How to set yourself up for success when searching for a tenant farmer
March 27, 2020

How to set yourself up for success when searching for a tenant farmer

Finding a good tenant for your farmland should be a landowner’s highest priority if they are not going to farm the land themselves and still want the land to stay active and generate income.

However, as with any business relationship, it takes time to find a good tenant. You want someone who works as hard as you would if it were you operating on the land you own. You also want someone who you can trust to communicate clearly. Finally, it’s best to find a tenant who shares your values and vision for the land.

If only actually finding a good tenant farmer were as simple as following those suggestions. Sure, you have to take those tips into consideration, but there are more characteristics to look for if you want to find that tenant who will work your land, respect it and provide you, the owner, with the return on investment you are very likely seeking.

Renting farmland is common in the United States

Most farmland in the United States is operated by the owner of that land, according to the United States Department of Agriculture (USDA). Per the most recent informaiton, the 2012 Census of Agriculture, over 60 percent of farm ground here in the U.S. is owner operated. That percentage has been fairly steady over the years.

A report completed as a follow up to the 2012 Census of Agriculture found that about 39 percent of farmland in the lower 48 states was rented as of 2014. The amount of land that is rented also differs based on land use. Of cropland, about 54 percent is rented. For pastureland, the amount of rented land is about 28 percent.

Renting farmland is more common in areas where grain production is prevalent. The USDA states that cash grains, such as rice, corn, soybeans, wheat and cotton are often grown in these areas.

Who owns and who rents farmland

The larger the family farm, the more likely some of the land is rented. Small family farm operators tend to farm their land and are the full owners. Small family farms own 45 percent of farmland in the U.S. Fifty-one percent of the land is owned by midsize and larger family farms. These larger-scale operations are the most likely to have both rented and owned land.

According to the USDA, 80 percent rented farmland acres are owned by landlords who do not operate farmland. This means they own land used in some form of agricultural production but are not involved in active farming. The 20 percent of remaining rented land is owned by other farmers who own the land, also known as operator landlords.

Tenants and landlords, in general, tend to have long-term relationships, which the USDA notes could suggest that accessign new land to rent is limited. When looking at just operator landlords, 70 percent of land rented has been rented to the same tenant for more than three years and 28 percent for more than 10 years.

With non-operator landlords, the number of years the land has been rented to a specific tenant only increases: 84 percent of acres have been rented to the same tenant for more than three years and 41 percent for more than 10 years.

The importance of finding a good tenant

A good tenant is good for your farm business.

Farmer tenants that care about your land as much as you do will fare much better when trying to get as much production out of the land as possible, while also caring for any shared conservation or sustainability priorities.

That’s why it is critical for tenants and their landlords to always be on the same page.

Tenants and owners should communicate well

How do you get on the same page with a tenant? Communicate.

No successful relationship between a tenant farmer and landowner exists without good communication.

From the landowners’ perspective, they should want to know about how the land is being used and how it is being cared for. Owning the land is their investment, after all. But many landowners aren’t able to see for themselves how the land is faring. Others, such as people who inherited the farmland or spouses of farmers who passed away, may not know what questions they should ask.

That’s where a good tenant shines. Tenants with excellent communication skills would do well to provide regular reports. These reports can include farm productivity updates, photos of the land so that the owner can see crop conditions - even videos that can be shared digitally.

Tenants should also speak regularly, sometimes face-to-face with landlords about cost information, on-farm problems and life events affecting either party - or both, which could be as simple as the kind gesture of sending birthday and holiday cards.

Always check tenant references

If you find yourself looking for a new tenant, then the first step you should take to make sure you find the best person out there is to interview more than one farmer and always ask for and follow up with references.

By checking references, you can determine whether a tenant might be a good fit for your land based on feedback from previous landlords. Ask whether they have had a positive experience with the person you have interviewed.

Ask about a tenant’s objectives

A tenant with objectives suggests somebody who is movitivated. If they have goals that can be discussed during an interview, too, then that’s even better.

Good tenants should be able to discuss at length their goals and objectives for your farmland. Landlords should also discuss their own goals and objectives.

If both parties’ objectives align, then that could be supportive of a good relationship.

Cotton Grave can help with tenant selection

Tenant selection is just one of the farm management services we provide to our clients.

At Cotton Grave, we select the farm tenant and give preference to existing tenants, unless conditions warrant a change.

We’ll negotiate a crop share or cash rent lease, with a sharp focus on what is best for the owner, and always strive for fairness to the operator.

Let us focus on creating a trusted, successful business relationship with the operators of your farmland. Contact Cotton Grave Farm today to discuss how we can help.

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