Tight margins are the norm in agriculture right now. We are one of the many operations that walked away from land rental contracts since harvest.
It is hard to walk away from any farm, but especially so after 12 years. There was a lot of time, energy, and resources invested. Over the years, we had installed irrigation, cleared fencerows, done drainage work, and more.
However, this was not unforeseen. All businesses must review their operation. Farmers are no different, we must know what is supporting the operation and what is dragging you down. I had just scraped by on that parcel the last couple of years. A torrential summer rain, followed by root rot, caused stalk lodging and ate up any extra margin in 2016. Yields were better in 2017, but low prices kept revenue low.
The lowest returns
Historically, this farm was the lowest returning properties we had. In dry years, the corners would burn up, and in wet years, the muck would never dry out. The worst years were wet followed by dry.
Based on yield history and current commodity prices, I made an offer for 2018. Initially it was received in a positive light; however, offers from other operators were solicited. At least one of them came in higher. The landowner and I negotiated a value to buy out my irrigation equipment and we parted ways. Last week we had a mild day so we retrieved a few odds and ends we had sitting on the property.
Fortunately, our parting was amicable. I’ve heard of some operations that were just done with farms. They had determined not to re-rent properties no matter what the price, and declined to even make an offer. I’ve also heard of situations where rents went unpaid.
This isn’t to say we aren’t looking to rent ground. We are actively looking for new ground. Even so, we need to be selective moving forward. We remain focused on doing a better job and increasing production/profitability on the acres we are farming. Farming fewer acres better should help offset lower gross acres.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.