What is in this article?:
- Open communications with your landlord to establish common goals and expectations.
- Share information to strengthen a landlord's understanding and appreciation for how farming practices benefit short-term and long-term returns.
- Create a synergistic relationship that recognizes market vagaries and shares risks and rewards.
- Consider new options, review alternatives and explore potential alternatives to traditional cash rent that better serve and strengthen an existing relationship.
- Follow the Golden Rule. Treat your landlord and his children as you would like to be treated when the day comes that you, too, are a non-operating landlord.
How secure is your relationship with all your landlords? At a time when aggressive operators are targeting long-term relationships, offering substantial bumps to rental agreements, what would your landlords accept? Do you know how to 'seal the deal' with every landlord?
"Arrangements with landlords are some of the most critical ones they have, perhaps more critical than the one with their lender," suggests Mike Boehlje, ag economist, Purdue University.
Your landlord relationships may become even more critical. While farmland ownership differs from state to state, a 2007 farmland ownership survey conducted by Iowa State University reflects a major transition in the rural economy. People over 65 currently own 55% of Iowa farmland, compared to only 29% in 1982. Landowners over 75 own more than half of that total.
Where and who this land goes to is likely to change rental relationships in a dramatic way. The 2007 survey disclosed that nearly two-thirds of land owned by those over age 75 would likely stay within the family, whether through sale, gift or inheritance. However, the land is likely to go to multiple owners. From 1982 to 2007, the amount of land owned by a single owner dropped from 41% to 29%. With more than half of Iowa farmland in transition in coming decades and most of it going to family members, the complexity of relationships between landlords and renters can only increase. Expanding operators will have to deal with not only multiple landlords, but also potentially, multiple owners of a given piece of ground.
Having 10 landlords or 100+ means potentially different types of relationships with each one, Boehlje notes. One landlord wants to be more informed about field and farm data, and the next may not care. Another may be invested in how the property appears, while the next is only interested in long-term productivity and building value. While some landlords are only interested in getting rent, these are possibly the least secure relationships of all as they have less reason to ignore an offer of higher rent from a competitive operator.
"Forward-thinking operators devote more time, energy and effort to understanding their landlords, what they want and how to deliver on those expectations," says Boehlje.
Even without change in ownership, a renter may do well to rethink his current relationship, suggests Randy Dickhut, vice president client relations, Farmers National Co., a leading farm management firm. He notes that escalating land values and rents are increasing landowner interest in the land.
"Non-operating landowners pay more attention to farm incomes and expenses and lease arrangements," says Dickhut.