4 Keys to a Long-Term Land Lease Relationship – AgFax

with farmland sale prices reach $30,000 in parts of the Midwest, the prospect of renting land—as an owner or producer—is becoming increasingly lucrative.

If you’re leasing farmland to or from others, there’s a lot to think about, from entering into long-term leases and land improvements to targeting the right farm insurance and liability protection.

Max Wink, who farms and leases land in both South Dakota and Wisconsin, tells Andrew McCree he’s learned something from being on both sides of a lease. Here are his tips:

1. Find your balance

According to Vink, trust is the foundation of a long-term agricultural lease relationship.

“It’s hard to build trust when one party doesn’t feel they’re being treated fairly,” he says. “If you fail at something, it’s your job to learn it and figure out how to do it right.”

With trust as a form, Wink says fairness is a mortar that needs to be applied every season.

“A lot of people approach price negotiations in different ways. My approach has always been to have some basis for why I believe the transaction is worth whatever it is. It helps to come to an agreement that is fair, meets each person’s needs and is based on facts, not what I heard or felt.”

To build on trust and fairness, Wink expects a constant flow of communication.

2. Bring data to the negotiation table

According to Vink, high commodity prices are the catalyst for many conversations in his people, and he is concerned about those who rent and lease.

However, if one party proposes to change rental prices, Wink says both parties can prepare by having data at the ready.

“You want it to be fair. But as a tenant, you have to prove that it is fair,” he says. “If you can provide some information to support the value of the resources and what is required to increase the yield, you could be able to avoid a significant increase in the rent.”

Along with data, Wink says it’s also important to have insurance knowledge on hand.

3. Ask the tough questions about insurance

If you don’t know what to ask, ask what to ask. This is the insurance advice Wink gave McCree in the episode “Agriculture”.

In Wink’s experience, there are a few heavy hitters that are often overlooked:
• Mutual understanding of liability insurance.
• Items found in farm buildings — the structure and its contents.
• Eligibility for FSA payments

“In the past, when I farmed leased land, I didn’t actively communicate certain aspects of the farming program we were involved with to the landowner. The landlord thought he was entitled to FSA and had to contact his local agency to get an answer. But it was a big mistake on my part as a tenant,” he says.

And he adds that the script has taught him to be more open with landlords about all aspects of FSA programs, and to work to communicate that he cares about the land and the landowner.

4. Time to share

According to Wink, there are three “great” opportunities to network as a landowner.

“Most of our leases have spring and fall payments. It’s an opportunity to write a little note about how the season went in particular on their ground,” he says. “When I have time, I will take a picture of their farm and a field that has just been sown or harvested and send it in a text.”

Vink says that over time, these small actions will lead to a stronger relationship that can “surprise” both parties. He says the tenant will understand the surprise if he sends a note and a text.

“Sometimes it has nothing to do with the price, but everything to do with the extra things you’re willing to put forth and know and care about your land or someone else’s,” he says.

Want to know more?

McCrea’s insurance talk will continue in the coming weeks when he moderates a discussion on farmland leasing on November 29th and December 9th.

To register for the panel, visit AgWeb.