Farmland leases relationships

Farmland value and productivity go hand in hand. But when farmland is leased on a year-to-year basis, it can be difficult to make the improvements necessary to maintain both.

“Some land improvements like irrigation for perennial crops, drainage tiles and other soil health benefits require multiple years to realize the full benefits,” said Nationwide Risk Management Director Doug Becker. “If a landowner is leasing out a field for only one or two years, there is limited incentive for the lessee to incorporate improvements or embrace long-term climate soil health practices”

Multi-year farmland lease agreements can be a win-win for both parties. Not only do they help build trust and cement relationships, long-term commitments between landowner and lessee are good for the land – both in terms of farmland value and productivity.

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Start with good alignment

Developing a good relationship starts with alignment. A farmland owner’s goal often depends on how involved he or she is in the operation of a farm. Some see farmland as a basic financial investment, while others want to be more involved in what happens on the land. As a lessee, it’s important to align with your landowner’s preferences in forging a strong relationship.

“Some absentee landowners will leave many or all of the operational decisions to the lessee. Others want to stay informed about things like what’s planted and how crops are managed,” Becker said. “Aligning how the lessee manages leased acres with the landowner’s preferences and wishes helps build trust and a good long-term relationship.”

Understand each other’s needs

Once aligned, it’s important to level set on needs. If land is leased on a crop-share basis, for example, the landowner may have specific requests on how crops are managed and marketed. Decisions on things like production systems and how grain is marketed are typically made after consulting the landowner if he or she is actively engaged in the operation.

“If you’re leasing farmland, have the conversation with your landowner. That way, you can make informed decisions and engage him or her in exactly the right way,” Becker said. “That will demonstrate that you not only care about the productivity of the land but want to do what the landowner wants and needs. That’s a great way to cement a strong relationship.”

Watch on-demand webinar, Managing Farmland Leases

Produced by Nationwide and moderated by Andrew McCrea, farmer and award-winning host of The American Countryside, the webinar features a panel of farmland experts discussing how landowners and renters can work together to create and maintain mutually beneficial partnerships.

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Tips to demonstrate good land stewardship

Land improvements aren’t always major year-over-year efforts. Lessees can do simple things to show they are fully invested in caring for the land. A comprehensive approach to being a good steward of rented farmland includes:

  • Matching cropping plans to the landowner’s wishes
  • Creating a conservation plan that ensures the long-term productivity of the land
  • Keeping farmland clean and in good order
  • Keeping up the land’s appearance by things like mowing ditches and fencerows
  • Implementing sustainable practices that reduce the landowner’s risk by things like minimizing erosion and improving water quality
  • Communicating positive farmland outcomes to the landowner, like strong crop yields

“Adding new conservation practices demonstrate that the leasing farmer has more than just a financial interest in a piece of farmland. But sometimes, doing things like keeping road ditches mowed shows a genuine care for the land,” Becker said. “Those kinds of things shouldn’t be underestimated in demonstrating a commitment to the long-term viability of a piece of farmland. It instills confidence in the landowner.”

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Making lease agreements a win-win
Watch how a farmland owner and tenant work together to make their partnership work

Keep up the hard work year after year

Sustaining a strong relationship over time requires assessing how you’re meeting the other’s needs, both personally and financially. That attention normally creates the trust that’s essential to long-term lease agreements.

“It’s important for the landowner and lessee to consider each other a business partner,” Becker said. “Just like you value the opinions of your accountant, agronomist and legal advisor, the other person should be part of that team.”

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1Source: A.M Best Market Share Report 2021.