Farm Rents

Should I Continue Farming?

by:  Chris Zoller, Extension Educator, ANR- Tuscarawas County

 It’s no secret that all of agriculture is suffering from years of low commodity prices and rising input costs. The economic struggles have affected you financially and physically. You’ve looked at the numbers, met with advisors, and talked to family.   The thought of selling part or your entire farm brings with it added worry and concern. What can you do?

Find someone you trust and with whom you feel comfortable discussing your situation. This person may not have many answers to your questions, but they can listen to your frustrations and worries. They may be able to help you sort through the confusion and develop a course of action. Think of your situation as a picture – a set of eyes looking at the picture from the outside may see things you can’t because you are caught up in the picture.

Understand that you are not alone. Nearly every farm and farm family is in a similar situation. Don’t live in the past or dwell on what could or should have been done. Take control of the situation and develop a plan for managing the things you are able to control.

Assessment

Evaluate your financial position by meeting with your lender to discuss options for restructuring debt. Can you extend the repayment terms to provide more cash flow? Contact your Extension Educator about completing a FINPACK analysis (https://farmprofitability.osu.edu/).

What are your Specific, Measurable, Attainable, Rewarding, and Timed (SMART) goals? How are your goals similar and different from those of family and/or business partners?

Develop a list of your education, experiences, and skills. How can you use these in another career? What career opportunities fit you best?

Evaluation

If you come to the decision that selling all or part of your farm is the best option, there are several items to address. Begin with a balance sheet and other financial information to understand your present financial situation. Doing so will help you decide how much money (and approximate number of assets) you must sell. You may want to meet with an appraiser, auctioneer, or real estate professional for help determining the expected value of assets.

Professionals

Your attorney can answer questions and advise you about legal considerations related to a sale. An accountant will help minimize your tax liability and give an estimate of what you may expect to pay in taxes.

Help is Available

There are people and agencies/organizations that can help with the transition and the emotions that come with the sale. Clergy, licensed counselors, and medical professionals can help you cope. Other sources of help include:

Ohio State University Extension (extension.osu.edu)

National Suicide Prevention (1-800-273-8255)

National Alliance for Mental Illness (1-800-950-6264)

Ohio Workforce Training (ohio.gov/working/training)

Ohio Job & Family Services, Office of Workforce Development (jfs.ohio.gov/owd)

Additional Information

Coming to the decision to sell all or a part of your farm is not an easy decision. Find someone with good listening skills. Talk to professionals, reach out for help, get answers, and make the best possible decisions. More information about this subject is available at https://ohioline.osu.edu/factsheet/anr-71.

 

REMINDER- Registration will close soon…Come Join Us for the…Small Farm Conference & Trade Show

The two day conference will be held on Friday, March 29th and Saturday, March 30th at the OSU South Centers in Piketon, Ohio.

The conference is designed for small farm owners wanting to learn more about how to make their farms work better for them. Many topics will be offered to help landowners expand their operations. Land owners can attend workshops and seminars taught by Extension professionals and industry leaders on a wide variety of agricultural enterprises.  Attendees will also get to meet various vendors at the trade show.  The trade show will be open part of the day on Friday, and all day Saturday.

Attached is the brochure that includes a mail-in registration, the agenda with session descriptions, and the registration letter for vendors.

Please see the flyer below for additional information.

For full details, please go to go.osu.edu/OSUFARMConference2019.

Landowners Leaving a Legacy

by: Amanda Douridas

Land is an important investment. One that is often passed down through generations. Farmland needs to be monitored and cared for to maintain the value and sustainability if it is to be enjoyed and profitable for future generations. Following the success of Lady Landowners Leaving a Legacy offered this past summer, Landowners Leaving a Legacy is open to everyone. If you want to learn more about your land, farming and conservation practices and how to successfully pass it on to the next generation, this program is for you!

Farming has changed dramatically over the last several decades. The thought of trying to understand it all can be overwhelming, especially if not actively farming. This series is designed to help landowners understand critical conservation and farm management issues related to owning land. It will provide participants with the knowledge, skills and confidence to talk with tenants about farming and conservation practices used on their land. The farm management portion will provide an understanding of passing land on to the next generation and help establish fair rental rates by looking at current farm budgets. We will also visit a local farm to view practices currently implemented and hear from the landowners involved.

