We tried to protect ourselves from poaching BTOs.

My sons and I have had a couple of run ins with some of the local BTO in the last few years. I had began to worry about one(or more) of them trying to play some kind of revenge game. So my sons and I set down and came up with a plan to try to head any land issues off.

We cash rent all of the ground we farm other than our own. We do not have any left on the shares. We also have not gotten pulled into the sky high rents that many are offering. We try to pay what is fair and still take care of the ground like it was our own. That means keeping the places mowed and fences in repair. Also keep the trees trimmed back if needed.

So with interest rates fairly low we decided to offer all of the land lords full spring payment for the 2013 crop year if they would would extented the current rental contract for at least three years.

It worked!!! All but one took the offer. The one wanted too but his wife is in poor health and he is not sure if he will have the farm for three more years. His farm is rented by my oldest son. My son decided since the fellow was a good land lord to go ahead and pay him too. HE had enough troubles with his wife's health concerns that Robert decided that the full rent may help the landlord so he paid the rent in full for this year.

It kind of takes some stress off with not having to worry quite so much about this. Also made us happy that the land lords seem happy with the job the family is doing for them.

So just thought I would share some good news for once.

Best wishes. I hate renting land. If I could have gotten the home farm I wouldn't have to be renting any. I want to take care of the land like it was mine. They want their money and a wildlife preserve at the same time.
I did make my last payment in Jan. NO debt. So that is something.

You're a good business man. My cousin and I had this arrangement for over ten years (he was the farmer, I had forty acres). That way we didn't have to be in each other's business. In good years he gave me a little bonus after harvest. One dry year in June he was worried about the crop, I told him don't worry you may get a discount on the fall rent payment. We had a crop anyway. He always saw to it that I got to run the planter and combine some when working on my ground.

What happens if the bottom drops out of the market next year? High rents and low prices won't work too well.

We are not paying the sky high rents that many are. The average rent we pay is only about 15% higher than our 10 year average. We have not had to get into bidding wars. I will not do that. If they want sky high rents then they can go somewhere else.

Most of our rental agreements have a bonus plan that kicks in if the prices or yields go over a certain amount. The last several years the landlords have gotten a bonus based on this formula.

They may still get a bonus this year but that will not be until Dec. we just paid the base rate all in the spring rather than the half spring and half fall.

Hi, I don"t fully understand your land rental/owner use. Although have read about the system here on the tractor board over the past few years. Exactly how does it work? Thanks, Murray

The simple rental agreement is just paying a set fee for use of the land for one year. Most cash rents are paid half April 1st and the balance Oct or Nov 1st.

One major legal issue that is different state to state is on the continuing use of the land if not under a written contract. Here in Iowa the tenant has some pretty strong legal protection. Either party ( land lord or tenant) has to notify the other in writing before Sept. 1st. if they want to change the agreement for the next crop year.

Not many states have this. In those states you have to depend on having a iron clad contract to protect your self.

You're lucky. Several problems exist here. A couple potential landlords have a mercenary mentality. This means absolute top dollar and issues to care of the land do not matter. Offer 1 penny less than some poacher and you're out on your tail. Want to put down U-235 as a growth enhancer..sure.
Then we have the people who I suspect of taking part of the rent under the table. There is an owner here who seems awfully happy to be getting substantially under the going rate and the tenant does not mow, clean ditches, etc. as payment in kind.
Also, we have the type who flat out have lost touch with reality. Kind of hard to describe here. I guess one of the issues that could be described is talking to them could be like walking through a minefield.
Then there are the people who are obsessed with the BTO's who have buddy seats in all their tractors, combines, etc. even though they will never go for a ride.
I could make the best business offer possible and still have less than a 50-50 chance to pickup ground.
Anyways, congrats on being able to implement a plan that benefits both parties and neither has reason to feel cheated.
Lastly, the competition here has gotten almost brutal here and not long ago poaching was unheard off and poachers shunned. But not anymore. Guys are readily trying to grab other farmer's holdings and stopping by the competition's house to establish who has what and what the retaliation for competing (not poaching) will be. Even some of the agribusinesses are showing very open favoritism.

