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BA Deere
Honored Advisor

Re: Interesting rent article

Yah, that ol` Mildred really gets around Smiley Very Happy   I talked to one guy that thought widows are the hardest to rent from because they seem to assume that they`re being taken advantage of just because they are a female.  When in reality in some cases the farmer is bending over backwards because he honestly does feel sorry for her.

 

It seems that now that "next generation" has control of much of this land, they live in the "cities" that "widow mother Mildred" has passed the land to them and they turn it over to Hertz Farm management. 

 

But i`ve seen both sides, there are "tribes" out there that will never willingly raise their rent.  One case was pitiful a nice old Norwegian fellow rented to one of those tribes and after he passed away it was found that he was only getting $65/acre rent when going rent was approaching $200.  But this tribe always bitch about something "low prices" "bad weather" ect ect and this nice old guy figured the farming really was awful ...but he never asked himself why that tribe was renting more and more and more, getting bigger and bigger if farming was sucking so bad.

 

I try to educate my family on what to look for in a tenant when I croak.  Number one, if they try to buy the land "run away", because that`s always the scam they want to buy a farm behind the scenes, where they are the only one offering the price. The seller always gets screwed when a farm is sold that no one ever knew that it was for sale.  And when in doubt, just go to Hertz Farm management and just let them handle it.   

 

But it`s hard as a farmer to navigate when there are so many out to take advantage.  The past 5 years especially have been a landlord`s market, with farmers cutting each other`s throats, trying to rent land away behind the current farmer`s back.  However with lower grain price that might temper the back stabbing a bit...or maybe not   Smiley Happy 

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Jim Meade / Iowa City
Senior Advisor

Is Crop Share Rent Unworkable?

What is your experience with crop share in this day and age?  Is it unworkable for the landowner?  By that, I mean is it too hard, too uncertain, too complicated or is there some other reason why a landlowner would give up a share of the profits (and losses) in return for what may in some years be a lower income and in some other years may mean losing a good renter?

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Jim Meade / Iowa City
Senior Advisor

Do Tenant Farmers Never Lock In Profits?

Why do tenant farmers seem to not often lock in input costs and incomes while they are committing themselves to high land rents?  Do they think they will get more money if they gamble and wait?  Is it that they can't lock in enough input costs ahead of time?  Do they not want to hedge and take what the market gives them?  Why should anyone feel sorry for someone who takes one risk (land rent) but won't lay the risk off (hedge the crop)?

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hardnox
Advisor

Re: Interesting rent article

First year corn and soy look very similar on that budget. If it were me I wouldn't change rotation but I suppose someone might. Certailny wouldn't grow 2nd year corn but there's not a lot of that in marginal country anyway.

 

Basic micro theory says you run until that return to land and operator number hits 0 and in the real world somewhat beyond- getting into depreciation and equity.  And anyway, the farm payment is going to rise under the more adverse scenarios, keeping people in the game even if they're bleeding.

 

In that regard there's something to the cryto-populist view that the farm program just keeps marginal acres in production. But I've refined that to the perspective that we are now a key link in an "industry" and it is about keeping Monsanto paid, the etoh and pig factories running and, as I've said, we human livestock need to be fed in order to continuing to provide milk to the system.

 

If you don't believe that look back to the open letter that was sent to Washington on the urgency of a Farm Bill. Sure, there were a few producer groups as signatories but hundreds of agribiz industries, farm credits etc.

 

Actually got to say that at the moment the Farm Bill looks to have been exceptionally well crafted by the lobbyists and staffers who wrote it and had it quietly slipped through.

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Kay/NC
Honored Advisor

Re: Do Tenant Farmers Never Lock In Profits?

Very good question, Jim. I can only offer a patallel from renting houses out.

We have tenants who pay in full on time every month. Then we have one young couple that straggles in late to the realtor's office, so some months, all of the rent from there turns up a week or so later than it ought to.

Then, Christmas always takes these two by surprise. I thought it always came on December 25th, and I am not making fun of them, but one gets child support (she had been married) and that alone covers the rental figure, so it isn't like the roof we maintain over their heads suddenly disappeared.

Come January, there is no rent paid. This has happened three years straight now. First year, realtor z( who did them a favor and negotiated the rent $100 a month lower to help them to start with ) got them in to pay it eventually. Last ywo years, she has been disgusted enough to mail them a " pay in five days or quit" letter.

Somehow, they scrape both months' rent together by February 1st. I have encountered one of them while out walking with a friend, and had to hear her whole sad story du jour. knew rent would be slow that next month, too.

Her remark to me was, " I have been talking to Sue ( the realtor) about my problems."
My reply was, " Talking is not paying...your first priority is keeping your girls in a home."

We aren't dependent (yet) on the rental income to directly pay our living expenses, so we can be somewhat flexible. I like these two girls, but they are not MY girls, so I didn't take them on to raise them.

I see lots in common with the land tent deal...if you cannot cover the rent, move.
If you run short, no amount of " talking" substitues for paying.
Christmas always comes.
Make sense?
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Shaggy98
Senior Advisor

Re: Is Crop Share Rent Unworkable?

All the ground I rent with the exception of 1/4 section is rented on a share crop basis and has been set up like that since the get go.  I'm the third generation to farm some of these acres.  it takes one of two things.

 

1. It takes a landowner who stays up to date with all the current happenings in the ag world so they know what the farmer is dealing with or talking about when the bills start to arrive in the mailbox.

 

  or

 

2. It takes a landowner/tenant trust relationship that is second to none.  Personally I've got both of those scenarios and don't have an ill feeling towards either one.  The one landowner who has complete faith in me has been renting to our family for more than 50 years.

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sw363535
Honored Advisor

Re: Is Crop Share Rent Unworkable?

Jim in higher risk/reward lands crop share is still prominant. And it does it's job in moderating this very issue.

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Jim Meade / Iowa City
Senior Advisor

Re: Interesting rent article

Was talking with my ag banker today and he said many rents went down 10%-20%.  That's all I know - what he told me.  It's a big ag bank in eastern Iowa.

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