Farm Rents

Jan

19

2012

Fixed and Flexible Cash Rental Arrangements for Your Farm – Newly Revised North Central Region Bulletin

By: Barry Ward, Leader, Production Business Management, Ohio State University Extension

The North Central Farm Management Extension Committee has recently updated three lease bulletins that have been widely used by farm landowners and farm operators to evaluate lease arrangements. This article highlights the bulletin, “Fixed and Flexible Cash Rental Arrangements for Your Farm” (NCFMEC-01).

The purpose of this newly revised publication is to help operators and landowners develop equitable cash-rent arrangements and assist them in making sound decisions based on an equitable evaluation of resources. The first section of this bulletin (Part I) addresses whether a fixed cash-rent lease arrangement should be used. Part II discusses how to develop an equitable fixed cash rental rate. Part III outlines methods for developing a flexible cash rental lease and their advantages and disadvantages. Part IV discusses the importance of putting the agreement in writing. A sample lease form is also included.

This newly revised North Central Region bulletin titled “Fixed and Flexible Cash Rental Arrangements for Your Farm” is available at the “AgLease101” website under the “Document Library” tab at: http://www.aglease101.org/

Farm Rents, February 2012

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Jan

06

2012

Ohio Farm Custom Rate Survey 2012

Barry Ward, Leader, Production Business Management, OSU Extension Custom farming providers and customers often arrive at an agreeable custom farming machinery rate by utilizing Extension surveys results. Ohio State University Extension collects surveys and publishes survey results from the Ohio Farm Custom Survey every other year. This year we are updating our published custom farm rates for Ohio. We need your assistance in securing up-to-date information about farm custom work rates, machinery and building rental rates and hired labor costs in Ohio. Please download the Ohio Farm Custom Rates 2012 survey and respond even if you know only a few rates. We want information on actual rates, either what you paid to hire work or what you charged if you perform custom work. Custom Rates should include all ownership costs of implement & tractor (if needed), operator labor, fuel and lube. If fuel is not included in your custom rate charge there is a place on the survey to indicate this. The survey is available for download as a Word document at: http://aede.osu.edu/sites/drupal-aede.web/files/Custom%20Rate%20Survey%20Instrument%202012%20Survey.doc Or you may access the survey at: http://aede.osu.edu/programs-and-research/osu-farm-management/publications Surveys can be completed and returned via email, mail or fax. email ward.8@osu.edu Fax (614) 292-4749 Address: Attn: Barry Ward, The Ohio State University, Department o...
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Farm Rents, January 2012

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Jan

06

2012

Ag Lease 101 – New Website Housing North Central Lease Bulletins and Sample Leases

Barry Ward, Leader, Production Business Management More than half the cropland in the North Central Region of the United States is rented. Rental rate and leasing information is highly sought by both land owners and land operators. AgLease101.org includes multi-state materials which help land owners and land operators discuss and resolve issues to avoid legal risk. The website also guides both land owners and land operators towards informed and equitable decisions. AgLease101 was created by a team of economists and attorneys as a part of the North Central Farm Management Extension Committee. AgLease101 is online at: http://www.aglease101.org/ The “Document Library” within AgLease101 contains the newly revised bulletins and sample leases in pdf format for free download and use. The sample lease forms are all in a fillable pdf format to allow users to input their own lease values and other specifics. Revised Lease Bulletins include: Fixed and Flexible Cash Rental Arrangements For Your Farm (NCFMEC-01) Crop Share Rental Arrangements For Your Farm (NCFMEC-02) Pasture Rental Arrangements For Your Farm (NCFMEC-03) Newly revised sample leases include: Fixed and Flexible Cash Rental Arrangements For Your Farm (NCFMEC-01A) Crop Share Rental Arrangements For Your Farm (NCFMEC-02A) Pasture Rental Arrangements For Your Farm (NCFMEC-03A) AgLease101 also includes a section of “Frequently Asked Questions” (FAQ) and a section “For Educators”...
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Farm Rents, January 2012

