Renting Farm Land

To make a long story short I have some land that a local dairy farmer is renting, and with an old handshake agreement he made with my grandfather lets just say he is getting a bargain. Plus he using more land now than he originally started with, and doesn't pay a cent more. I need to come up with an agreement that is fair to both of us, (not that it matters but with the size of his farm and milking around 3000 cows he can afford to pay what it is worth) and anyone who lives in the central new york area can agree property and school tax is outrageous, and that is what the money will be going towards. Is there a certain dollar amount per acre that is the standard for farm land rent? How do I figure that out? Call a government office? Any help would be greatly appreciated, and thanks in advance.

Talk to your county agent, they should have local numbers. It
is $350-$450 per acre in eastern Iowa for cropland. Pasture is
less than that.

I doubt very much that land in New York state would bring anywhere near what it does in eastern Iowa.

it is all crop land, 3 wheat fields, 6 corn fields, 5 hay fields

I would think it would bring at least $150

Just be aware that dairy farming is "in the tank" right now (pun intended), so don't overplay your hand, especially if you don't have alternative renters in mind.

As others have said, local ag extension office should have some idea of local rental rates- but a rule of thumb is that landowner should get in the range of a third of the crop- so figure out what yields he is getting, and the resulting gross income per acre, and divide by 3. You can bet that you'll end up with a higher number than he is going to be happy with.

Also be aware that you even bringing up the idea of raising the rents is going to forever change the relationship between the two of you- up to now, it has been his deal with grandpa, but now it will be with you, and you are trying to put it on a business-like footing. Which will hit him in the pocketbook, at a hard time for him.

Leverage is the big determinant in most negotiations. In this case, it comes down to alternatives: Do you have alternative renters if he won't step up to the plate, and does he have alternative ground he can rent if he decides you're asking too much.

In my area (southwestern Washington), crop farming is about as dead as it can get- If I could get anybody to cash-rent my ground, at pretty much any price, I would be thrilled. As it is, I have a deal with a local hay guy which won't strike anyone as a hot deal for me: He gets the ground for the first 2 years for free, to compensate him for plowing, replanting, fertilizing, etc. Then, either he gets 2/3 of the hay and my third is left on the ground, or I can have all the hay after paying him $2 per bale to put it up (price of hay here is $3 to $4 per 50# small square).

And my alternatives were: [sound of crickets chirping]

I've been on both sides of the situation, though much more as a lessee than as lessor. I'd suggest sitting down with the farmer; just being very candid with him and asking what he thinks. If rental property is hard to come by in your area, you may be surprised by his response.
As others have suggested, the extension service or friends who are in one or t'other camp will have some ideas of what the property is worth per year.

(quoted from post at 08:33:40 06/29/12) I would think it would bring at least $150

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don't bet on it

First let me say I feel that you have some misconception about Dairy Farming. Just because he milks 3000 cows does not mean he is rolling in money, Makes me remember my wife her paents were cattle and grain farmers. As a little girl she always told them she was going to marry a Dairy famer because they had more money not relizing it was the constant drip money coming in and not having to wait for grain to be sold or catle shipped. She married me and found out the difference. Perhaps he does have a good flow of cash from 3000 cows but he has a lot of expenxe feeding that bunch. If they are good milking herd. Figure 30 lbs of grain and 30 lbs of hay per day per cow as a minimum. There is no get rich scheme. gitrib

I am also in Central NY. It somewhat depends on what land competition is in you little corner of the world and how good your land is. Here in my area excellent river bottom ground can be rented for $50-$75 and acre. Certainly not more than $100. If there are a lot of dairies and crop guys in your neck of the woods and you want top dollar consider putting it up for bid. If you have a good relationship with your current tenant you may be willing to accept a little less than top dollar but come up with a figure that suits you both.

The USDA has statistics on all this, you can search by county. I
am in one of the highest areas.

