Lease Your Farm – Manges Realty Inc.

Lease Your Farm: Good Farm Management Questions: Example Rental Rates:

Rental rates have changed dramatically over the past decade. We have seen substantial increases due to commodity prices and improved production capacity. We have also seen more recent decreases due to higher crop input costs and outside economic influences.

As a landowner, have you taken advantage of these changes? Obviously, some of the changes have been dramatic and relatively quick. Other changes have been more moderate to reflect overall returns. With a good management team, these changes can be recognized and action taken.

Is your farm irrigated? Do you have underground water available? Have you thought about irrigation? Do you know that center pivot irrigation is now very automated? It can be operated from a tablet or cell phone. It can tell you when it is running, when it is pumping water-or not. It will turn off automatically. It can be setup with weather stations and soil moisture probes, which will assist is efficient irrigation on an ‘as-needed’ basis.

If your farm is leased--is your farmer participating in conservation practices? Are they utilizing minimum-till? Or no-till? Are they utilizing cover crops? Are they maintaining filter strips along drainage ditches to reduce nutrient runoff? Are they maintaining grass waterways to reduce erosion? Do you have land that should be in a long-term conservation program?

Good Farm Management Questions

Example - Rental Rates:

From 2009 to 2013, cash rent rates more than doubled across much of the Midwest and nearly all property types! Did you take advantage? Did your cash rent double, or more?

From 2013 to 2020, rental rates declined somewhat due to record production and lower grain prices. However, most rent rates only declined by 10-20% from their peak.

However, in 2021-22 everything changed again! Commodity prices exploded to new levels. Farmland values increased 20-40% in response to higher farm profits. Rental rates also increased 20-40% for 2022 reflecting those high profits and demand for more farmland by farmers.

As a landowner, did you take advantage of this new change? Obviously, some of the changes have been dramatic and relatively quick. But, with a quality farm management team, these changes can be recognized and action taken.

Each geographic area differs. Plus, the quality of your farm soils will dictate the final and proper rental rate. If you have questions regarding the proper rent for your farm--we can help! We can analyze the income potential of your unique farm and illustrate the proper rental rate where both you and the tenant can be profitable.

MRI has over 40 years of experience of managing farms across six Midwestern states. This experience has provided a vast network of farmers, a broad perspective of farmland quality and with that a strong ability to analyze profit potential of farms that leads to the best possible rental rates for the farmland owner and operator.

Example - Capital Improvements:

Did you know that drainage tile improvements could increase your yield potential by as much as 15-20%? That is a corn yield increase of 30-35 bu/acre. Plus, yields are more consistent being able to handle the excess rain events. With this yield potential increase--how much can your rent rate improve?

With our vast experience in management across the Midwest, we can analyze the returns to this type of capital improvement showing you how it is possible to increase cash rents of convert to a flexible rent that will provide high returns to your investment. In many cases, those ROI’s (return on investment) exceed 8-10%. This type of investment in capital improvements could be a better alternative to buying additional acreage.

Example - Conservation Practices:

With government regulations constantly changing, conservation practices are becoming more mandatory. Nutrient run off into streams is a major problem in some watersheds. Is the problem coming from our farms? Do we know?

Monitoring of drainage water runoff is becoming a highly probable program for farms. If we, as farmers, can monitor our water runoff and test for nutrient losses we can gain the knowledge and know for certain if we are contributing to the problem. Conversely, if we do NOT know, we will not have the answers for those who want to ‘target’ the farmcommunity. Plus, if we learn of problems, perhaps we can institute more targeted fertilization programs that will reduce nutrient losses. Perhaps we can reduce our fertilizer applications while still maintaining high productivity? Perhaps cover crops could become a beneficial addition to our crop rotations?

Again, all of these examples are questions to ask and answer when properly managing your farm property for best possible returns. Plus, these are questions regarding how we can be both profitable and sustainable. How can we produce to the maximum yield potential, at the lowest cost, and while conserving our soil and the nutrients we apply for our production?

Lease Your Farm: Good Farm Management Questions: Example Rental Rates:

Good Farm Management Questions

Example - Rental Rates:

Example - Capital Improvements:

Example - Conservation Practices:

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