The grant should be reported on Schedule E as farm rental income on Form 1099-MISC. You can enter this under Rental Income topic for this schedule. Farm rental income is not reported on Schedule F.
It's best to report only the expenses you actually paid during the year covered by the tax return. This is required by the cash-basis method.
However, if you have reported on an accrual basis in the past, you may continue to do so. Under this method, you would have a prepaid rent balance until the two years are over.
Note that if you have reported on a cash basis in the past (most common), you would need to file IRS Form 3115, Application for Change in Accounting Method.
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