'Only the farmer knows what's fair' and other bad arguments
"Tenants have the right for a crack at a reasonable profit on farming the land, while landlords have the right to expect a rental rate comparable to similar land in the area. Both sides are equally important, and both need to be reflected in the final agreement."
For many years I wrote an annual, mid-winter look at area farmland rental rates for Agweek. I talked with a whole lot of people to produce what I always thought was an accurate, evenhanded look at the issue. This year, as a mere columnist rather than a full-time reporter, my analysis for 2022 boils down to this:
Rates generally will trend slightly higher or hold steady, reflecting the rising property taxes that most farmland owners are paying. On the other hand, moisture shortages — severe in some areas — will limit rental rates increases, even pushing rents a little lower in places
This column, though, will look mainly at some of the, well, let's them questionable arguments in which farmers/renters and owners/landlords engage. To be clear, most folks in each group try to do the right thing in determining rental rates for cropland, hayland and pasture. But sadly, a few do not. Here are four egregious examples in my personal experience.
- It was 2010, a time of strong farm profits and rapidly rising rental rates, and I was sitting in the audience at an area farm show. Behind me, two farmers bragged about how they each had bamboozled one of their landlords. "I told my guy (landlord) that times are tough, and I got him to agree to just 25 cents (increase per acre)," one of the farmers said with a laugh. "That's nothing," the other farmer said. "I got mine to agree to no increase." From the rest of their conversation, it became apparent that the two farmers had knowingly and deliberately taken advantage of two elderly landowners whose mental sharpness had slipped.
- It was 2011, also a time of strong farm profits and rapidly rising rental rates. I listened to a farmer who maintained that he and only he knew the fair rental price for land he wanted to rent. "Only the farmer knows what's fair," he said. What's more, "Once I decide what the fair price is, I expect to get it," he said.
- It was 2015, a time of cooling farm profits and rental rates. The nonfarmer/landlord said he deserved to be paid more in rent anyway because he wanted to start spending winters in Arizona and needed much higher rental income to do it.
- It was 2017, a time when rental rates were mostly holding steady or dipping. But this farmland owner wanted higher rental rates because land in a different part of the county was renting for more than his. When it was pointed out to him that the other land was far more productive than his, he glared and said, "It's the same county, and that's what matters."
So what's fair?
In all the rental rate stories I wrote through the years, several points about "fairness" always came out. Tenants have the right for a crack at a reasonable profit on farming the land, while landlords have the right to expect a rental rate comparable to similar land in the area. Both sides are equally important, and both need to be reflected in the final agreement.
It's also clear that landowners and tenants should start with reliable, impartial statistics from the Extension service, real estate officials, experienced ag bankers or other knowledgeable folks. Those stats, in turn, might be modified if the tenant and landlord are close friends/relatives or if the tenant helps the landlord in some way such as keeping the landlord's road open in winter.
As mentioned already, most farmers and landlords are trying to do the right thing. To them, congratulations and keep it up. To the few who aren't, try harder.
Jonathan Knutson is a retired Agweek reporter. He writes a monthly column from Grand Forks, North Dakota.