The number one question I receive is about cash rent prices. Many landlords and tenants are working to find an equitable arrangement before February 28, 2019. Given the constraints on both sides, real estate taxes and the farm economy finding that arrangement is difficult. Becoming creative in how you analyze and value different cash rent options is necessary. Before sitting down face to face, here are some suggestions and preparations I recommend that can help maximize success.
Identify the facts
Cash rent has numerous variables, and ground that is just a mile down the road could command vastly different amounts of rent. Researching cash rent provides a needed understanding of market conditions. Both the U.S. Department of Agriculture and the Department of Agricultural Economics provide survey results for cash rent rates across Nebraska. These provide a useful start, but they are far from accurate enough to use as a base for an entire negotiation. Contacting your local ag bank loan officer, ag real estate professional, or professional farm manager may provide additional information. To truly drill down those results into personalized information for the given negotiation, adjustments normally should be made. Those adjustments are fairly straight forward. One way is to take the county rental rate from the USDA survey divided by the county yield to obtain a county rent per bushel. Take the calculated county rent per bushel times the average production history of the farm in question and you have one estimate for farm level rent.