The series runs every other Monday, February 25 – May 13 from 6:00-8:30 pm in the Champaign County Community Center Auditorium in Urbana, Ohio. It is $70 for the series. If you are only able to attend a couple of session, it is $15 per session but there is a lot of value in getting to know other participants in the series and talking with them each week. Materials and dinner included. The registration flyer can be found at http://go.osu.edu/agevents. For questions or more information, please contact Amanda Douridas at 937-484-1526 or Douridas.9@osu.edu. Please register by February 19. The detailed agenda is below.

Feb 25- Building Soil Structure

    • Introductions
    • Soil Structure Discussion and Demo
    • Tillage Methods and Compaction
  • Soil Coverage Discussion and Demo

March 11- Implementing Conservation

  • Conservation Activity
  • Aquifer Demonstration
  • Watershed Maps of Participants Farms
  • Explanation of Conservation Practices

March 25- Value of the Land Beyond the Dollar

  • Land Value Diagram
  • Landowner/Tenant Relationship Panel
  • Wildlife Habitat Programs

April 15- Transition and Succession Planning

  • Peggy Hall and Wright Moore Law Firm

April 29- Leasing and Budgets

  • Good Leasing Contracts
  • Hunting Leases
  • Overview of Commodity Budgets

May 13- Farm Visit

Some activities developed by Women, Food and Agriculture Network for its Women Caring for the Land program.

Agronomy and Farm Management Podcast

by: Amanda Douridas and Elizabeth Hawkins

Stay on top of what is happening in the field and the farm office as Amanda Douridas and Elizabeth Hawkins interview experts in agronomy and farm management. Hosted by Ohio State University Extension, this podcast takes a bi-monthly dive into specific issues that impact agriculture, such as: weather, land value, policies, commodity outlooks, and more.

This podcast began in May 2018 and has a great library of podcasts to choose from. This winter, we will feature some of the Ask the Expert interviews that occurred during Farm Science Review on Farm Management topics. Catch up on the ones you missed during the show.

Subscribe through iTunes at http://go.osu.edu/iTunesAFM or Stitcher at http://go.osu.edu/StitcherAFM to have the newest episodes added to your playlist. Stay up to date with us on Facebook @AFMPodcast and Twitter @AFM_Podcast.

 

2019 Outlook Meetings to be held Across Ohio

by Amanda Douridas, Extension Educator

Ohio State University Extension is pleased to announce the 2019 Agricultural Outlook Meetings! In 2019 there will be seven locations in Ohio. Each location will have a presentation on Commodity Prices- Today’s YoYo. Additional topics vary by location and include U.S. Trade Policy: Where is it Headed, Examining the 2019 Ohio Farm Economy, Weather Outlook, Dairy Production Economics Update, Beef and Dairy Outlook, Consumer Trends, and Farm Tax Update.

Join the faculty from Ohio State University Extension and Ohio State Department of Agricultural, Environmental, and Developmental Economics as they discuss the issues and trends affecting agriculture in Ohio. Each meeting is being hosted by a county OSU Extension Educator to provide a local personal contact for this meeting. A meal is provided with each meeting and included in the registration price. Questions can be directed to the local host contact.

The outlook meeting are scheduled for the following dates and locations:

Date: January 14, 2019 Time: 7:30 am – 10:30 am Speakers: Ben Brown, Barry Ward, Ian Sheldon, Zoe Plakias, Aaron Wilson Location: Emmett Chapel, 318 Tarlton Rd, Circleville, OH 43113 Cost: $10.00 RSVP: Call OSU Extension Pickaway County 740-474-7534 By: January 12th More information can be found at: http://pickaway.osu.edu

Date: January 17, 2019 Time: 8:00 am – noon Speakers: Barry Ward, Ben Brown, Ian Sheldon, Aaron Wilson Location: Der Dutchman, Plain City, 445 S Jefferson Ave. Cost: $15.00 RSVP: Call OSU Extension, Union County 937-644-8117 By: January 10th More information can be found at: http://union.osu.edu

Date: January 24, 2019 Time: 9:00 am – 12:00 noon Speakers: Barry Ward, Ben Brown, David Marrison Location: St Mary’s Hall 46 East Main St. Wakeman, OH 44889 Cost: No Charge; $20.00 if past deadline RSVP: Call OSU Extension, Huron County 419-668-8219 By: January 22nd More information can be found at: http://huron.osu.edu

Date: January 28, 2019 Time: 6:00 pm – 9:00 pm Speakers: Ian Sheldon, Ben Brown, Aaron Wilson Location: Jewell Community Center Cost: $10.00 (after deadline $20.00) RSVP: OSU Extension, Defiance County 419-782-4771 By: January 22nd More information can be found at: http://defiance.osu.edu