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Dec

26

2011

Targeting a Fair Rent or Crop Share Lease Agreement

By Wm. Bruce Clevenger, OSU Extension Defiance County When farmers and landowners evaluate cropland rental arrangements, questions arise like “Should we continue farming on shares?” “Which is more fair, crop share or cash rent?” “Do we have the right share percentages?” “How do we set a fair cash rent?” “What happens to my risk?” These are common questions across Ohio and the Midwest. As the dynamics of cropland production changes with market and production forces as well as landownership transitioning to the next generation or owner, cropland leasing and rental arrangements too will evolve. To help with the analysis, The Center for Farm Financial Management (CFFM) at the University of Minnesota offers a software called FairRent. Some OSU Extension County offices have the software to assist farmers and landowners evaluate current or future cropland leasing and rental arrangements. FairRent evaluates both cash rental and share rental arrangements based on expected yields, prices, government program payments, and expenses. The results calculate a break even cash rental rate and help develop a realistic bidding range for cash rental negotiations. The share rent results show whether sharing production and expenses will result in a fair economic return for the operator. FairRent also has sensitivity tables that show how break even bids change with varying yields and prices. All sensitivity levels interact with government payments to show the pric...
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Farm Rents, January 2012

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Nov

07

2011

Farmland Value and Rent Outlook 2012

By: Barry Ward, Leader, Production Business Management, OSU Extension, Department of Agricultural, Environmental and Development Economics No revelation! Cropland values in Ohio have increased in 2011. An OSU Extension survey conducted in December 2010 estimated that the increase in value of Ohio cropland in 2011 would be 5.3-6.0%. This was prior to sharp run ups in commodity prices. The Chicago Federal Reserve Bank and Purdue University both conducted surveys in July 2011 and found that cropland values in Indiana had appreciated 20-22% from one year ago. These increases in land value are due to a number of factors. Crop profitability prospects were positive in 2011 as they have been for the most part since 2007. This period has seen some of the most profitable years in the last 50 years of crop production. These profit streams and healthier balance sheets have led many farmers to seek an investment option for these profits and many have turned to land. Investors outside of agriculture have also been looking to farmland as an investment alternative. With many dollar’s and buyers chasing farmland, it isn’t a surprise to see land values increase substantially in 2011. Low interest rates and the relative scarcity of farmland being sold have also helped drive land values higher. So all of this begs the question, “Where are land prices headed in 2012?” The case is strong for land values to see continued strength in 2012 as profitability prospects are good for...
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Farm Rents, November 2011

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Sep

06

2011

Time to Renegotiate Cash Rental Rates

By: Chris Bruynis, Assistant Professor & Extension Educator With the late planting this spring, farmers will be harvesting somewhat later than normal this fall. The late harvest will challenge farmers to get wheat planted on time and crops harvested before winter weather arrives. Many times farm rental arrangements are discussed following harvest, but farmers and land owners may want to get this completed before harvest begins. This will allow both parties the necessary time needed to arrange a rental agreement beneficial to both parties. One of the more common questions asked of Extension Educators is what is an appropriate cash rent? Establishing an appropriate cash rental rate for a farm is difficult and is often influenced by several factors. While it is likely that each situation will have some features that make it unique, Craig Dobbins, Department of Agricultural Economics, Purdue University states the following items in this list are common considerations for many situations. The list includes land quality, fertility, tile and drainage, use of facilities, expected crop returns, risk, services provided by tenant, previous relationship history, payment dates, tillage, previous crops, federal farm program, logistics of crop movement, size and location of farm, and size and shape of fields. For more information see http://www.agecon.purdue.edu/extension/pubs/LeasePointsConsider.pdf. Another good source of information that can help determine an appropriate la...
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Farm Rents, September 2011

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May

04

2011

Opportunities for Beginning Farmers through using the Transition Incentive Program

