Last minute farm land rental adjustments

Farm producers are past the point in time when farm land rental arrangements need to be in place.

In general, 2014 farm land rents have trended lower than 2013 for farms that have been at the higher cash rental values. This downturn in rental values has sent some landowners out shopping to find a renter that will commit to higher land rental payments. Some landowners have procrastinated in getting land rental agreements in place with farm producers unable to offer the values tied to higher commodity prices. As a Michigan State University Extension district farm management educator, I am still seeing some of the lower farm land rental rates climbing higher as they have not been keeping pace with the rapid changes over the past few years. A summary report of USDA – Farm Service Agency survey of farm operators shows some of the change in farmland rental rates that has been taking place the past few years Additional resources related to farmland rental issues on the FIRM Web page or you can find links to extension educators that may be able to provide assistance.

Consider how the landowner and renter or tenant can share some of the economic and production risks that are part of the production of crops. Many farm producers are asking landowners to consider rental arrangements that allow for a fixed base rental rate that may be lower side of the range. With a base rate established the landowner will receive in addition to the base rent a potential bonus rental payment in years when the economic returns are above average. This type of rental arrangement has worked very well for landowners over the past several years when commodity prices were high and yields have been good here in the Thumb of Michigan.

After spring planting starts, landowners who have put in place their 2014 farmland rental agreements should expect to see discounts in values being offered as farm producers are being faced with planting delays and may not be able to take on more acres at this time.

Related Articles