- Leasing Your Farm to a Family Member/Neighbor: This situation can make it hard for you to set a rate that is fair to both parties involved. The family member/neighbor renting the land may take it personal when you want to change the rent. When a third party is involved, both parties can ensure that the lease is fair and no personal relationship harm is done.
- Profitable Ownership: Dealing with a large number of farms/ranches, we are experienced in determining a market-derived rent that will help you realize profitable ownership for years to come. Crop prices/inputs change every year, and in some cases the rent should also. We also offer a Flexible Lease option which has proven to be mutually beneficial to the landowner and tenant. If crop prices go up, you will receive a “bonus” rent payment. Our approach yields a good return and a long lasting partnership with the farmer who is leasing your farmland.
- Keeping Your Farm Fertile: With the current situation of low crop prices, some tenants have cut the amount of fertilizer they apply since it is “Rented Ground”. They may have also baled up the cornstalk residue and removed it from the farm. This will cause your farm to become less valuable/fertile. It will also make it harder to rent your land out, because potential tenants may have seen what previous tenants have done to your land. UFARM makes sure the correct amount of fertilizer is applied every year to ensure your farm stays fertile. Together, we will make your farm as profitable and fertile as possible.
- Keeping Up With Technology: Over the years, farming has changed drastically. In the past 3-7 years, a large number of irrigation pivots have been updated so they can be remotely controlled. The tenant may have changed your pivot over without you even knowing. This has caused pivot malfunctions in some cases if the pivot technology was not installed properly. We take steps to ensure technology is used correctly to protect your assets.
- Making Your Farm Sustainable: With the recent droughts that have occurred, we have worked with tenants to make sure they are utilizing water to the fullest. Technologies such as “Soil Moisture Monitors” and “Water Meters” have allowed our tenants to utilize water to its fullest and make sure we are doing our best to conserve our precious natural resource. We have encouraged the use of “Cover Crops” to increase the productivity of our farms and to also prevent erosion.
- Keeping Your Equipment Maintained: The cost of replacing an irrigation pivot is over $75,000, the cost of replacing an irrigation well is over $60,000, and the cost of a new irrigation power unit is close to $30,000. It is important that this equipment is well-maintained and properly serviced to ensure a full lifespan. At UFARM, we check your equipment to make sure the tenant is properly taking care of your investment. We get our hands dirty so you don’t have to.
- Is Your Lease Legally Protected?: Our leases are written by lawyers to ensure our landowners are legally protected. Our lease guarantees you will receive your rent every year. When you receive a bill for fixing your equipment, we will make sure that your equipment was actually worked on. We can also make sure the tenant pays for part of the expenses, especially if it was due to the tenant’s failure to maintain the equipment.
- The Future Of Your Land: The land management services that we provide will ensure profitable ownership for years to come. We will continually look for ways to improve your land investment. Maybe your land could use some tile in order to bring some land back into production, maybe the irrigation equipment needs an overhaul, or maybe part of the farm could use some manure or lime. Whatever the issue, an experienced UFARM land manager can help you today. We will visit the farm several times per year so you can have peace of mind that your land is being taken care of. We make sure the ditches get mowed, the weeds sprayed, and the equipment serviced. Our office staff will provide you with a detailed income statement that will make it easy for your tax accountant to file your taxes.
You’ve made the decision to engage the help of a Land Management Company to aid you in your farm ownership needs. What happens next?
Fortunately, while the decision to turn to a land manager can be initially difficult, it is good to know that the ultimate goal of a land manager coincides with your own goals, with the overarching purpose of making your land as profitable as possible.
Owning a farm or ranch is an investment that comes with a lot of responsibilities, and can become overwhelming to even seasoned owners. This is especially true in the cases of non-farm owners, who may find themselves in the position after inheriting farm or ranch land from their deceased parents.
For the absentee or non-farm owner, spending large amounts of time arranging leases, supervising tenants, and managing farm property is simply not feasible, and many feel out of their depth as they struggle to make all the decisions that need to be made.
It is for these reasons that landowners across the state have turned to United Farm and Ranch Management (UFARM) to help them oversee and implement a management plan for their land for over 80 years.
The experienced land managers at UFARM begin by preparing a detailed inventory of all assets involved, following a thorough check-in process to itemize specific details of your property, including FSA aerial photos, NRCS soil maps, previous crop history, and a full list of buildings and structures on the property.