We're not in a situation here where we have to rent land. Bought enough back in the fiftys and sixtys to meet current needs.
I watched a segment on RFDTV about current land rental contracts which were adressing issues of soil depleation, (fertility, surface condition, residue, and lingering spray residue) primarly on "year to year" rental contracts. With the high crop production costs today, a cropper doesn't want to invest heavily in soil preservasion practices unless he has a longterm contract. Weed control and fertilization, is a major cost issue, and short term herbicides only retard the progression of hardy prolific weeds.
Crop management is a science today.
JD you are very smart. You can now formulate a 3 year crop management program to address fertility and weed control issues on your rented land to insure max yields, even with marginal weather.
Loren, the Acg.

JD Seller Good renters like you are hard to come by.

Wow. You were still on the half and half payment deal? That went out around here in the 1990s. You must be in a little friendlier area. Tho, there are a lot of good folk left around here, you wouldn't get any land if you weren't offering all the rent ahead here.

Good plan, glad it worked for you.

Only issue is, you kinda set it to all blow up again in 3 years. Perhaps you got things staggered out a bit so not everything comes up in the same year again, the risk of losing all of the rents in the same year would be bad.

Paul

we have the best tenants you could ever have on both of our farms. rent is alot lower then the going rate, but they take as good if not better then their own places. in fact the renters have been the ones to raise the rent in the past. but in return they both have gave bonuses in the fall, if its been a good year.
one has put tile in an put fences up have never seen a bill. the other one put fences up or does dozing for us,. never see a bill.
need help they will be the first ones here.
both will be farming these farms as long as they are farming. both farmers are partners with their boys also.

NY 986: There is competition here too. We just are not going to get into the bidding wars some of these BTOs want to do. Most of the ground we have we have had for many years. My middle son is renting ground My Grand father rented in 1940. We have farmed that ground now for over seventy years. We must be doing something correctly.

Most of our contracts are for five-ten years. The extra three was what we asked for and we got longer on more than half of the farms.

We have all the ground we want at this time. My sons all have off farm jobs. The older two have very good off farm jobs. We have talked about them going to farming full time. We just do not think that is good risk management at this time. Farm income has been sky high the last few years. That will change. When it does exactly is anyone guess but it will happen.

The BTOs that are throwing their weight around right now will be in sorry shape when that happens. Also when farm ground price goes back down and the rents follow, the outside investors will not make the returns they are seeing now. So they will suffer for their mistakes.

Also we turned down more ground than we currently farm this year. Most of them would have been getting less rent but they did not like how their land was being handled now. Also we have a reputation of always meeting our obligations. How many of the BTOs will be able to do that when things crash???

Their are a few paying $535 an acre cash rents just to the north of us here. Even if the landlords have a contract how are they going to get blood from a turnip???

People see what goes on and they talk about what and how they are treated. Also many do not want to deal with a miserable person. It kind of reflects back on you.

JD:

I'm NOT a farmer so I have no idea how any of that works. Do you run the same crop on all of your lands or do you run Corn on one, Wheat on another, etc., etc. .

On my farm I usually rotate the ground year to year. I have hay, oats, soybeans and corn. The corn is usually planted into the soybean ground. The soybeans go into the corn ground. When we need to rotate the hay. We spray and kill the hay in the fall and then plant corn in the spring in that ground. When we start a new hay seeding we plant oats as a nurse crop with alfalfa and brome grass into last year's corn ground.

The difficult part is that some of my ground is steep enough that you can not raise soybeans on it so you have to have it in hay or corn. I have about 100 acres of hay. So I try to seed down 20-25 acres each year. So the steepest ground is usually in hay. It makes planning the crops a brain bender at times.

My sons raise most of the crops on the rented ground. Usually we are just in a corn soybean rotation there. Until just the last 4-5 years we would have been in a 50/50 rotation. Now it is about 2/3 corn with a 1/3 soybeans. So it is two years corn with one soybeans now.

