April: Three-step Process for Renting More Ground

April: Three-step Process for Renting More Ground

Identify potential farm land partners, share information and build relationships.

Whether he's selling kitchen gadgets or Super Bowl ads, every good salesman starts by defining potential customers.

Farm accountant Darrell Dunteman says it's no different for young farmers looking to gain more ground. Selecting the sales target area is the first step.

"I tell young farmers to start by drawing a circle with a five-mile radius and identify every piece of ground in that circle," Dunteman explains. "You want to know who farms the ground and how old they are."

ADDING LAND: A strategic approach can help net you the ground you need.

From here, young farmers should work to ingratiate themselves with the farmers who are nearing retirement age and do not have a farming heir. Avoid bumping up against multi-generational farm operations with plenty of farming heirs, Dunteman recommends. If a landowner has stayed with the same family for several generations, there's little chance of a young farmer squeezing in as the new tenant.

The leave behind

Once potential landlords are identified, it's time to share a little info. Dunteman refers to the "leave behind" as a sales book. Essentially it's an extended resume. He recommends a list of equipment, a short narrative about yourself and some basic financial data.

When including financial data, Dunteman cautions young farmers to not be too revealing. Rather than providing folks with real numbers, he suggests painting the financial picture in terms of percentages. For example, what percent is interest of gross revenue? What is the ratio of working capital compared to total expenditures? What is the current ratio of assets to liabilities? "You give them enough so they can tell you are sound," he notes.

In some instances, landlords may ask for a letter of credit from the potential tenant's bank. Dunteman says to be prepared for such inquiries in today's business environment.

Always selling

After preparing the sales pitch, make contact. Dunteman says the most important thing to remember is be patient. Many of the best landlord/tenant relationships take time to develop. Approach the situation as more of a partnership rather than a hostile takeover.

For example, the discussion could begin with a conversation about harvest help. "Some folks are at the point where their equipment needs to be replaced, but they're getting close to retiring," Dunteman notes. "Just ask them, 'Do you really want to buy that next combine?'"

Above all, farmers should remember potential landlords are always watching, Dunteman adds. Your actions and community leadership are garnering attention from someone.

Dunteman remembers a story where a landowner showed up at a farmer's doorstep and asked if he would farm his 800-acre farm. It was a huge surprise (and opportunity) for the farmer. When he inquired, the landlord admitted that he'd been watching the farmer's actions for more than eight years.

"You have to remember, you're always selling," Dunteman says. "When you're at church, at the elevator, you're selling."

-Josh Flint is editor of Farm Futures' sister publication Prairie Farmer.

 

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