Farm Progress

Farmers should use these five tips when discussing leases with landlords.

January 2, 2017

2 Min Read
UP FOR NEGOTIATION: In a down ag economy, many farmers and ranchers are looking to trim their costs, and one way is by renegotiating land leases. Communication remains the key to helping landlords understand your financial position.Photo: Jevtic/iStock/Thinkstock

Renters and property owners are negotiating new farmland leases in response to lower farm commodity prices, says Joe Koenen, University of Missouri Extension agriculture business specialist.

“I know of renters who are negotiating leases. Several are being successful,” Koenen says. “Overall, so far it seems relatively smooth.”

Koenen teaches MU Extension classes on farm and recreational ground leases. He finds that communication helps landlords and tenants find a middle ground for new leases. He finds that landlords in tune with lower farm prices recognize that tenants will request rent adjustments. Some owners, however, resist the change. Landowners who invested in land with expectations of a set return seem most reluctant to renegotiate new terms, Koenen says.

Here are five tips to help you renegotiate a farmland lease:

1, Talk often. Open communication between landlord and tenant throughout the term of the lease — not just when down markets hit — is key, according to Koenen. “Communicate every year, not just when prices go down,” he says. Talk to landlords about income and expenses and how they affect your bottom line. “Agriculture is cyclical,” Koenen says. “We’re in a downturn. Everybody is in the same boat.” He says income on current Missouri corn-bean rotation farms is down more than $150 per acre.
2. Be realistic on rates. Do not pressure your landlord to accept an unrealistic lower rate, he says. Renters do not want to put landlords in the position of putting the land out for bid. Renters should consider additional factors, such as proximity to other ground they farm.
3. Discuss dependability. Tenants who are good stewards of rental property should remind landowners of this. Loyalty and tradition still matter in rural areas, Koenen says.
4. Barter for rate discount. Koenen recommends that tenants offer something of value to landowners to offset the feeling that they are losing. Tenants may be able to offer services such as plowing snow on the landowner’s roads, marketing timber on the property or fixing fences.
5. Share your budget. Don’t bring up topics such as your new pickup truck or the expensive vacation you are taking, Koenen says. The landlord will be more willing to lower rent if he sees that you are cutting back on your budget.

He recommends that renters calculate a five-year average of their farm income and expenses before meeting with their landlord.

For more information on current rental rates, the USDA’s National Agricultural Statistics Service, at, releases average cash rental rates for farm, forage and pasture ground each September. MU Extension studies rates every three years.

Source: University of Missouri Extension

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