ASFMRA: Farm managers impact the bottom line
Caller: “I own a farm in the Midwest and I have had the same tenant for a long time. But I don’t think I am getting as much rent as I should be. I’ve been reading in the newspapers about higher land values and farmers making big profits, but my rent hasn’t changed the past five years. What do you think my rent ought to be? I just want what is fair.”
Farm manager: “Yes, it does sound like your rent is low. Cash rents in your area are generally much more than what you are receiving. Tell me more about your farm.”
If you are a professional farm manager, you probably have had many calls from nonoperating landowners like the one above, wondering about their cash rent lease or their crop share terms.
Most know their lease terms are out of date or their cash rent is low, but they don’t know where to get good information pertaining to their farm. When a non-operating landowner wants to improve their farm’s profitability, they can turn to professional farm management for information and results.
Professional farm management services can bring near-term benefits to a non-operating landowner’s bottom line in a variety of ways. Farm managers have the information that is needed to keep up to date with rental terms including detailed analysis of farm revenues and expenses coupled with knowing the local competitive market for rental land. Having this information and implementing it into a leasing arrangement with a good operator can have a significant impact on a landowner’s bottom line profit.
Other near-term benefits of professional farm management include implementation of a sound grain marketing plan together with risk management through the proper crop insurance tailored to the landowner’s situation. Normal day-to-day activities of farm management will bring benefits to the non-operating landowner through increased discounts, good record keeping and reporting, which provide the basis for decision making. Working with government conservation and farm programs appropriate for the farm and owner will also be a benefit of farm management.
Many farms are an important part of a family’s legacy with the property and its upkeep passing down from one generation to the next. Professional farm management can play an important part in maintaining and improving a family’s land asset over the years, which will positively impact the bottom line profit of the farm in the long run. Through their experience of working with farms of all types, a farm manager will assess a farm for improvements and make recommendations that will improve the physical asset as well as the underlying value of the farm. Implementation of conservation measures and structures are an investment that will help ensure the farm remains productive and valuable now and into the future. Handling maintenance issues like brush removal or ditch cleanout directly impacts the productivity of a farm over many years.
Keeping rental terms and rates at the market is the most important way for farm managers to help non-operating landowners receive a fair return from their farm. Longer term, proactively maintaining and improving the farm will bring production and value benefits to the farm owner. Professional farm management doesn’t cost, it pays.
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