Then, insurance plans and options are reviewed to determine if the site has adequate coverage and the best rates. Along with insurance, property tax valuations are reviewed and compared with other properties to ensure that assessments are fair.
At this point, your UFARM land manager prepares a report, detailing his recommendations for your land’s best use and outlining ways to meet your ownership and investment goals.
Your land manager also endeavors to identify any potential problems that may exist, and make recommendations for remedying those problems through various improvements.
You may rely on UFARM to:
- Make recommendations regarding lease options
- Locate the best qualified operating personnel
- Negotiate lease agreements
- Manage and maintain homes, buildings, and other improvements
- Develop a comprehensive operating plan covering crop or grassland rotations, tillage practices, chemical applications, etc., which are beneficial for the long-term value of the property
- Supervise crop programs and conservation measures
- Manage crop and livestock sales
- Advise and oversee capital improvements
- Facilitate participation in and compliance with government programs
While there are many more day-to-day tasks than just those listed, UFARM strives to do whatever needs to be done to work on your behalf and to make your operation sustainable and income-producing.
UFARM land managers pride themselves on keeping you up-to-date and informed about any decisions that need to be made, and to make sure those decisions have your approval. We always make sure to keep our level of involvement at your sole discretion.
An area where a land manager can be especially helpful is when arranging tenant leases—especially true when family is involved. In a perfect world, everyone would rely on a handshake agreement. However, it is best business practice to have a written lease prepared by a neutral third party to ensure both parties involved are satisfied and clear on the lease terms. UFARM land managers can prepare a number of different types of leases, and locate the best operator for the job.
Perhaps most importantly, however, is UFARM’s attention to the details that make such dramatic differences in profitability. We strive to keep up-to-date on the latest advances in marketing, science, government programs, technology, and equipment in order to help your farm continually improve.
Through frequent visits to your property, UFARM land managers provide you with timely reports that outline the status of your operation. We also are happy to take care of bills that need to be paid, and carefully review invoices for accuracy beforehand. Transaction journals are sent quarterly, itemizing farm income and expense in a clear, understandable way.
Most importantly, you can trust a UFARM land manager to always keep your goals in mind and your best interests at heart. We are proud of our 85 year track record, and are eager to serve our clients for many more years to come. Please don’t hesitate to contact us at any time with your questions or concerns—we are happy to be of service to you.
It’s no secret to farmers and landowners that current farm economics are tough. Profit margins are tight this growing season, and myriad reports corroborate this fact. From 2011-14, US farm income experienced a golden period, driven by good commodity prices and strong exports.
Now, according to the Congressional Research Service’s 2016 Farm Income Outlook, it is projected that exports are set to be 6 percent lower from 2015 and well below 2014’s record $152.5 billion, a fact attributed to a strengthening US dollar and weakening economies in several major foreign import countries, including China.
The report also found that national net farm income is also projected to be down—$54.8 billion in 2016—a 3 percent decline from last year. This means that US farm incomes, a key indicator of US farm well-being, will be the lowest since 2002, and is the third year in a row that farms have experienced a decline.
As Nebraska farmers and landowners can attest, land values comprise a significant portion of a farm’s asset base. As such, a change in farmland values is an important gauge of a farm’s finances. Naturally, lower farm incomes mean lower land values, and in this way, the report found that overall farm wealth is likewise set to decline for the second straight year, about 2 percent from 2015.
In this way, reports have found that farmland values of both non-irrigated and irrigated cropland decreased 4 and 2 percent respectively, from 2015. It is expected that cash rents, too, will decrease in 2016, this according to the University of Illinois’ Gary Schnitkey
“However,” Schnitkey says, “projected rent decreases are not large enough to cause farmers to have positive returns in 2016 given current projections of commodity prices and costs. The lagged relationship between returns and cash rents still exists.”
While the outlook is most certainly a pessimistic one, there is always a small silver lining—a mild decline of 3 percent in farm cash expenses in 2016 is expected. Government payments from the 2014 farm bill in the form of revenue support programs are also expected to trigger payments upwards of $9 billion in 2016.
Overall, though, farmers are resilient. Paul Pittman, CEO of Farmland Partners Inc. says that, as tight as things are getting, “Farmers won’t see the same kind of economic crisis they did in the 1980s.” After years of high prices, and only very slight increases in interest rates, most farms in the US are in better financial shape in which to weather the storm.
