How do you add value outside of the cash rent?
The big phrase of the day is “value added.” As you look at many products and services today, the use of the words value added are very common to help communicate the benefits above and beyond what is being sold. We live in a value added world because the competition drives industry to always offer more than their competitors. In this type of environment, the customer is the big winner. But what does that look like in farming?
How can you add value to the rental agreement without paying more for cash rent? There are several ways to bring value to land. Improving air and water management, improving soil quality, and clearing fence rows are just a few to help bring value.
Improving air and water can add value beyond cash rent.
Why is air and water management so important? Air and water are by far the most important factors that impact yield. Many of you may be thinking, what about fertility? The way each soil type manages air and water has huge impact on fertility. Just adding oxygen to the soil can cause phosphorus and potassium to elevate to a nutrient status. The oxygen in turn feeds the biological systems and allows them to release nutrients to the crop. Adding tile to the field followed by the use of high calcium lime to manage pH and then gypsum to reduce surface sealing will help manage the flow of air and water into the soil. This management can bring long-term value to the soil that you are renting. This value is much more than just the cash rent you are paying.
Improving soil quality pays much beyond cash rent.
Improving soil quality is the next step to add value to farm land leases. We have already mentioned the role that managing air and water can play on soil quality, but what about fertility? When I say fertility, I am not just talking about a soil test. Fertility is defined as the soil’s ability to produce yield. There are many factors that contribute to yield other than P&K levels. Anytime a plant is growing in the soil, it captures the sun’s energy and deposits a portion of that energy below ground. These sugars feed the biological system and these systems elevate the minerals in the soil to a nutrient the plant can use. Cover crops are a great way to keep this process going throughout the year. Other tools, like compost, manure, or litter can also be valuable to help add nutrients as well as promote biological activity.
Cleaning tree lines help production
The final value-added item would be to just manage the trees and fencerows around the fields. A few weeks back I was talking with a landowner who was concerned that his tenant hadn’t cleared any brush around the fields for several years. The trees were encroaching on the usable ground and the current tenant was farming less of the land than they were five years ago. This is a common problem and when you see it every day, you don’t think anything of it. To the landowner who visits the farm every six months or so, it can be very noticeable. Especially in a 50/50 situation, the landowner is very concerned when the tree line is robbing yield and you, the farmer, should be too.
Unlike many other industries, these value-added management practices have a very long-term impact on the land where it is used. Also in many fields, the customer is the big winner and the business eats the expense. But in this case there is a big win for both the farmer and the landowner. Productivity is impacted for many years to come. Who wins in that situation? We all do!