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Corn+Soybean Digest

It's A Delicate Dance

Editor's Note: Since this is a sensitive subject, some sources agreed to interviews only if we kept them anonymous.

Granted, there are situations where cold hard cash is the only thing that matters in attracting or keeping a landlord. But how you handle your farming operation and how you treat people may be just as important in making or breaking ties with a landowner.

  1. Communicate.

    Keeping lines of communication open between you and your landlord is critical in today's land market, according to Jim Jensen, Iowa State University Extension farm management specialist. “The volatility of prices right now makes it even more important that you communicate,” he says.

    Although a third party, such as an attorney, may be involved in writing a lease contract, it behooves farmers to talk directly to the existing or prospective landlord early in the contract agreement process.

    “Invite them over for coffee,”suggests Mike Thompson, executive director of the Iowa Mediation Service. “Ask them, ‘what is important, what do you want me to do, how do you want this property to look?’ At the same time you have to divulge what you want.”

    Don't stop the flow of information once you get the lease signed. A veteran Illinois farmer who rents two farms says it's important to keep your landlord apprised of your plans, especially if you propose altering the property. “Don't yank a guy's fence out if you haven't asked first because maybe he likes it there,” the farmer says.

    Updates on the status of your crops can help keep landlords invested in your success and create a friendly, business-like rapport. Phone calls or emails to report information such as weather conditions, fertilizer rates, chemical applications and yield are often appreciated and especially helpful to landlords who don't reside in the area.

    “You can fire off an email or even send a picture, such as after tile is put in or work has been done,” says Eldridge, IA, farmer Jerry Mohr, who has rented one 240-acre farm on a crop-share basis for over 30 years. “You can have a running record.”

    A north-central Iowa farmer who rents approximately 3,000 acres agrees that staying in touch is essential. “We've traveled thousands of miles before to meet with a landlord once a year,” he says.

    And don't be silent if things unravel in the relationship, warns Thompson. He recalls a recent mediation case where the landlords, a retired farm couple, felt slighted when a tenant was late on payments and didn't bother to call and discuss it.

  2. Be a good steward.

    Finding a tenant who will keep fields weed-free and fertilize appropriately is important to most landlords, says Earl Spickermann, a loan officer with First Central State Bank, DeWitt, IA.

    Dean Holst is a retired farmer and the head of a family corporation that rents out five Scott County, IA, farms totaling about 600 acres. He selected tenants — mostly under age 40 — based primarily on their farming ability. As an independent representative for a seed company, Holst's farms are showplaces for his products and he says he doesn't want “to worry there will be weeds in the field or that they'll have a good crop.”

    Mohr adds that many owners have an emotional connection to the farm even if they haven't lived there or operated it. “It may be they want to remain attached to the farm because their grandfather started it in 1886,” he says.

  3. What's important to one landlord may not be to another.

    Not all landlords want the same thing. One owner might not be concerned with the day-to-day operations of the farm, while another wants to maintain an ongoing, back-and-forth dialog about weather, crops, pests, etc. A retiring farmer may want to be seen as an advisor and sounding board.

    Thompson recalls a recent mediation case where the landlord expected the tenant to apply chemicals the way he had. The tenant explained that he didn't realize the owner wanted to discuss specific farming practices. Through mediation, they shared their philosophies about techniques and agreed upon a set of basic practices while still giving the tenant room to operate as he saw fit.

  4. Show you care.

    Often it's the extras like mowing road ditches, plowing snow, letting the landlord use your equipment around the farm or even dropping off sweet corn in the summer that mean a lot in satisfying a landowner, says Spickermann.

    Mohr agrees that successful tenant-owner relationships are more than just business deals. “You invest personally, financially and in the management of the farm,” he says.

    When Mohr recently spotted a newspaper picture of his landlord's son — named to a coveted coaching position — he clipped it out and mailed it to her, along with a congratulatory note. It was a small gesture but Mohr says he took time to do it because it reinforced their mutual pride in their families.

    “You might attend a grandchild's ballgame or send a graduation card,” says Mohr. “These are little things, but they're important and it's ongoing.”

  5. Be fair.

    Spickermann says one of the quickest ways to get into hot water with a landlord is by paying a premium to another landlord for similar ground. “If you get into a rental auction (situation) and bid rents up versus what you are paying your current landlords, that can be a problem,” he warns.

Establishing a price can be a delicate dance. The north-central Iowa farmer keeps close tabs to make sure his rental prices remain competitive. “If I have a landlord who for some reason has slid below the average cash rent, I use something I consider fairly unbiased like the Iowa State cash rent survey. I'll say, ‘I think we ought to bump up the cash price,’” he explains.

A Muscatine, IA, landlord says he has struggled in setting fair cash rental prices given the volatility of grain prices and yields and the long span of time between when rents are set and when crops are marketed. “It's difficult to establish an agreement that is fair to both parties in September 2007 for a crop that will be grown in '08 but might not be marketed until '09,” he says.

But if 2007 is any indication, this landlord says he's assured he'll be treated fairly by at least one tenant. “One renter has given me $20 an acre more on this year's crop which was not even in our discussion last year,” he says. “It told me he has my best interests in mind and he intends to be fair.”

Fairness works both ways. As he was in the midst of discussing rental agreements for 2008, Holst says he planned to increase fees the same amount per acre across all five tenants.

Establishing a long-term, healthy relationship with a landlord is a dynamic, ongoing process. “Don't assume they maintain the same wants and needs over time,” says Thompson. “Stop to think about what they're really after.”

And keep in mind that even if you do treat a landlord with the utmost fairness and professionalism, you still may not hold on to a farm for 30 years. “I've seen landlords who have been really good to pick up stakes and do something different. Either they sold a farm or a relative in the area, all of a sudden, gets to farm it,” says the north central Iowa farmer. “Regardless of what you do, you might still lose in the end. There's nothing tougher from a farmer's standpoint than having farmed it (land) for 10 years and then being asked to walk away from it. That's really gut-wrenching.”

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