How do you reduce your farm cash rent cost?

Is the relationship with the landlord just about the cash rent dollar?cash rent

A simple reason for cash rent being higher than the local market value is due to farmers’ need to grow. This is often done at the expense of higher risk just to get their foot in the door. Although I don’t recommend this tactic as a BMP to doing business, it does happen. It can turn into a major problem, especially with $3.40 corn and $9.00 soybeans. This also gives the landowner the idea that the only value you can bring them is when you give them their cash rent check twice a year. This perception may be self-inflicted but couldn’t be further from the truth. How does a grower change this perception?

It first starts with communication.

Many times the reason landowners change tenants is because there is a gap in what the landowner sees as value versus what the farmer see as value. This gap normally doesn’t happen overnight but can be years in the making. It happens when communication between the producer and the landowner is infrequent. The first thing a grower can do to bring value to their landowner is to schedule regular meetings.

How often you should meet depend on the relationship between the two parties but regardless of frequency, always have a written agenda. The tenant is the only one who has the experience and information the landowner needs to make their farm more productive. The farmer should be the landowner’s main source of information. If the grower is constantly learning and improving, then the landowner is in great hands.

Focus on long-term goals.

During these meetings, focus on long-term goals. If a landowner knows what the long-term goals of the grower are, then he or she can work together to determine what is best for the farm. Landowners are people. Like many in our society today, instant gratification is the norm. But the tenant may have to help the landowner to think long term. What are some of the long-term objectives that can be used to bring value to the farmer?

  1. Establish a plan to promote soil health
  2. Determine how to better manage air and water in the soil
  3. Discuss what a comprehensive nutrient plan looks like
  4. Plan structural improvements to improve value

These are also areas that, if the producer has a management team in place, someone who helps bring them leadership in various part of their operation, they can help guide the farmer in achieving these goals. This management team demonstrates to the landowner that the producer has the necessary tools in place to achieve the goals on their farm.

Once the plan is written down and in motion, now determine a value on what achieving each of these goals will do long-term for the landowner. Land is a long-term investment and should be treated as such. A farmer has many ways to bring value other than paying a few extra dollars in cash rent. Each grower should get to know their landowner and find out what they see as value. The relationship you build with each of your landowners is a very important part of your business. At Bird Dog, our goal is to help each of you share your values and goals with new landowners looking to make changes. If we can help in this area, please contact us.

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