Posted by Mike (WA) on June 29, 2012 at 08:46:56 from (69.10.197.35):
In Reply to: Renting Farm Land posted by greenmachineman on June 29, 2012 at 07:42:22:
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]
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