Has renegotiating rental rates been on your mind?
One item of concern that many growers are facing is how to negotiate land rental rates. This can be a very difficult discussion, especially coming off of several years of high commodity prices. But rent levels have not fallen at the same rate. I am here to say, there is no easy way to approach a landowner and share with them your thoughts on rent, but it must be done.
Here are a few things to think about when sitting down with your landlords.
The first thing to consider is to be prepared. Open and honest conversation can happen when you have the necessary information to share your point of view. So what information is needed? Being able to share your estimated cost of production and projected budget can go a long way. Many landowners don’t realize the dollars it takes to grow a crop, and being able to share that with them could help bring your rental cost into balance. I am a big believer in sharing more information with your landowner as opposed to less. This will help facilitate discussion that would not happen otherwise.
The Use of Technology
Another thing to consider is how you are using technology on the farm. I have talked with many growers over the years and have asked them, “How are you using the yield data that you are collecting?” In many cases, they are not using it as effectively as they should be. This data can be very helpful in looking at overall yield as well as yield in specific areas. Being able to visualize the data helps you to work through field issues and become better at improving field conditions and over-all profitability. This use of technology can help put you in the driver’s seat to have these conversations.
Research the Rental Market
The third consideration is to research what the rental market is doing. Many of the land-grant universities publish the estimated rental costs for each region of the state each year. Knowing this will help to negotiate your rental rates and fine tune the field that could be out of line.
What is your value beyond your rental rate?
The final, and maybe most important thing, is to determine what value you are bringing the landowner outside rental rates. In order to determine the value for what is important to them, it takes time and multiple conversations to understand your landowners better. There is no easy approach to this, but it can be some of the more important time you spend. Just remember that this relationship with the landowner is just that, a relationship. When you know the person and what they value, you can do a better job working with them. The goal should be a win-win for both you and your landowners.
I would like to know your thoughts. How you are working with your landowners during this challenging season of farming?