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9 Things Every Landowner Must Do Before Renting Land
It’s almost time for farmers and landlords to begin negotiating their leases for the 2020 growing season. With 40% of U.S. farmland rented, this market is worth $32 billion.
As you begin to consider the next growing season, you have the opportunity to make adjustments and gain new insight into the health of your land. To help you make the most of this time leading up to farmland lease termination dates, here are nine things you need to address ahead of the 2020 growing season:
1. Determine Your Lease Termination Date
Start thinking about your plans at least 30 to 60 days before the lease termination date in your state.
This may sound early, but it’s a good idea to give yourself a month or two of lead time to evaluate the rent you’re getting and what fair market value for 2020 will be. It’s also ample time to provide a termination notice if you want to make any changes.
2. Check Your Land’s Fair Market Rental Value
When you set up your lease for 2020, set the determined value of that lease based on the potential for its crops in the year ahead. If bad weather or bad luck struck your land this year, don’t let that undercut your assessment of your land’s potential yield in 2020.
As long as your land’s fertility has been maintained, there’s no reason not to look at your land’s value in a positive light: it has as much potential this year as it did last year.
3. Make Sure You Have a Written Lease Agreement
There’s no excuse for dealing only in handshakes in 2019. Protect yourself and your family by having a formal lease.
4. Look at the Document You Signed Last Year
Where all conditions met? en it comes to data delivery, be specific. Make sure you’re requiring the correct reporting and getting the numbers as promised. This will help you ensure your land is being taken care of.
Your farmer should provide a record of their annual production as well as records of fertilization. This information will improve your land’s cash rent value and help establish a strong history that you can present to potential buyers should you choose to put your land on the market in the future. Reinforce the quality of the farmland by confirming you have the data you need on hand.
5. Set Data Delivery Dates
If you don’t have them already, add a rider to your lease requiring the delivery of data by specific dates. Make this a standard part of your annual cycle. It’s not uncommon to ask for yield data by December 15 and fertilizer data by August 1, although this may vary somewhat.
If you have a strong relationship with your farmer, it may benefit both parties to add a rider to the lease that stipulates that as long as the farmer provides you with the yield information and fertility data within a certain time period after harvest, they’ll have an option to renew their lease.
6. Check on Tillage Practices
What does your lease say about tillage practices? It’s in everyone’s best interest that this be included in the lease.
Landlords who haven’t looked into this already should find out whether their farmer is tilling up the soil. Make sure you know whether they’re doing this multiple times, and whether or not this practice aligns with the language in the lease.
7. Confirm Your Farmer’s Crop Insurance
This is one of the most straightforward items on the list: verify that your farmer’s crop insurance satisfies the requirements of your lease.
8. Seek Out an Expert
If you need assistance reviewing or renewing your lease, make time to contact a professional who can explain what you should include in the language to ensure it preserves the integrity of the value of your land.
9. Build a Better Relationship with Your Farmer in 2020
The new growing season may still feel far away, but now is the time to seize the opportunity to strengthen your relationship with your farmer. Show them you care about your land and its health in the long term, and you’ll find yourself well-positioned to support their sustainable practices.
Corbett Kull is the cofounder of Tillable, which helps landowners optimize returns and helps farmers access land to expand operations.