Farm yard scene

Farm landlords and the future, part 2

Figuring out what’s fair will be important this fall.

Last week, I shared some ideas around how to find out what’s on your landlords’ minds right now. Let’s talk some more about approaching landlord conversations.

Previously we discussed combine rides and stop-bys for casual update conversations. You first want to get a feel for where your landlords are at in their concerns or perceptions. It’s also an opportunity to tell your story about what you’re doing in your operation and some of the trends and challenges in agriculture.

Challenges and opportunities
As a part of the update about harvest and your farm, it’s ok to share some of the good things going on in ag. While it can feel like much of our focus is on the tough things happening, there are positives too.

Tighter margins force any industry to tighten its belt and get better – meaning it will be more competitive long-term and yield a more resilient business.

As a nation, we’ve been blessed with good crops, agronomic knowledge and technology, and cooperative weather. Of course the downside of this better production is lower prices. That places a greater challenge on you, the farm leader, as you’re working to create a solid business plan.

Be sure to talk about the future and your desire for a long-term, win-win relationship with your landlord. A confident relationship makes it easier to go the extra mile to invest in the land. Explain that while the long-term outlook for agriculture is bright, the reality is that things are tough right now.

Balancing the optimism of the future with the reality of the present helps the landlord see that there are short-term challenges that must be addressed. But that doesn’t mean there isn’t plenty of hope for a brighter future.

Figure out what’s fair
Many landlords and farmer tenants have a sense of tension as they’re working to figure out ‘what’s fair’. The landlord may understand things are tough right now, but may not be willing to take a cut in the rent. They may fear that if they lower the rent now, there won’t be an opportunity for it to ever go back up.

Explain that with so much uncertainty about next year, it’s tough to say what things will look like at the end of 2017. You can address the landlord’s concern about fairness by explaining that if your operation ends up having a good year, you’re going to make sure they have a share in that.

Bring some education and different options into the conversation. You might approach them with the concept of using a flex cash rent lease. Or you and your landlord could work to set a minimum rent, with an agreement that if 2017 goes ‘better than expected’ (defined ahead of time in some way), then the landlord receives a bonus. You can work with an ag finance advisor to help with the number crunching and analysis of what that might look like.

This harvest and winter, prioritize spending relational, educational time with each landlord. That quality time lets you discover the questions in their minds, and make plans to keep building their understanding.

Read the Smart Series publication, bringing business ideas for today’s farm leader. This issue features the story of a farm family who is working on a legacy plan to keep the farm in the family while maintaining family harmony, and how to work toward increasing your operation’s efficiency. Get your free online issue here.

The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture

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