Date: January 30, 2019 Time: 9:30 am – 3:30 pm Speakers: Ian Sheldon, Ben Brown, Barry Ward, Dianne Shoemaker, David Marrison, Kenneth Burdine Location: Fisher Auditorium Cost: $15.00 RSVP: Call OSU Extension, Wayne County 330-264-8722 By: January 24th More information can be found at: http://wayne.osu.edu

Date: February 13, 2019 Time: 5:30 pm – 9:00 pm Speakers: Barry Ward, Ben Brown, Ian Sheldon Location: Wayside Chapel, 2341 Kerstetter Rd.,  Bucyrus OH 44820 Cost: $15.00 RSVP: Call OSU Extension, Crawford County 419-562-8731 or email hartschuh.11@osu.edu By: February 5th More information can be found at: http://crawford.osu.edu

Date: March 22, 2019 Time: 11:00 am – 4:00 pm Speakers: Barry Ward, Ben Brown, David Marrison, Ian Sheldon Location: Chamber Ag Day / Ag Outlook meeting, Darke County Romers 118 E Main St., Greenville Registration Flyer: http://go.osu.edu/2019darkeagoutlook Cost: $20 RSVP: Darke County Extension office at 937-548-5215 By: March 16th More information can be found at: http://darke.osu.edu

 

Livestock Building Rental Considerations

by: Rory Lewandowski, Extension Educator Wayne County

Recently I have gotten some questions about rental of livestock buildings, specifically dairy facilities.   Typically, callers want to know a charge per square foot or a rental rate based on a per head basis or, for a dairy facility, based on number of free stalls.  The reality is that there is no one right or correct answer.   Several methods or approaches generate a dollar figure for rental.  However, view that number as a starting point in a rental negotiation. There are additional factors that affect the final rental rate.  Those factors include the age and condition of the building, location of the building, the functionality or obsolescence of the building, the demand for rental of this type of building and the character and personality of the parties involved in the rental agreement.

The simplest and most direct way of calculating a building rental rate is to use a commercial rate, a known market.  While these types of figures are available for grain storage and some equipment storage markets, they are not available for livestock building rentals.  We don’t have a commercial livestock building rental market.  A second method is to use survey data.   Survey data is commonly used to provide rates for custom farm work and cropland rental.  The reliability of those numbers is dependent upon getting significant numerous responses.  The issue with livestock building rental surveys is that there are a very limited number of surveys and those surveys generally have a small number of responses, so use results with caution.   You can get an answer that is fast, easy and very wrong for your situation.  The most recent farm building rental survey that I know of is a May 2014 document by the North Central Farm Management Extension Committee.  It is available on line as a pdf document at http://tiny.cc/farmbldgrentalsurvey.  The number of responses for dairy building rental varies between three and nine.

The best method to determining a rental rate for livestock buildings is to actually calculate some building ownership costs and use those figures as a starting point in coming to a rental rate agreement.  There are two basic categories of building ownership costs, variable and fixed.  Variable costs are dependent upon building use and the level or intensity of building use.  Those costs include utilities, use-related repairs and maintenance, and possibly costs of additional wear and tear beyond depreciation.  Often variable costs increase as the number of animal units or production level in the building increases.

Fixed costs are incurred regardless of the level of building use.  Fixed costs remain even if the building sits empty.  The fixed costs of building ownership include depreciation, interest, repairs (maintenance not related to building use), taxes and insurance.  The low end of any building rental agreement must cover at least the variable costs of using the building.  There must be some way to measure these costs, especially costs such as electricity, fuel, and water. However, the building owner realizes no gain until at least some portion of the fixed costs are included in a rental agreement.

The North Central Farm Management Extension Committee publication “Rental Agreements for Farm Buildings and Livestock Facilities” (http://tiny.cc/NCFMfarmbldgrental) contains a good worksheet to help building owners estimate ownership costs.  A basic starting point for determining ownership costs requires an estimate of the current value of the building to calculate depreciation.  One method commonly used is to determine a replacement cost for the current building along with an estimate of the useful life, generally in the 15 to 25 year range.  Next, determine how many years of useful life remain in the current building.  Depreciation is the replacement cost divided by useful years of life remaining in the current building.  If the building is under loan, then the interest cost is the actual interest payments on the building loan.  With no loan, calculate interest costs as a return on investment by multiplying an annual interest rate times the current value of the building.  The interest rate used could be the current rate to borrow money, the rate for invested dollars or possibly an average of the two.  The county auditor’s office can provide the building tax rate. Use the actual insurance policy for insurance costs.  Alternatively, multiply the current building value by 1.5% to get an estimate of tax and insurance costs.  The most accurate way to get cost of building repairs is from farm records. According to an Iowa State University publication entitled “Computing a Livestock Building Cash Rental Rate” (https://www.extension.iastate.edu/agdm/wholefarm/html/c2-26.html), a value of two to four percent of the replacement (not current) value of the building provides a reliable estimate if records are not available.

