As the 2012 crop production season moves into full swing, land rent values continue to be important in most rural communities across the state. A landlord often asks, “What is the average cash land rent in my county?” But the question they really want answered is “What is the highest farm land cash rent being paid in my area?”
Seldom do landowners want to be average within a large area like a county that has a wide range of rental rates with low to high valued land. Landowners can visit Dennis Stein’s web page to find the most recent Michigan State University Department of Agriculture, Food and Resource Economics Report #642 titled “Michigan Farm Land Values and Rental Survey” and another report titled “Farmland Rental Rates Summary.” This report summarizes information taken from the USDA’s Farm Service Agency database which compiles many categories of agricultural information reported by farm producers such as paid rent. Additional information on Stein’s website such as the landlord checklist can be helpful for a landlord who is trying to evaluate land values/rents with others.
Not every parcel of land will increase rent values for 2012. Many farms have already seen increases over the past few years, raising them to their current rental values. Farms that have been under multi-year agreements are more likely to be in a position for some level of increase in the land rent value for 2012. It is important to note that not all land is equal and that the value of fair rent should reflect those differences. Crop history, yield history, tile drainage, fertility, size of field and other factors all affect rent value. Each of these factors can add to or decrease the rental value of farmland.
Communication is the key to obtaining a reasonable farm land rental value for both the landowner and the renter. It is a good practice to sit down with your renter and review how they value your farm property. During this discussion you may both be able to identify actions that can improve your land’s value over time.
Another important part of any farmland rental situation is to make sure that a written rental agreement is in place to protect the rights of both the renter and landowner. Verbal land rental agreements can work in some situations but can leave both the landowner and the renter at risk. To avoid conflicts and confusion it is necessary to get your land rental agreements down on paper. If you are looking for some examples of written farm land rental agreements, you may want to visit Dennis Stein’s website which has several downloadable example rental agreements. Each situation may be just a little different from the next so making adjustments to a standard rental agreement is something that is often recommended to ensure it meets your needs.