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A good land relationship
With land values and corresponding farm lease rates getting a lot of attention these days, there's a lot of talk about the importance good, solid landowner/tenant relationships. But, what goes into that kind of relationship? Here are a few pointers.
Keep communication open. This one's fairly obvious, but about everything important to a successful land rental deal is built on communication. This should include not just the nuts and bolts of the business arrangement, but more importantly, how both parties feel about their deal, say specialists and Agriculture.com Farm Business Talk members and contributors.
Outline goals and objectives clearly. Why do you want to make a lease or rental arrangement? "Inform your landlords of the objectives for your farming operation," says Ohio State University ag economist Bernie Erven. "Particularly when goals change, dialogue among the parties may foster a continued relationship, though the lease type or terms may evolve."
Be specific. If you have a specific goal in mind, lay it on the table. "Poor communication in this regard is a common reason for tenant termination," Erven says. Adds Farm Business Talk senior contributor Red Steele: "When we renew rents, I do a spreadsheet that takes their individual farm and shows what the yields have been, and what makes a rent that will return me a modest profit based on price projections."
Outline attitudes toward risk & change. The tenant and landlord getting on the same page when it more emotional parts of the deal -- like risk tolerance -- is just as important. "A crop-share landlord may no longer wish to share in production and price risk. If she and her tenant have not communicated over time, assumptions may be made that result in the lease being awarded to another farmer," Erven says.
Give options for lease terms. You may have been renting a piece of ground for a long time under the same terms. But, if for example you've been cash-renting, crop-share or flexible cash-rent may be a better deal for your landowner. It's a good idea to offer, says Farm Business Talk senior contributor Red Steele. "I always give them the option to switch from cash to share, and make more money by taking on more risk," he says.
Document & share. Keep track of any work you do to the land or plans you have for its management. Make sure the landowner is aware of and comfortable with what you're doing. "You should provide information regarding agriculture and farming," Erven says. For example, Farm Business Talk senior contributor Kay/NC says she provides landlords all manure management plans if they agree on the practice.
Keep making improvements. Get the landowner to sign off on any changes first, but devote energy to improve the land as much as you can. "Producers should strive to improve the appearance of fields, driveways, roadways, and accompanying buildings. Landlords and neighbors who are potential landlords often correlate the appearance of the farm with farmers’ abilities as tenants," he says.
Keep up yield records & profit potential numbers. This includes the cost side of the equation, Erven says. "Alerting the landlord to anticipated changes in costs can prevent irritation when the bill arrives," he says. Adds Farm Business Talk senior contributor Red Steele: "I do a spreadsheet that shows what the yields have been, and what makes a rent that will return me a modest profit based on price projections."
Farmers, specialist offer tips to keep a good relationship with your farm landowner.