contract as either included, excluded, or prorated. The default rule in most states: unharvested crops pass with the land unless the contract says otherwise.

The arithmetic: projected yield times forward price, minus remaining inputs, harvest, drying, and hauling costs, minus a risk discount that grows the further you are from harvest. A corn crop in August is worth far more per acre than the same field in May, because most of the risk and cost is behind it.

Contract language decides who owns what. Common structures: seller retains the growing crop with a right to harvest; buyer takes the crop and credits the seller for inputs already spent; or the closing simply waits until after harvest. If a cash-rent tenant planted the crop, it is the tenant's — the sale transfers the lease, not the crop.

Say it in writing regardless of custom. "Crops" disputes are among the most common closing fights on farm sales, and they are entirely preventable with one paragraph.