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Land rental ethics

03/20/2012 @ 3:33pm

The tremendous volatility in grain prices, input costs, and land values over the past five years has created lots of turmoil in the farmland rental market. Stress was palpable again this winter as landowners and tenants hammered out cash rental agreements.

“Problems with lease arrangements seem to be more common in the current environment,” says Kansas State University ag economist Kevin Dhuyvetter. Even long-term relationships between landowners and tenants are being strained. And there is no end in sight, except perhaps for parties who have switched from cash rent to crop share or flexible cash rent agreements.

Good communication between tenants and landowners is one key to forging harmonious rental relationships. But there is another key that is not discussed nearly as much – ethics.

As Mark Twain said, “Do the right thing. It will gratify some people and astonish the rest.”

However, the definition of ethics and “doing the right thing” varies dramatically from one person to the next. What seems black and white to one person is varying shades of gray to another. If you want evidence of that, simply go to any of the ag discussion groups online and read the threads about renting land, especially the threads about farmers competing among themselves for land to rent.

While the online debates often get heated and even hostile, the subject of land rental ethics is sometimes danced around at meetings. But for the past few years, Dhuyvetter has been tackling the topic head-on by incorporating it into his farmland rental meetings.

He and Kansas State professor emeritus Terry Kastens (now back on the family farm in western Kansas) wrote a paper on the topic five years ago based on their experiences in Kansas. “The stories and situations that led us to write the paper seem to be occurring with increasing frequency in recent years,” Dhuyvetter says.

“As economists, we have a distinct preference for working with numbers,” Kastens and Dhuyvetter wrote. “Yet, we regularly spend as much or more time assisting with the psychology, emotion, and ethics associated with land rental arrangements. Intrinsically, the field of ethics is much more subjective than objective. Yet, since we deal with this area so much, we believe that noting a few of our observations could be worthwhile to landowners and tenants.”

During his presentations on the ethics of leasing, Dhuyvetter posed questions to the attendees, usually a mix of tenants and landowners. Their electronic responses to some of these questions were flashed on a screen to stimulate discussion. You can take the quiz yourself, albeit with an old-fashioned pen or pencil, as you read this article.

Question 1: How do you view the other party in a lease?

  • A competitor
  • A partner
  • Neither a competitor nor a partner

In meetings across Kansas this winter, 84% of the respondents said they viewed the other party in a lease as a partner; 12% said neither a competitor nor a partner; and 4% said they viewed the other party as a competitor.

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