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| I farmed my land for nearly 20 years, then decided I wanted more freedom. I leased it 50/50 crop share because I understand the variability of yield and the market's volatility for pricing. I still get involved with some fertilizer decisions because I'm paying half and I have to market my share of the crop. So far I haven't missed a year riding the combine and gathering the delivery tickets at the elevator. Often I run the tenant to another location for more harvest equipment in my car or his truck. And I can still wander around the field for exercise if I want all year.
Many a landlord has fixed or annually rising living expenses and desires a fixed cash rent to help cover those. Though the rents I've been hearing have been rising as the commodity prices have been rising, but not falling as the crop prices have tumbled. Excessive cash rent can turn the renter's enterprise into a money looser easily demanding more cash rent than there's profit to be made from the crop. Few can do that for long and stay in business. That was the point made at an ISU extension program for landlords that they do annually (included a book and there is a charge). City landlords should attend one of those programs to get a better feeling for the financial side of renting farm land. Renting out farm land is not the best way to have a constant or rising income these days. One would be better off by selling the land and investing in safe bonds and dividend yielding stocks and loosing the attachment to the land. Of course there are tax factors in the land sale and those investments.
It is a bother to have to sell the crop and try to gather decent prices, but in the really good years I've gotten more than I'd have dared ask for cash rent, and so far even the bad years, the return on investment after paying taxes and my share of farm expenses has been positive. I've been competing with my present tenant in marketing for all the time I farmed and so far beat him on prices in 2015 but I still have about 38% of the 2015 crop to be sold. I've paid storage until January. At the same time the involvement keeps life interesting and old age can become boring with nothing to do.
Gerald J. | |
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Cash Rent Lease....New ideas needed for the future of farming