By: Chris Bruynis, PhD, Assistant Professor & Extension Educator I have farmers nearing the end of their career frequently ask me “How is a young person supposed to enter into the business of farming?” Even though there are no easy answers, one thought that comes to my mind is that these tenured farmers are going to have to assist with the transition to the next generation, even if it is not family. To help farmers in their transition of their land to the next generation, the U.S.D.A. has a new program designed for retired or retiring owner or operator to transition expiring CRP land to a beginning or socially disadvantaged farmer who will return the land to production for sustainable grazing or crop production. This program is titled the, Transition Incentive Program (TIP) and provides annual rental payments to the land owner for up to two additional years after the date of the expiration of the CRP contract, provided the transition is not to a family member. The FSA factsheet can be found at http://www.fsa.usda.gov/Internet/FSA_File/tip051410.pdf So who qualifies as a beginning or socially disadvantaged farmer that is not family? Based on USDA’s Farm Services Agency a beginning farmer is an individual or entity who has not operated a farm or ranch for more than 10 years. Likewise a socially disadvantaged (SDA) farmer is one of a group whose members have been subjected to racial, ethnic, or gender prejudice because of his or her identity as a member of ...
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Farm Policy, Farm Rents, May 2011

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May

03

2011

Consider More than Just Money When Leasing Your Farmland

By: Chris Zoller, Extension Educator, ANR, Tuscarawas County Approximately 50% of the farmland in Ohio is leased. This is and will continue to be the case as farm operators seek more land to maintain a competitive position in today’s agricultural market. These leasing arrangements create opportunities for landowners and farmers to develop relationships that can allow the landowner to receive additional income and the farmer to spread his costs over additional acres. Valuing the Tenant It is no surprise that, in most cases, the landowner who has land available to rent wants to maximize their return and the person wanting to farm the land also wants to maximize their return by limiting the amount they pay in land rent. There are various methods available to determine a “fair” rental rate; one benefit landowners may not consider is the value of the person who is renting their land. In some cases, landowners charge no rent or a very minimal amount to the farmer. For many, this is the result of a relationship that has developed over the years and/or the reputation the farmer has achieved within the community. There is no formula for calculating the value of the farmer to the landowner, but it can result in benefits for everyone involved. As a landowner you may think it is crazy to charge a reduced or no land rent, but there are a number of reasons why this may be the case, including: An opportunity to allow a beginning farmer to get established...
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Farm Rents, May 2011

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May

03

2011

Western Ohio Cropland Values and Cash Rents 2010-11

Barry Ward (ward.8@osu.edu) Leader Production Business Management OSU Extension, OSU Department of Agricultural, Environmental and Development Economics (AEDE)

Ohio cropland values and cash rental rates are projected to increase in 2011. According to the Western Ohio Cropland Values and Cash Rents Survey bare cropland values are expected to increase from 3.1% to 7.4% in 2011 depending on the region and land class. Cash rents are expected to increase from 7.19% to 10.11 % depending on the region and land class. click here to download the 2011 Western Ohio Cropland Values and Cash Rents

Farm Rents, May 2011

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Mar

11

2011

Ohio NASS Office Release County Rental Estimates for 2010

By David Marrison, Extension Educator

The Ohio office of the National Agricultural Statistics Service (NASS) released this week the 2010 Cash Rent Estimates for the 88 counties in Ohio. This report provides average cash rents for non-irrigated cropland and pasture for both 2009 and 2010. The average cash rental rates vary from a low of $24 per acre in Noble County to a high of $145 in Darke County. The average rental rate for all counties was $100 per acre. The average pasture rental rates ranged from a low of $18 per acre in Gallia County to a high of $47 per acre in Morrow County. The average rental rate for pasture in Ohio was $35 per acre.

Click here to access the 2010 County Cash Rent Estimates report

Complete county by county statistics for corn, soybeans, winter wheat, hay, oats, all cattle, milk cows, hogs, sheep, and farm numbers can be found on the NASS web site at:
http://www.nass.usda.gov/Statistics_by_State/Ohio/Publications/County_Estimates/index.asp

Farm Rents, March 2011

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May

01

2010

Western Ohio Cropland Values and Cash Rents 2009-10

by Barry Ward ( ward.8@osu.edu ) Leader Production Business Management OSU Extension, OSU Department of Agricultural, Environmental and Development Economics (AEDE)

The full article is also available at: http://aede.osu.edu/resources/docs/pdf/D2R0YYDP-94GQ-4JKS-VOS4DHRFYGJXGKQC.pdf Ohio cropland varies significantly in its production capabilities and cropland values and cash rents vary across the state. Generally speaking, western Ohio cropland values and cash rents differ substantially from eastern Ohio cropland values and cash rents. This is due to a number of factors including land productivity, potential crop return, variability of crop return, field size, field shape, drainage, population, ease of access, market access, local market price, and competition for rented cropland in a region. This factsheet is a summary of data collected for western Ohio cropland values and cash rents. Ohio cropland values show signs of remaining stable to falling slightly in 2010 while this survey indicates cash rent levels will see little change in 2010. According to the Western Ohio Cropland Values and Cash Rents Survey bare cropland values are expected ...
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Nov

