Make the most of your farmland rental agreements
These tools may help you get the job done when discussing land-rental agreements.
Land-rent negotiations are underway for farmland rental agreements and time is running short. Some farm operators can use some tips and tools in working with landowners to put in place the final details for the 2010 crop production rental arrangements. If you rent, or plan to rent, land, you may want do download a checklist of items to consider when working with landowners.
Communication failure is one of the most common reasons for a renter and landowner negotiation to break down. As a renter, your listening skills are the most important part of communicating with your landowner. Make sure you hear what the landowner is saying and what concerns that they have expressed. If you respond to their concerns first, you help them to focus on your comments and concerns rather than trying to figure out how to repeat or rephrase their concerns again. If you cannot completely cover their concerns, offer to respond later with more information. One of the best tools to use is to rephrase back to the landowner what you hear them telling you. Now that the landowner can focus on your information and concerns, help them understand what they need to know about the rental agreement you are offering (or could offer). Again, take it slow and use follow-up questions to ensure that you get your points across. Consider repeating the process if you feel things are still not clear.
Economics of production are important, and in many cases may be something that renters will want to share with their landowners. It can help put some realities back into the discussion. December 2011 corn prices are not the $7 to $10 range that are being discussed at the coffee shop. Rather, the real farm price is about $5.50. Inputs costs increases have added $50 to $100 per acre to the cost of production. Consider showing landowners a completed worksheet demonstrating the changes and restrictions costs have put on your farming operation’s profit potential.
Many farms have been working toward some form of flexible rental agreement or made adjustments to fixed payment agreements to compensate the landowner if the crop yield and prices warrant land-rent payments above the set amount. In other cases, farms have used up-front cash payments and bonus payments at year’s end to reward the landowner if they agree to a more favorable rental arrangement for this year’s production cycle. See the rental agreements on my website for some examples.
For more information, contact Dennis Stein.