A Look at Renting Farmland
It is not that easy to establish a flexible, non-traditional rent, between a landowner who isn’t highly knowledgeable and a new tenant, the two speakers suggested. But they didn’t recommend a farm management firm be engaged.
Most landowners and tenants like cash rent because of its simplicity, but this form of rent does not allow for huge risk by the tenant, and it doesn’t allow for an upside to the landlord should the ag economics drastically change for the better.
Finding a new tenant every year is not costless and requires a lot of time. Keeping up with what is going on at the farm is important for the landlord. Too many times without someone overseeing things, either or both the tenant and landlord become complacent, Dhuyvetter said. Complacency often takes the form of not communicating.
Not communicating is one of the reasons that landlords without farm managers feel in the dark as to the value of their land for rent. And without any feeling of partnership with a tenant, a spreading tendency is to put land up for a cash rent auction.
Dhuyvetter said, “Cash rent auctions are typically the way for landowners who don’t have enough information to level the playing field.”