Fair return

[farmaholic]

Horse. A percentage based rent requires a huge amount of trust on the landlords behalf.....if you don't trust your tennants....go cash.

[hobbyfrmr]

What about guys getting 30 bus wheat at $7 ?
Or 25 bus peas at $8
Or 25 bus canola at today's price ? Not some fukin fairy tail B/S

One landlord I have works for a conventional farmer. They just finished peas. Landlord says 50 bu/acre contracted for $10.00/bu. That is some good farming . He will make money

[newguy]

I believe if people are willing to pay 65 for canola seed the person who owns the land should get that.Around here 40 is a standard.Just think the canola seed companies got rental price on 20 million acres this year.that is a good return.and no land taxes.

[LEP]

Horse, I would never rent on a percentage and here is why.

I have 5 landlords and none of them provide bins. So I have to keep it all separate as well as my own for multiple crops. Too inefficient for bins.

You say you have $2,000 an acre (which I doubt). You probably paid much less. If you sold, after taxes you would have much less available to invest.

You talk about a 3% return, which implies you could get that for a risk free return , which you can't.

Anyway, I rent alot of land. At renewal we discuss which way rent will go. Which has been up every time. They are happy. In fact they all say they get more for rent than they ever made farming.

I don't think they are too hard done by.

[sk_wheatking]

I have never been able to completely understand why farmers expect to get land rented to them for less than the market is at. Why is it different than the farmer trying to get the most for his canola or wheat or you name it. The people who have land to rent have a commodity that you the farmer kind of require to run that over priced machinery over. Many of the landlords are retired farmers who have paid their dues and now are using the equity in their land to fund their retirement . Seems fair to me. Sorry but I dont understand all moaning and bitching about rent. I dont think there is a cartel of landlords forcing the rent up. Last time I checked it was farmers trying to grow larger that forced the rent higher. BTW I am not a landlord yet,I am the tenant,and probably will have to rent my land at a large discount to my intern.

I couldn't agree with you more!!!
I don't understand why farmers worry so much what other farmers are doing or paying what for rent or equipment. Your right on with the bitching....oh land is too expensive( except when I want to sell) ohhh ****ing high rent( except when I rent out I'd like a good dollar) so on and so on. If someone over pays for something does another farmer have to make up the difference? If someone gets a good rent for their land good on them. And your right Grefer it's another commodity really like anything else. Why do farmers Bitch about each other so much, I'll never understand it I guess.

[hobbyfrmr]

There is very strong competition to rent land for reasons described in above posts. New iron is one thing, but keep in mind many of these farms have purchased a lot of land. Renting 10,000 acres allows cash flow to cover fix costs and pay for the land they bought. Everyone is trying to build some kind of wealth in this industry. End game is property ownership. They are growing exponentially while others are growing modestly. By paying top remt you get to control (ie. canola winter canola rotation) more property and hopefully grow faster. I dont see that kind if rotation on the land they bought, only rent.

[JoeyJeremiah]

I have never been able to completely understand why farmers expect to get land rented to them for less than the market is at. Why is it different than the farmer trying to get the most for his canola or wheat or you name it. The people who have land to rent have a commodity that you the farmer kind of require to run that over priced machinery over. Many of the landlords are retired farmers who have paid their dues and now are using the equity in their land to fund their retirement . Seems fair to me. Sorry but I dont understand all moaning and bitching about rent. I dont think there is a cartel of landlords forcing the rent up. Last time I checked it was farmers trying to grow larger that forced the rent higher. BTW I am not a landlord yet,I am the tenant,and probably will have to rent my land at a large discount to my intern.

Because this is the thought process that goes into it when most farmers put pen to paper and figure what they should pay for rent " well I think the neighbour is going to pay $100/acre for rent, and I'm a better farmer then him so I should be able to pay $110." No cost of production numbers, no marginal return analysis, nothing, nada.

And it does directly effect me as all my rents will have gone up to the same level. Maybe they are smarter better farmers then me, but I doubt most don't actually know their cost of production and the marginal returns if they rent that land and increase the local rent by 20%. Perhaps they will last longer than me and I can let them pay me an exorbitant amount for the little I own.

[furrowtickler]

Agree with Joey . Rents are becoming unsustainable if you own a pen and paper and work with real numbers . Time will prove that .

[hobbyfrmr]

15 years ago this may have been the case. The farms around here are well managed. I suspect between FCC and MNP they are aware of their costs and what they can pay for rent. Some farms are 3rd generation and they were well managed long ago. When your cost if production gets into multi millions Im thinking you have hired somebody to run the numbers through with you. Some guys can afford to "average up" on cash rents.

[Wheatking]

15 years ago this may have been the case. The farms around here are well managed. I suspect between FCC and MNP they are aware of their costs and what they can pay for rent. Some farms are 3rd generation and they were well managed long ago. When your cost if production gets into multi millions Im thinking you have hired somebody to run the numbers through with you. Some guys can afford to "average up" on cash rents.

I think you give most producers more credit then they deserve. "Average up" is a good term. I always run the numbers, know my marginal return by adding an extra 160 acres etc... And most of it gets thrown out the window if its a quarter next to mine etc.... I won't go nuts, but most times I don't think as rationally as I should when bidding. But if I thought rationally I wouldn't be farming.

I honestly have never had FCC ask what I pay for land rent. They want to know what my gross income and margin is, they could care less about anything else and how I operate my dark from what I can tell. As for MNP, I have never heard of anyone being given the advice to expand to make the numbers work, ussually it's downsizing and debt reduction.

But there are much more profitable, smarter farmers then me out there, and if they want to pay more for rent, so be it. I just keep telling myself bigger isn't always better, or is that what I tell my wife.

[farmaholic]

Wheatking...I'm sure Mrs. Wheatking doesn't want to offend you.

Seems the older men get, they become better judges of size.

Maybe the law of "averages" finally sets in.