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.
ENTER FARM MANAGERS
For non-operating landlords, farm managers serve as a neutral conduit for information from a tenant. If managers are seeing this increasing interest from landlords, it is safe to assume it also is increasing among landlords with direct and often more complicated relations to renters. Dickhut counsels renters to communicate more openly.
"Renters need to be willing to update the landowner and farm manager with issues or progress and be willing to share data and information," says Dickhut.
Some land operators take that communication to new levels. While those working with professional farm managers and some landlords may be accustomed to sharing yield, soil and nutrient application data, profits have been private. That may be changing, according to Jason Henderson, vice president and Omaha branch executive, Federal Reserve Bank of Kansas City.
"Cash rent is still king, but I'm hearing about fixed cash rent with a possible bonus payment, depending on how good the year was," says Henderson. "Others are going in at the end of the season and making a voluntary bonus cash payment to be directed toward land improvement."
Henderson suggests the increased volatility of land and commodity markets are moving the industry toward more transparency as a way of strengthening relationships. Boehlje agrees, pointing to increased use of flexible cash rent based on yield and price as a tool for risk mitigation and management.
"Landlord and tenant have to be comfortable with data documentation and verification," he says. "Using the same information provided to crop insurance agents is one way to facilitate that transparency with a third party documenting numbers."
Greater transparency is important to landlord/tenant relationships, agrees Shonda Warner, president, Chess Ag Full Harvest Partners. Chess Ag manages several funds with over 35,000 acres in farmland investments across the U.S. with offices in Clarksdale, Miss. and Dakota Dunes, S.D. Warner grew up on a northeast Nebraska farm and has dealt with tenant relationships personally as well as professionally.