In summary, the reasons for the tough times are many—production outpacing consumption, a strong US dollar’s effects on exports, lower commodity prices, and a drop in land values—but all boil down to the fundamentals of supply and demand. In a world with a growing population, people must eat, and farmers optimistically hope to weather through this storm until the scale tips in their favor once again. The recent uptick in soybean prices is a positive sign and corn is trending upward as well. The summer weather is the wildcard that no one can predict for sure.
Sources consulted: Bjerga, Alan. “The Crop Surplus is Bad News for America’s Farms.” Bloomberg.com. Bloomberg. 11 Jan. 2016. Web. 23 May 2016. Schnepf, Randy. “US Farm Income Outlook for 2016.” Fas.org. Congressional Research Service. 16 Feb. 2016. Web. 23 May 2016. Wright, Kevin. “Tightening in the Ag Belt.” KansasCityFed.org. Federal Reserve Bank of Kansas City. Spring 2016. Web. 23 May 2016.
Aside from the day-to-day duties of owning and managing land, one of the more difficult aspects of land ownership deals with leasing farm land. Many landowners have difficulties coming to mutually acceptable agreements, getting those agreements on paper, determining fair rental rates, and determining what type of lease agreement best suits their needs. What are the leasing basics of which landowners should have a firm grasp?
The first is to know and understand how rental rates are set. The end goal is to come to an agreement that is mutually beneficial to both the landowner and tenant. As such, setting a fair rate is important. There are several factors landowners can take into account when determining this rate, among them are the rental rates of the local area, percentage return on investment, survey data showing rental rates, percent of gross income, and many others. Most land managers recommend that landowners estimate the rental rate based on three or four of these factors and then make a decision. Determining a local rental rate is fairly straightforward; ag loan officers from the local bank, ag real estate professionals, and professional land managers are able to supply the going rates for current lease agreements.
Additionally, the National Ag Statistics Service (NASS) releases land value surveys annually for consultation. This, along with determining your desired ROI and percent of gross income, are excellent ways to come to a fair rental price agreement with your renter.
With over half of the agriculture land in Nebraska rented, it’s important for landowners and farmers who lease land to recognize the importance of a well-written lease agreement. Where a handshake was enough in many cases in the past, the nature of farming today is a bit more complicated, and the necessity of having a well-designed legal agreement is paramount. Land managers are well-versed in helping you get that lease down on paper, as well as helping you sort through the necessary particulars prior to it.
Land managers are also able to help you determine if a flexible lease agreement may be the right choice for you and your tenant. The factors that have the greatest effect on rental price are land values and crop yields. As these vary year to year, it can be tricky for owners and the farmers who rent the farmland to agree on a fair rental price. To address this complex problem, area farm management experts increasingly promote flexible land lease agreements in order to reduce risk and optimize profit potential for both parties. 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.
After determining the type of rental agreement come the particulars, such as who pays for grain bin storage and power, how irrigation costs are to be handled, and the like. These vary from farming “neighborhood” to neighborhood. The important thing is that both parties come to an agreement so there is no confusion if/when an issue arises.
There is no definitive right or wrong land rental rate, but taking the above factors into account will accomplish the most important leasing goal: A mutually beneficial and satisfactory agreement for both parties.
Source consulted: Vyhnalek, Allan. “Frequently Asked Questions—Farmland Leases.” University of Nebraska-Lincoln Agricultural Economics. University of Nebraska-Lincoln. Web. 17 Mar. 2015.
A successful farm used to be judged by good yields, well-maintained fields and machinery, and timely planting and harvesting. With the burgeoning land and commodity values that characterized the first decade of the 21st century, coupled with advances in risk management and an often volatile grain market, it is clear that the skills necessary for agriculture success are often the ones that go on behind the scenes. What are the skills that a successful farm manager must possess in 2014 and beyond?
The Purdue University Ag Extension compiled a self-assessment checklist to help farmers and farm managers gauge their efforts on a number of crucial business management fronts. The first area explored deals with production management. Production management is typically described as the hands-on aspect of farm management. Managers who are well-acquainted with the processes of crop production are in a better position to achieve the goal of successful production management: To have a cost of production that is lower than the industry average. With this key aspect in mind, successful farm managers seek to stay on top of the latest technology for their particular operation, know their machinery, and focus on making their farm run efficiently at every stage of production.
