Successful landowners know what it takes to build and maintain good working relationships with the producers who farm their land. With the high land values and cash rental rates of the last decade, it’s even more important for both landowners and tenants to go into their business relationship with clear goals and a well-defined agreement for how best to manage the farmland.
In many cases, today’s landlords are increasingly turning to professional farm management companies to help them navigate the decisions that need to be made regarding their farmland. Two main reasons account for this change. One is that agriculture is becoming more complicated and volatile. Anyone farming in the last decade, with its rapidly burgeoning land values and commodity prices, can attest to this. Another reason is that many of today’s landowners don’t have close ties to the farm. This may be the result of farmland being passed down to non-farming children or grandchildren, the landowner not being geographically close to the land, or the landowner acquiring the land as an investment, without any prior farming knowledge.
Whatever the case, many landowners feel they lack the knowledge to farm the ground themselves, or to find someone who is both competent and trustworthy to farm their ground, and so they turn to the expertise of experienced professional land managers to do this for them.
One of the most important decisions that farm managers help their clients make is who to farm the land. Farm managers strive to take into account each client’s circumstances, gathering the pertinent information needed in each instance to make the right decisions. They ask many questions, finding out if the land has been rented to relatives or neighbors, and if the client would like to see that continue or not. Often, there are prevailing family concerns that need to be taken into account, and farm managers have experience when it comes to these often delicate situations.
Open, candid communication is the foundational component to successful relationships. This is especially true for landlords and tenants. A professional farm manager can be an effective liaison between landowner and farmer, securing a mutually beneficial arrangement for both parties. In many instances, an impartial third party negotiator is all it takes to encourage a positive landlord/tenant bond.
When it comes to landlord/tenant relationships, it’s important to negotiate a lease that is agreeable to everyone. Farm managers are knowledgeable about different type of leases. For instance, leases that share the profit and risk, known as flexible lease agreements, are becoming more commonplace. A flexible land lease agreement is an agreement in which the rent is not paid until the after the crop is harvested. The final rate is then based upon the actual prices and yields attained in a year, rather than a set rate. This type of lease may be a good fit for both parties, and will further promote a healthy and open business partnership.
Are you a landowner? Are you striving to get the most out of your farm? Let UFARM help you determine which strategies are a good fit for you, your tenants, and your valuable land asset.