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COMMUNICATE! Stay in contact with your landowners, suggests David Erickson. Make them aware if costs are stable, or if they're higher and crop prices are much lower.

Cash-rent conundrum continues across Indiana, Corn Belt

Profit Planners: Ag economists insist cash rents will drop, but what do you do if aggressive farmers are pressuring your landowners?

Question: A couple of aggressive farmers contacted some of my landowners this past fall and offered more cash rent. I still have the farms. Should I be proactive and prepare to offer more cash rent for 2018? Or should I just let things play out?

The members of the Profit Planners panel answering this question include: David Erickson, farmer, Altona, Ill.; Mark Evans, Purdue University Extension educator, Putnam County, Ind.; Steve Myers, farm manager, Busey Ag Resources, Leroy, Ill.; and Chris Parker, retired Purdue Extension educator, and livestock and forage producer, Morgantown, Ind.

Erickson: I encourage farmers to maintain an open dialogue with landlords at all times, not just when negotiating rent. Make sure you include them in how you are planning for each new crop, and show them your crop budget projections. Also, follow up once the crop is harvested to share the real numbers on production, and discuss the potential for profit with current crop prices. Good communication goes a long way in developing trust.

Evans: If you have been doing a good job of communicating to landlords, and doing the little extras it takes to keep landlords content by tailoring approaches for their farm, it doesn’t make sense to offer more cash rent. Current budgets and ag economics don’t support an increase in cash rent. Continue to be proactive and communicate.

Myers: I believe you should prepare for the discussion, but exercise patience. I would put that conversation on hold at this time. No one’s crystal ball is that good — not even those aggressive farmers offering more rent. I would suggest that you stay in communication with your landowners as changes, both positive and negative, occur. Your efforts to keep landowners abreast of whatever those changing economics are is a positive, proactive approach that you can react to as the year plays out.

Parker: In my professional experience, being proactive is much preferable to being reactive. Check your finances, know what you can offer as cash rent, and then visit your landlords. Also, understand that some landlords value other factors, such as field edge and ditch mowing or soil fertility maintenance, along with a reasonable cash rent. Emphasize that you do or can do those things, if need be.

Summing up: All panelists agree that being proactive starts with developing and/or maintaining open lines of communication with your landowners. Don’t wait until it’s time to renegotiate cash rents to visit landowners. Make them aware of your crop budgets and what adjustments you’re making this year.

However, now may not be the best time to start talking brass tacks about adjusting cash rents for ’18. No one knows right now how price and cost trends will play out this year. Keep communicating, and be prepared to discuss cash-rent levels when the time comes. 

 

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