For example, let’s say I investigate and find that it would cost $325,000 to build a new free-stall dairy barn of similar size, function and with comparable technology and features to what is currently present on the farm.  That building would have a 20-year life.  My current building is 8-years old, so I have 12 years of useful life remaining, equivalent to 60% (12 divided by 20) of the building replacement value.  The current value of my building is therefore $325,000 x 0.60 or $195,000.  The annual depreciation cost is $325000 divided by 12 (years of useful life left) equals $27,083. Note that in some cases, buildings may still be serviceable after their useful live and so depreciation expense could be zero.  For this example, assuming no outstanding loan on the building, I am going to calculate a conservative return on investment using an interest rate of 3% times the current value of the building ($195,000) equals $5850.  To calculate taxes and insurance costs ideally I use actual values, but in this example I will use 1.5% times the current building value equals $2925.  Next, I need to estimate repair costs.  I will use 3% times the replacement value ($325,000) equals $9750.  My total estimated fixed cost of building ownership is the sum of these calculations or $45,608 annually.

Knowing the fixed costs of building ownership can guide a rental negotiation.  The ideal situation is that the building renter, in addition to paying all the variable building costs, will cover the fixed costs as well.  In most markets that may not be realistic.  The next best-case scenario is that the cash costs of building ownership are covered after building variable costs.  Those costs include taxes, insurance and repairs.  In our example, those cash costs equal $12,675.  From a purely economic point of view, if an empty building can’t generate enough rental income to cover cash expenses in the foreseeable future, it is reasonable to consider demolishing the building.

I have found a couple of spreadsheets available on-line that can help to calculate building costs and potential rental rates.  They are available at https://www.agmanager.info/ksu-building-cost-rent, and https://dunn.uwex.edu/agriculture/farm-management/farm-lease-information/.  Click on “Lease Payment Evaluators”, then “Building Rental Evaluator”.

The most important piece of any building rental is a written lease.  The lease spells out not only the rental rate but also specifies dates of rent payments, what happens if rent is late, and how the rental agreement is renewed or terminated.  The lease contains provision about how repairs are handled, how water and utilities are paid for and maintained, limitations on modifications to the building, how many livestock can be housed, rights of entry and inspection and even how manure will be handled and where it will be applied. The North Central Farm Management Extension Committee publication “Rental Agreements for Farm Buildings and Livestock Facilities” contains a sample lease agreement that can serve as a starting point.

Finally, the characteristics of the potential renter are another consideration in a lease agreement.  Things like how they care for property, personal habits, reliability, honesty, temperament, how you get along with them, can all matter and might influence the rental price either upwards or downwards.

References and Livestock Building Rental Resources:

  • Computing a Livestock Building Cash Rental Rate, Iowa State University Extension publication C2-26.
  • North Central Farm Management Extension Committee publication “Rental Agreements for Farm Buildings and Livestock Facilities”, NCFMEC-04.
  • Figuring Rent for Existing Farm Buildings, Purdue University publication EC-451

 

 

Ag Lender Seminars feature Federal Reserve Bank of Kansas City Economist

By Wm. Bruce Clevenger, Amanda Douridas & Rory Lewandowski, Extension Educators

The 2018 OSU Extension Agricultural Lender Seminars will feature keynote speaker, Courtney Cowley, Economist at the Federal Reserve Bank of Kansas City, Omaha, Nebraska.  Cowley will speak to each of the three regionally offered Ag Lender seminars scheduled in October 2018.  She will share her research and the role of the Federal Reserve Bank with her topic “Outlook for the U.S. Economy with Implications for the Ag Sector.”  Cortney Cowley is an economist in the Regional Affairs Department of the Federal Reserve Bank of Kansas City. Her current research focuses on agricultural finance, commodity markets, farm management, and natural resource economics and policy. Cowley’s responsibilities also include writing for the Tenth District Survey of Agricultural Credit Conditions and the Federal Reserve System’s Agricultural Finance Databook.    Cowley joined the Bank in 2015 after completing her Ph.D. in Agricultural Economics at Oklahoma State University. She also holds a B.S. degree in Biosystems Engineering from Oklahoma State and a M.S. degree in Civil Engineering from Colorado State University.

