Do you really need to farm more land to be more profitable? Unless you buck the trend, that's exactly what's happening these days. And building trusted partnerships with landlords could be a key to growing your business.
“People who have control of farmland and the amount of land available to farmers have a huge impact on producers' success,” says Allen Lash, agricultural consultant and chairman of AgriSolutions, Brighton, IL. He says market share will be of increasing importance to growers who want to be full-time producers.
“If a producer isn't renting land successfully he or she should ask why and take steps to make changes. The problem is rarely external,” says Lash. “Ask yourself, ‘Am I less efficient (can't pay as much rent), or am I not as landlord responsive?’
“The services growers get from their ag retailers could depend greatly on the amount of market share they're able to garner. Those who have the most acreage will have the most access to resources, including more farmland, price discounts and expertise,” he says. “There will be a considerable economic competitive advantage to growers who have market share.”
While market share is a relatively new concept in agriculture, Lash says it's certainly not new in business. “In crop farming the easiest way to increase market share is to increase acreage,” he says. Farmers do this in one of two ways — through buying or renting land.
“Most farmers know buying land usually doesn't cash flow,” he says. “If a producer's capital situation is such that he or she can't buy land, the only option for growth and market share is to rent.”
Lash says farmers who are effective at increasing acreage find ways to market themselves uniquely to landowners in their communities. “Producers who want to grow define a very clear strategy,” he says. “They usually have one person whose primary job is getting and keeping landlords. If producers aren't willing to commit the resources to rapid and sustained growth, they can't expect people to hand them the land. They need to compete aggressively.”
Customer Service Comes First
“We treat all our owners as clients,” says Kevin Green of Greenview Farms, De Witt, IA. “They're our customers, and customers are always right.”
Green farms 10,000 acres — about 8,000 cash rented and another 2,000 custom farmed. His operation has grown dramatically from 160 acres of rented land in 1976. To attain that growth, Green works with 37 landlords. And while that seems like a lot of people, he says there's less risk in working with more owners. And of the nearly 10,000 acres he farms, Green only owns 50 acres.
After getting burned with buying land at high interest rates in the '80s, Green discovered he doesn't have to own land to farm.
“It's a separate thing — land ownership is an investment decision. Farm operations are a separate business. I learned you don't have to own land to be a good farmer. There are other ways to obtain those acres,” he says. “I'm not saying ownership is wrong — I'm just saying it's a whole different decision. At this point we're investing in expansion.”
Originally, he knocked on doors of people who might retire in five to 10 years and tried to build those relationships ahead of time.
“Landowners now come to us,” says Green. “We've built our reputation, and the best salespeople we have are our landlords.”
Green says the easiest way to rent land is to make your farm profitable enough so you can afford to pay more cash rent than the neighbors, or do a better job of providing service.
“Service comes at a high cost — higher than I would have imagined,” he says. “My wife Lori and I are in the office full time because that's what it takes to deal with 37 landlords. I didn't fully realize that until I started comparing myself to others who own all their land. They make the decisions and there's no one else to satisfy.”
On the other hand, with all those landlords, Green has plenty of people to satisfy. “We treat every farm as if we owned it. But we know it's their farm and they have the right to do whatever they want with it,” he says.
While the service he provides varies from landlord to landlord, Green provides an annual report that outlines what varieties are planted, what crop protection products and fertilizer are applied, yields and how they compare with other landowners, and finally, comparisons to past years. He also makes comparisons with other landowners in the state. Green provides his insights about the past year and projects what he sees for the year ahead. The report also includes photos of each farm.
“We try to find out what our landlords' goals are and provide for them accordingly,” he says. “They own land for different reasons. Most want the highest rent, but they also have other goals in mind. So we do different things for our landowners, depending on their expectations.”
In the case of a couple in their 90s who still live on their farm, Greenview Farms keeps their lawnmower filled with gas because it's too difficult for the couple to take care of that task. “That seems like something simple, but it's important to them,” says Green. “To absentee landlords, it may be taking pictures of what we're doing on their farm, cleaning up brush, or taking down an old building.”
In summer the Greens host a picnic for their landlords, and at harvest they offer the opportunity to ride along in the combine.
“Land ownership should be more than just an investment — we try to make it fun. I ask myself what I can do to make their ownership of that farm more rewarding,” says Green. “We look at it as a win-win. How can I farm your land to make you more money and somehow make more money myself? My goal is to make our landowners more money than they could have otherwise.”
There's certainly an element of trust involved in the landlord/tenant relationship. Ken Ruggeberg of De Witt, IA, rents 250 acres to Green. “Kevin takes care of the land like it's his own property,” he says. “He's a good manager, and I know he'll take care of the farm and leave it in as good or better shape than when he got it.”
Caretaker Of The Land
Providing information and land stewardship are also important to Bob Wieland of Laura, IL. He and his brother own one-third of the land they farm and rent two thirds from 10 landlords, some cash rent and some 50/50. They grow corn, soybeans and pumpkins.
“I always ask myself what I would want. What would I expect? I'm trying to provide what I would want to my landowners,” he says.
At the end of the year Wieland's landlords get a full report of everything that's been done on their land, including any improvements, the rates of pesticides, seed and fertilizer applied, as well as a profit and loss statement that includes how much net profit was made that year.
“Absentee landowners are becoming more aware that it's an information world and their assets are important,” he says. “The more they know about that asset and how it's being handled, the better they're going to feel about renting it to someone. I think information is critical.”
Wieland is well aware that his management decisions impact his landowners.
“We need enough equipment to cover the acres in a timely fashion. I want to be able to provide equipment that can cover their acres so our landlords get the maximum return off the acres we rent from them,” he says. “God has entrusted my brother and me to leave the land we farm better than we found it.”
Wieland says the first concern he has on rented land is tile, second is lime, third is fertilizer, fourth is to get the work done in a timely manner, and fifth is to scout fields weekly so he knows what weeds and insects he needs to control.
Part of how Wieland carefully manages and makes decisions is by surrounding himself with a team of people he trusts, including his wife Nancy, his brother, his bankers and representatives from JD Office and AgriSolutions, which offer software that helps him document his production and financial records for each farm.
“My landlords are my partners,” he says. “They trust me with property they may have had handed down to them or worked hard to obtain. I'm careful to preserve that asset and make it better for them. Once they understand that, they're very comfortable with what I'm doing.” He says his landlords care about the land and share his philosophy about land stewardship and management.
As senior vice president of agricultural services for Heartland Bank and Trust Company, Bloomington, IL, Marty Thornton also manages farmland. He has worked with Wieland in the past.
“Bob is innovative and understands the importance of the balance of returns for the farm operator and the farm owner,” he says. “When we look for someone to run farmland, it's not about who has the biggest machinery, it's about getting things done right in a relationship that benefits both parties. We want to work with people with integrity.”