Time to re-negotiate cash rental rates

By Chris Bruynis, Ohio State University Assistant Professor & Extension Educator

With the late planting this spring, farmers will be harvesting somewhat later than normal this fall. The late harvest will challenge farmers to get wheat planted on time and crops harvested before winter weather arrives. Many times farm rental arrangements are discussed following harvest, but this year farmers and landowners may want to get this completed before harvest begins. This will allow both parties the necessary time needed to arrange a rental agreement beneficial to both parties.

One of the more common questions asked of Extension Educators is what is an appropriate cash rent? Establishing an appropriate cash rental rate for a farm is difficult and is often influenced by several factors. While it is likely that each situation will have some features that make it unique, Craig Dobbins, Department of Agricultural Economics, Purdue University states the following items in this list are common considerations for many situations. The list includes land quality, fertility, tile and drainage, use of facilities, expected crop returns, risk, services provided by tenant, previous relationship history, payment dates, tillage, previous crops, federal farm program, logistics of crop movement, size and location of farm, and size and shape of fields. For more information seehttp://www.agecon.purdue.edu/extension/pubs/LeasePointsConsider.pdf.

Another good source of information that can help determine an appropriate land rental rate is the research report prepared by Barry Ward, Agricultural, Environmental and Developmental Economics, Ohio State University titled Western Ohio Cropland Values and Cash Rents 2010–11. This report can be found at http://ohioline.osu.edu/ae-fact/pdf/11-AED-911.pdf.

Finally, landowners and farmers often inquire what should be included in a quality land rental agreement. Although a qualified attorney should always be consulted, there is a good checklist that was written by Don Breece, OSU Extension. This checklist allows users to think through the different components that are in most good farm leases and can be found at http://ohioline.osu.edu/fr-fact/0003.html. Additional question on farm rental agreements can be directed to your local Agricultural Extension Educator or by email to the Ohio Ag Manager Team at ohioagmanager-on@ag.osu.edu.

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