Rents are all over here in Maryland, and it varies with the end use of the product and what both parties agree to. I am a beef producer, and I do not pay the amount the grain producer does for an acre. My average rents are around $75 and acre, and it varies with the "bells and whistles" on the farm. There are several places the rent is free, but I have to keep the place trimmed and mowed on non workable acreage. Several places are a low, older and long term rent, and again I do extra work around the farm to keep it neat. If erosion controls are needed, I do them. If trees need trimmed, again, I do them. The BFO's in the area generally pay more rent, but they do little or nothing for the farm. If a ditch gets bigger, they just farm around it and adjust their rent down some. If a tree comes down, it lays there. If the old orchard needs mowed, the owner does it. There are many ways to establish a rent. Mine is much sweat equity. You know your current renter, and there's a good chance he will work with you. Don't be greedy and he may just be more accomodating than you may believe. He will probably know the rents in the area and be willing to work on something you can both live with.

Here in Minnesota the University has those numbers on there web site.

I don't have any misconceptions about dairy farming. I've worked on a lot of farms and know a lot of farmers. New (massive) barns, trucks, combines, choppers, tractors, house etc, paying fair rent shouldn't be an issue. I have known him since I was young so I don't think it will effect our relationship, again I want to be fair with him. A few other large dairy farms in the area have asked to rent several times. I just need to know who to call to get accurate and fair rental pricing.... I will try those suggestions I appreciate the responses. Thank you.

I don't know if you have an "in" with a local bank or ag lender but even if you don't I would try one of those. One time I was looking to price some corn for silage for a farmer that inquired and it was as simple as asking. Farm Credit in the past had an in-house survey in terms of the financial structure of dairying in the Northeast. Other sources may possibly be biased. Most extension agents are intelligent and honest but every once in a while you will find one with a bias, also. There used to be one many many years ago that only seemed interested in helping the top farmers in the area. I found his attitude hard to take so after the first time I stopped to talk to him I decided there was no point in doing so again.

In our area land rents for around 4/5% of its
value.$10000 acre land has people renting at $400
plus.Pasture usually brings $1.25 per day per head.

If a land grant university is close they will have average land rents on the web. We use Univ Illinois figures as a guide. Rent tends to follow grain prices as they go so goes land rent. And old rule of thumb is a landlord should be getting 3% or so of land value for one year rent. Lot depends on soil productivity and how much rainfall you get also. Here in the Midwest land rents are all over the board from 190 to 350 acre. Few BTO's using the high numbers. Talk to the renter and ask for what he thinks is fair in today's land rent market. Then let him answer. Do your net research first. I would get an agreement in writing after finished.

Location, quality, size, and shape of fields all play into the worth of the land.

Is it sandy, to owet, clay, hills, flat, well drained..... Good land is worth top dollar in your neighborhood, poor land is worth 1/3 of that. So you have to know what it is you have.

Bigger fields tend to be wotrth more, as it's worth divingtogo farm it. Small 5-20acre plots are harder to work, takes more fuel to drive there than to actually farm them.

Small or irregular fields that follow tree lines, curved roads and ditches, etc. are worth less, as it's hard to manuver equipent in them, you overlap and drive over stuff, spend all the time turning around instead of actually working. Big rectangular 80 with no obstructions is worth a lot more than 5 fields along a pond, around a farm yard, and with a grove in the middle, even if it totals 80 acres all together....

Your local Extension office or an ag banker should have the local rental numbers, then you have to adjust that number to fit your dirt and field types.

You are not in the heartland whererents go 300+, youare probably more in a $150area, but your land & field shapes willmodify that....

--->Paul

Can you tell us how much land he is farming and what he is paying you? Also what is the ground like?
I know a guy that is getting a little shorted on a 20 acre parcel he is renting to a guy. But he isnt saying anything cause the farmer pays in cash when he shows up in the early spring.

$110 an ac. here in my part. Good flat land brings more.