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| I'm working with a couple of landlords to establish a baseline and pay on bushels instead of flat dollars. I figure how many bushels of corn is fair x the insurance price (February average vs the Dec futures). Then we negotiate the bushels 1 time and it's done. If we decide that doesn't work some day, we'll adjust. But right now I'm giving away 40-55 depending on productivity, drainage, field size, and quite bluntly how well we negotiated for ourselves.
If you were paying $200 in 2017-2019 ($3.95-4.00 insurance price), you're basically at 50 bushels.
If you are at $300 today, you're at 51 bushels for this year.
Pretty much the same, but comes with a lot of headaches and uncertainty. That's why I went to the bushel number with a couple landlords (admittedly neither is big, but both are pieces I don't want to give up). If it works, I'll float it to more landlords. I sold it to them as crop insurance is my "low risk" revenue, but the weather, market, equipment, input prices, etc. are all my risk and I need to have some upside for all the risks I'm taking. | |
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How do you calculate fair rent?
