Setting land rental rates
Leasing land is a great way to get into agriculture without the high cost of buying. For landowners, leasing provides a steady income from land they’re not using.
Setting the land rental rate usually depends on a few things: The type of land, the type of operation that is leasing, and whether or not there are buildings or other infrastructure on the land. However, the most fair rental rate in the end is one that’s agreed upon by the landowner and the farmer.
Doug Stark is the president and CEO of Farm Credit Services of America. He encourages building constructive relationships with your neighbors and people in your community.
"You’re being a good neighbor and they know you have an ag operation, you might want to expand it, you’re going to get the first call. They’re going say ‘hey I’m thinking about renting this out, would you like to take care of this for me?’ You know, create win-win relationships," says Stark. "Look for those ways to build a positive relationship with those landlords, and then once you get something, how to you maintain or build that relationship?"
Your local extension service and land offices can offer advice on land rental rates. However, each community has a general sense of what their parcels are worth, so be in tune with what’s going on in your area.
"There’s probably a pretty standard arrangement that exists in most of these communities whether it be pastureland, cropland, or small acreages, even large farms," says Stark. "There’s probably a standard rate that we can go from, but I would encourage people to work out unique arrangements between the two of them. So, what are the needs of the landlord, where are you at as a renter, and how can you construct an agreement that is unique that can meet both of your needs?"
Whatever rental agreements are made, write them down. Written arrangements leave little doubt as to what was agreed upon six-months ago.
Online tools that can help you figure land rental rates
Find ag leasing forms
Determining pasture rents
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