01

2009

Input Outlook and Ohio Cropland Values/Cash Rents

by Barry Ward, Leader, Production Business Management, Department of Agricultural, Environmental, and Development Economics

Materials presented at the recent OSU Department of Agricultural, Environmental, and Development Economics Outlook Kickoff Meeting held October 26,.2009 covering input outlook, land values and cash rents is available online at:

http://aede.osu.edu/Programs/FarmManagement/Programs/Input%20Outlook%202010.pdf

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Sep

01

2009

Making A Farm Rental Agreement Better

by Bruce Clevenger, OSU Extension Educator and Peggy Kirk Hall, Director, OSU Ag & Resource Law Program

When parties disagree about farm rental arrangements, often an arbitrator or 3 rd party advisor is asked to intervene if a written agreement does not exist. However, even some written agreements may not included details necessary to resolve the disagreement. What makes a well designed farm rental agreement? While most written agreements do include general terms like a description/location of the farm, who the tenant and landlord is, and the amount of cash rent or crop share percentages, some critical information may be missing to protect both parties. For example, disagreements can arise about termination or renewal deadlines, and parties may look to Ohio law to find guidance. However, Ohio is a state that does not have a statutory law on farm lease termination or renewal, so it is important to define dates that both parties can agree to and include those in the written farm lease. Does a written or verbal agreement imply a partnership? Does the agreement increase the landowner or tenant liability for the action of the other party? Who has access to production records from the farm and how does that impact Farm Service Agency program participation? Who pays for lime? Are the buildings included in the agreement and who performs repairs? These are just a few of the questions that can arise from poorly constructed farm rental agreements. OSU Extension offers a Farm Rental Agreement Checklist to guide landowners and tenants toward a ...
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Apr

01

2009

Flexible Cash Lease Calculator Decision Aid at OSU Farm Management

by Barry Ward (ward.8@osu.edu) Leader Production Business Management OSU Extension, OSU Department of Agricultural, Environmental and Development Economics (AEDE)

Now, more than ever, big swings in crop prices and input costs points toward negotiating some flexibility in cash leases for farmland. “Volatile” and “Uncertain” are two words that might best describe grain prices and input costs for row crop production heading into the 2009 planting season. With this increased volatility and uncertainty, risk increases for producers and more uncertainty arises about the amount of cash rent to pay. On the other side of the negotiating table, landowners, seeing higher profitability in recent years for commodity crops, are possibly seeking higher cash rents. So, just what is that “most equitable” cash rent amount and how can it be maintained from year to year or contract to contract? One answer is negotiating a flexible cash lease arrangement that varies from year to year based on price, yield and input costs. Price, yield and input cost changes from an agreed upon starting point will trigger changes in the base lease amount. Historically, flexible cash ...
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Feb

01

2009

Ohio Cropland Values and Cash Rents 2008-2009

by Barry Ward (ward.8@osu.edu ) Leader Production Business Management

OSU Extension, OSU Department of Agricultural, Environmental and Development Economics (AEDE) Ohio cropland values show signs of falling slightly while cash rents show signs of leveling off or seeing modest increases depending on the region and land productivity. Ohio cropland values are expected to decrease from 2.4% to 4.9% in 2009 while cash rents are expected to range from a decrease of 0.24% to an increase of up to 1.24%. The “Ohio Cropland Values and Cash Rents” survey is conducted annually drawing on the expertise of numerous professionals that are knowledgeable of Ohio's cropland markets. Surveyed groups include farm managers, rural appraisers, agricultural lenders, OSU Extension Educators, farmers, and Farm Service Agency personnel. One hundred eighteen surveys were completed, analyzed and summarized. Respondents were asked to give responses based on 3 classes of land in their area; “top” producing land, “average” producing land and “poor” producing ...
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Farm Rents, Financial Management

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