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NE Iowa | Had 7 of these conversations the last 3 weeks on leases that were up for renewal. Most of which were all farms that we are paying fair market value to above for and managed to get 10-15% reduction in rent for this upcoming year on about half of them. I gave them all a proposal of a flex lease that would give them the same rent they had last year if we get $4.80 cash corn or better. 2 of them told me that their is no way they can afford to lower the rent as their costs of living has went up every year. One liked the benefits of a flex lease and went that route, we gave up one piece of dirt and haven't finished negotiations on a couple others yet. We only rent one piece from a farm manager and this upcoming year would be the second year of a 5 year lease and he called to voluntarily drop the rent 12%. (This rent was a fair rent that is workable to start with too) His reasoning was he knows that the operator needs to be able to turn a profit as well or the farm will likely get mined of lime and P&K and that isn't the result they are after in the long run.
I've actually experienced better luck negotiating with owners that own a farm as an investment as they understand their investments make 10% one year, 5% one year, 25% one year and maybe go backwards a year. The crowd that's tough to crack are those that depend on the farm for their sole source of income and have used the last 5 years of rent annual rent increases and bonus payments to up their standard of living and didn't view it as a windfall for when times may not be as rosy. It will be interesting to say the least how this all shakes out. | |
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So how have the rent negotiations went?
