Before entering into negotiations with the owner she asks,
“How do I properly value and negotiate farm lease terms that include using the owner’s working farm in addition to renting farmland.”
I put this question to Hillary Barile who is currently working on exactly this type of leasing support project with New Jersey’s SADC and NOFA-NJ. You may be familiar with Hillary – she’s a fifth generation farmer working the family’s Rabbit Hill Farm with brother Blair and father Abe Bakker.
Hillary offers our beginning farmer this insight, “The best relationship is the one that satisfies both parties. Existing owners will need to act on their values. That means offering reduced or below market rents in order pick the operator who will continue the operation of their farm and set a standard for stewardship of the land and the assets.”
Hillary Barile and Dave Kimmel comment further.
Landowners and beginning farmers can get information on contractual relationships and networking opportunities at three upcoming free programs co-sponsored by the SADC and NOFA-NJ.
This beginning farmer’s question is both complex and common. In addition to cropland access, beginning farmers depend on using farm assets with existing utility and maintenance costs that may be inseparable from the farm (irrigation wells, barns or equipment).
As Hillary Barile points out, the issue also affects farmland owners, who may choose –or need– to offer below market rents in order recruit farm operators that share similar stewardship goals for the working farm.
Understanding annual cash farmland rent is relatively simple. We touched on farmland rents last year – they currently vary over a wide range from about $40 to $160 per acre in NJ, and comparison values are widely published in trade publications like Lancaster Farming.
While a cash cropland lease is straightforward, like these nine cropland lease terms from Michigan, renting working farm assets requires more attention to detail.
Leasing Farmland Guide The SADC recently completed guide and web resources.
Nine things that should be in a cropland lease. MSU Extension.
A Lease Agreements Guide for Landowners and Farmers. Land Link Vermont and Vermont Farm Bureau.