Same here. You better be willing to lay down the full amount on day 1 of the agreement, AND, you better be willing to take care of the property (ie trees, mowing etc) while you have property, or you won't be back next year. Been that way for quite a few years. One local "bto" who farms around 4500 acres total goes in and cleans out fence rows, tears down old dilapidated buildings, installs culverts @ road access, spending whatever it takes to keep yields as high as possible all the while with an eye to the future, and in general, maintains property as if it was his own. (In addition to paying highest rent in the area) Most of these guys didn't reach the level they did by being idiots.

I don't try to compete with him. No point in that. Then again, I don't begrudge him for his success and ambition.

My situation is different unfortunately. Most of the BTO's have other ventures going besides farming so it is going to take more than a down turn in farming to push them back.
Even with the good prices I really need to be working more ground not for today but to be able to make sufficient income when things do slide back. Myself and my closest neighbor who I get along well with have had very little luck talking to potential landlords. The ground we have the best chance to pickup is generally poor quality for row crops and is currently way over priced.
Off farm jobs are very hard to come by here and people just do not quit jobs here whether it is stocking shelves at the local grocery or changing oil at the local quick lube. I do have four years of college but without moving away I doubt I will be able to utilize my education here. I would pickup new education if I knew it was going to lead to something. The whole effect has been it weighs me down. I just traded planters recently and when the new to me planter rolled in the driveway I just did not get all that excited.
I'm glad you did post as I do enjoy hearing how others have successfully managed issues relative to farm business.

I see allot of talk on here about BTO's. How many acres does someone have to farm to be a BTO?

3-5 year contract fall payment dec 1 on all of my rented ground

I guess you guys dealing with BTOs are somewhat lucky. We really don't have ANY operators in the area now. Most of the good tillable ground has grown 1/2 million dollar McMansions on 1/4 acre "estates". I've been lucky for the past 28 years that there has been one operator or another willing to mow and bale the 8 acres below my house. I've never charged any rent or collected any money. It just needs managed. Depending on the year I've seen as little as 25 tons and as much as 60 tons of hay taken off that field, the only cost is their time and trouble. This year I may have to hog it to keep it from going to weeds and brush.
Funny thing is I've had a couple horse people approach me about buying the hay off the field. I don't have any haying equipment so somebody else would have to do it. I explained this to a few of them only to find out they have horses, but absolutely no concept of putting up hay.

It comes down to some pretty serious confrontations and threats around here. One guy was real forward and stuck his nose everywhere. I think he got his life threatened. He's mellowed some now.

My farm neighbor lost 179 acres this year due to not pre paying and not having any kind of a multi-year written contract with the previous owner who died last summer. That farm sold around Thanksgiving to an investor group. One in the group is a large BTO who I think is a distant cousin of mine. My neighbor only found out in January that he would not be offered a chance to rent it via the grapevine. Poor business practice on my neighbor's part, poor communications by the new owners.

It is not a given. For some, it is anyone who farms more acres than he does! So he bellyaches and whines. Lot of it is jealousy. Many BTO are very good, efficient farmers. If not, they would never achieve BTO status. Yes, goes both ways. No shortage of sloppy smaller operators either. Same as in any other business or industry.

Exactly. Seems a lot of smaller operators want what they want, with no competition, and they want it at below current market prices. Same people generally whine like a cat with it's tail caught in a car door when someone wants to buy hay from them at below market price (as an example)

A lot of people are stuck in a time gone by, and refuse to accept the fact that others have adjusted to the times, with 'em or without 'em. Like it or not, times have changed. Regardless of how well a person adjust's, times will continue to change. It's just a reality some folks won't accept.

Let's see:
1) No competition wanted or tolerated.
2) Rent, fertilizer, seed, etc. below market price
3) Cries when somebody wants him to cut his price
4) Cries when he gets beat on a rental deal.
You just described four BTO's who have spoken out since New Year's Day around here. Even the Mennonites are snipping at each other here.