Lean Times in Ag Call for Determined Negotiating

Negotiate cash rents

The squeeze is on for farmers. They’re trying every way possible to trim the fat with the continued drag on commodity prices, and a Purdue specialist says farmers who don’t like to negotiate will need to work at it anyway, especially when it comes to the ground they rent. Gerry Harrison is a professor of agricultural economics.

“One of the problems with leases with land owners is they get it to a level and they don’t want to back it down even though the economics for the farmer is not there anymore. The farmers from current rents are going to be losing money or just working very cheap and burning up their capital. They’re not going to be able to cover their depreciation or their use of their machines, and the question becomes how long can an operator do that?

In order to stay in the game he says negotiate the rates you pay. And stay with it until you get a rate that works.

“As an example, just a few years ago my niece and her husband are big farmers in southern Wisconsin and a piece of property came up for rent right between everything they were renting. He went on for weeks visiting with that landlady trying to get the number she wanted and he finally did. He tried every trick in the game to find out what she wanted but she wouldn’t tell him. She just said give me another bid. You’ve got to compete nowadays.”

Negotiation may well be the key to success since Indiana farmers can’t just terminate a lease on a whim.

“We have rules, and we have lease law,” he told HAT. “The landowner or the tenant is entitled to notice if they have a lease such that would require notice. If the tenant can’t handle the rent that he’s been paying for 2015, then he better give the landlord notice. Otherwise right now they’re on to another year at the same rate. Now that doesn’t mean the owner still won’t negotiate.”

Harrison, a seminar speaker for HAT at last week’s Indy farm show, says advance notice ranges from 4-6 months, and now in Indiana notice must be in writing even for an aural lease. Learn more in his publication Farmland Lease Law in Indiana.