What is a Fair Rental Price for Farm Buildings?

by David Marrison

Farm buildings and livestock facilities often outlast their owner’s need for them, but can still provide usable service. Other farmers in the community may wish to use these buildings instead of investing in new facilities. Both parties can benefit from a leasing arrangement. However, they must agree on the amount of the rental payment and the use and care of the property.  However, information about common rental rates for farm buildings is not easily obtainable.  To help provide information for farmers, a survey was recently conducted by the North Central Farm Management Extension Committee.  The survey was conducted across the Midwest and was completed by farm operators, farm owners, professional farm managers and rural appraisers.

The survey assumed that building tenants would provide labor and management and pay the cost of utilities and minor upkeep. Owners would generally be responsible for major repairs and insurance coverage. Individual rental rates will vary according to the age, condition, size, location and efficiency of the particular building being rented. The results of the survey:

 

 

Type of Building

Number of Responses Unit on Which Rent is Paid Average Rent Paid Range of Rents Paid Average Capacity of Building
Beef          
Finishing, open lot & shed 9 $/head/day $.12 $.03 – .33 282 head
Dairy          
Milking parlor and cow housing

Heifer housing

–no labor, no feed

9

 

 

3

$/cow/mo.

 

 

$/head/day

$12.16

 

 

$.31

$6.25 – 16.67

 

 

$.27 – .33

177 stalls
–with labor, no feed 3 $/head/day $.67 $.56 – .85  
–with labor and feed 3 $/head/day $2.28 $2.15 – 2.40  
Swine          
Farrowing 5 $/crate/year $360 $165 – 660 30 crates
Nursery 7 $/pig through $4.09 $1.33 – 6.00 1,350 spaces
Finishing 16 $/ pig finished $12.93 $6.00 – 19.00 1,334 spaces
Machinery Storage          
Machine shed, all 75 $/sq. foot/year $.45 $.02 – 1.65 3,845 sq. ft.
–with concrete floor 26 $/sq. foot/year $.53 $.06 – 1.65 3,927 sq. ft.
–without concrete floor 36 $/sq. foot/year $.40 $.08 – 1.50 3,445 sq. ft.
–with high doors 35 $/sq. foot/year $.52 $.10 – 1.65 4,474 sq. ft.
–without high doors 27 $/sq. foot/year $.40 $.06 – 1.50 2,513 sq. ft.
–over 10 years old 60 $/sq. foot/year $.43 $.02 – 1.65 3,928 sq. ft.
Grain Storage          
Grain bin, all 11 $/bushel/month $.027 $.015 – .05 30,635 bu.
Grain bin, all 78 $/bushel/year $.14 $.05 – .25 26,919 bu.
Up to 10,000 bu. 43 $/bushel/year $.13 $.05 – .25 8,005 bu.
Over 10,000 bu. 34 $/bushel/year $.16 $.07 – .25 25,000 bu.
Hay Storage          
Small square bales 4 $/bale $.12 $.07 – .25 4,825 bales
Large square bales 5 $/bale $2.81 $1.50 – 3.50 225 bales
Large round bales 3 $/bale $5.24 $5.00 – 5.71 423 bales
Rural Housing          
House on farm, all 110 $/month $568 $100 – 1,300  
–1 to 50 years old 24 $/month $598 $300 – 1,000  
–more than 50 years old 56 $/month $509 $100 – 1,200  
–2 bedrooms 12 $/month $435 $100 – 700  
–3 bedrooms 40 $/month $499 $150 – 850  
–4 or more bedrooms 22 $/month $626 $200 – 1,200  

 

A printable version of the building rental survey results can be found at: http://aglease101.org/DocLib/docs/NCFMEC-07.pdf.

For more information about determining rental rates and terms, farmers can access a 17 page publication titled “Rental Agreements for Farm Buildings and Livestock Facilities (NCFMEC-04) at: http://aglease101.org/DocLib/docs/NCFMEC-04.pdf. This publication examines the major considerations in developing rental agreements for crop and livestock buildings and facilities from both the owner’s and operator’s points of view.  Three different approaches to determining a cash rental rate will be presented. Finally, several other important considerations for developing a lease agreement will be discussed. A sample lease is also included in this publication.  A sample building lease form is available (NCFMEC-04A, “Farm Building or Livestock Facility Lease.”) at: http://aglease101.org/DocLib/docs/NCFMEC-04A.pdf

More information about agricultural leases can be found at: http://AgLease101.org