The next area is in procurement and selling. Procurement deals with the purchase of needed inputs; selling with the selling and delivery of the product. Smart procurement and selling practices are critical to farm management success, and involve more than simply buying low and selling high. Seeking and getting good marketing advice, where to price products, when and how to deliver, and risks taken to enhance price are all necessary things to take into consideration.
Successful farm managers also need to be mindful of their financial management practices. Financial management involves where funds will be obtained and how they will be used. It is important for farm managers to have a good understanding of the concepts of leverage, interest rates, the rate of return on assets and equity, and the cost of debt and equity capital. Along with this, good financial farm managers also understand and utilize good tax management strategies, as well as the use of insurance to protect against financial losses.
Finally, successful farm managers have a good grasp of the risk management tools available to them. Farming involves a lot of risk; in addition to the price variability of commodities, the farm manager also faces production risks, financial risks, and legal risks as well. To combat them, successful farm managers take advantage of futures price contracts and options, crop insurance, and health, life, and liability insurance. In addition to this, farm managers must have a contingency plan, and be aware of world market trends that are occurring in the industry.
In addition to assessing these skills, it’s also important to re-visit them from time to time, to see if they are being used effectively. If you’re concerned about the proper management of your farm, contact UFARM, and they can help you assess your operation so that you are operating it to its highest potential. UFARM offers a full range of Nebraska land management services, including real estate sales, rural property appraisals, consultations and crop insurance. UFARM has operated in Nebraska since the early 1930’s. Contact us today!
Source consulted: Boehlje, Michael, Craig Dobbins, and Alan Miller. “Are Your Farm Business Management Skills Ready for the 21st Century?” Purdue University Dept. of Agriculture Economics. Purdue University Ag Extension. Web. 04 Dec. 2014.
Demand continues to grow in the nation for organically produced foods and grains, and many farmers and landowners across the nation are joining the growing organic trend. Nebraska farmers have also been taking notice. The increasing demand for certified organic products and food are opening up new markets, and many Nebraska farmers are stepping in to fill the niche. Have you ever considered the benefits of using your land to produce organic grains or foods? Would organic farming be a good fit for you and your farm?
The term “organic,” when applied to farming, means that foods and grains are produced without using pesticides, non-organic fertilizers, antibiotics, and hormones. Organically grown foods and grains must comply with mandated specifications and regulations set forth by the National Organic Program. Farms must meet specific requirements and be certified by the NOP in order to be considered organic. One of these requirements is that their fields be organic (free from certain synthetic fertilizers and chemicals) for three years before they are able to be certified.
Those applying to be certified must include an application to an accredited agent specifying the four following things:
• The type of operation to be certified
• A history of substances applied to land for the previous 3 years
• The organic products being grown
• The organic system plan describing practices and substances used in production
A drawback at the beginning of the process is that the grain they are producing for the first three years is unable to be sold at the organic prices, even though they are grown using organic practices. Despite the initial hurdles, the payoffs can be substantial; organically produced corn and soybeans can be very profitable for farmers, as they can sell for larger premiums.
Growing organic grains requires different practices than conventional farming, specifically in areas relating to soil composition, weed control, yields, and prices. In particular, weed control for organic farming is perhaps the area which is most divergent from conventional farming, since organic farmers are unable to use conventional methods of weed control, such as spraying herbicides on their crops. Instead, they use other means, such as mowing weeds when they are small, increased cultivation, and adding another crop to the rotation to discourage weed growth, such as rye.
In order for organic farming to be profitable, it is important to make certain that the price premium exceeds the yield loss and higher input costs associated with the practice. While organic farmers traditionally have lower yields, the price of organic grains can be expected to offset those lower yields.
If you’re thinking of moving your farmland into organic farming, it is necessary to be aware of the vast differences in farming practices that accompany the venture as opposed to conventional farming. It is also important to keep in mind the nature of your farmland, and if its soil composition is conducive to growing organically produced grain. Finally, consider the geographical location of your land and decide if it is in decent proximity to markets that seek out organically produced grains and food.
Let UFARM help you decide if organic farming is the right fit for you and your land. They have the expertise to match you with the right operator, and the insider’s knowledge of the specifics that go along with expanding or changing your landowning goals.
Contributing source: Schober, Marc. “Organic Trends Benefit Farmland.” Agweb.com. 15 Dec. 2010. Web. 23 Jan. 2014.
GET TO KNOW US
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