Re: Need some advice!

Posted by MarkB on February 22, 2002 at 03:51:48 from (64.79.80.13):

In Reply to: Need some advice! posted by J.C.F. on February 21, 2002 at 13:46:41:

You've received a lot of good advice here, but I'll just add my two cents.

First, can you tell us what part of the country your farm is in? A 120 acre farm is pretty small in many parts of the country. On the other hand, if you have good water, you can do OK with 120 acres of vegetables.

Second, the advice to rent it out for at least the near term is pretty good advice. You can get a cash flow out of it, while helping one of your neighbors pay for his equipment. However, in most parts of the country there are three different rent arrangements:

1. Cash rent. The tenant pays you a fixed amount each year. This is the safest arrangement, because you have zero risk. Normally you will receive no government payments.

2. Share rent. You lease out the land for a share of the crops. Normally you would get a share of government payments. These arrangements can get quite complicated, as the landlord sometimes is expected to kick in for some expenses (e.g. fertilizer, herbicide, seed, transportation). You are at risk, since a crop failure leaves you with expenses and no income. Be very careful of the terms of a share lease, and who you are renting to.

3. Custom farming. You pay a negotiated rate for each farming operation. (eg. plowing is x dollars per acre) You get the full government payment. If you decide that you truly want to get into farming, this will probably be your only option. Some equipment is so expensive (e.g. combine) that you'll never be able to pay for it with a 120 acre farm, it's better just to hire it out. Likewise, if you purchase some kind of specialized equipment, you can do custom work for other farmers.

What you need to do right now is go out and talk to your neighbors. Chances are that most of them will be eager to rent your farm. They're also the best source of advice if you do go into farming yourself.

As for rental and custom farming rates, many state farm extension services routinely survey farmers to track the prevailing rates. That will give you some ball park figures before you start to deal with your neighbors.

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