Additional speakers at each location include: Farm Policy & Commodity Outlook – Ben Brown, OSU CFAES, Farm Mgmt. Program Mgr.; Ohio Farm Economy & Production Economics – Barry Ward, OSU Extension, CFAES, Production Business Management; Dairy Production Economics – Dianne Shoemaker, OSU Extension, CFAES, Field Specialist; Hops, Barley & Ohio’s Specialty Crops – Brad Bergefurd, OSU Extension, CFAES, Extension Educator & Horticulture Specialist.

The three Ag Lender Seminars will be as follows:

Tuesday, October 16

Champaign Co. Community Center Auditorium

1512 South US Highway 68

Urbana, OH  43078

 

Wednesday, October 17

Putnam Co. Educational Service Center

Assembly Hall

124 Putnam Parkway

Ottawa, OH 45875

 

Thursday, October 18

Buckeye Agricultural Museum

877 West Old Lincoln Way

Wooster, OH 4469

Seminar programs begin promptly at 9:15 a.m. and conclude by 3:15 pm.  Registration information is available at: https://u.osu.edu/aglenderseminars/  or by contacting Bruce Clevenger, OSU Extension Educator, Defiance County at 419-782-4771 or clevenger.10@osu.edu.

OSU Extension conducts the seminars from input from Ag Lenders, County Extension Educators and Extension Specialists.  The seminars are designed to provide information that Ag Lenders will use directly with their customers, indirectly within the lending industry, and as professional development for current issues and trends in production agriculture.  OSU Extension has been offering Ag Lenders seminars for nearly 30 years.

 

 

Ohio Farm Custom Rates 2018

Part 1: Soil Preparation, Fertilizer Application, Spraying Pesticides, Mechanical Weed Control, Aerial Applications, Planting Operations, Harvest Operations, Grain Drying and Storage, Hay Harvest

by: Barry Ward, Leader, Production Business Management, Department of Agricultural, Environmental and Development Economics & John Barker, Extension Educator Agriculture/Amos Program, County Director, Ohio State University Extension Knox County

Farming is a complex business and many Ohio farmers utilize outside assistance for specific farm-related work. This option is appealing for tasks requiring specialized equipment or technical expertise. Often, having someone else with specialized tools perform a tasks is more cost effective and saves time. Farm work completed by others is often referred to as “custom farm work” or more simply, “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.

Ohio Farm Custom Rates

This survey summary reports custom rates based on a statewide survey of 352 farmers, custom operators, farm managers, and landowners conducted in 2018. These rates, except where noted, include the implement and tractor if required, all variable machinery costs such as fuel, oil, lube, twine, etc., and the labor for the operation.

Some custom rates published in this study vary widely, possibly influenced by:

  • Type or size of equipment used (e.g. 20-shank chisel plow versus a 6-shank)
  • Size and shape of fields,
  • Condition of the crop (for harvesting operations)
  • Skill level of labor
  • Amount of labor needed in relation to the equipment capabilities
  • Cost margin differences for full-time custom operators compared to farmers supplementing current income

Some custom rates reflect discounted rates as the parties involved have family relationships or are strengthening a relationship to help secure the custom farmed land in a cash or other rental agreement. Some providers charge differently because they are simply attempting to spread their fixed costs over more acreage to decrease fixed costs per acre and are willing to forgo complete cost recovery.

The measures shown in the summary tables are the summaries of the survey respondents. The measures are the average (or mean), range, median, minimum, and maximum. Average custom rates reported in this publication are a simple average of all the survey responses. Range identified in the tables consists of two numbers. The first is the average plus the standard deviation, which is the variability of the data from the average measure. The second number of the range is the average minus the standard deviation. The median represents the middle value in the survey responses. The minimum and maximum reported in the table are the minimum and maximum amounts reported from the survey data for a given custom operation.

The complete summary of part 1 is available online at the Farmoffice website:

https://farmoffice.osu.edu/farm-management-tools/custom-rates-and-machinery-costs

 

 

 

Western Ohio Cropland Values and Cash Rents 2017-18

by: Barry Ward, Leader, Production Business Management, Director, OSU Income Tax Schools  OSU Extension, Agriculture & Natural Resources

Ohio cropland values and cash rental rates are projected to decrease in 2018. According to the Western Ohio Cropland Values and Cash Rents Survey, bare cropland values in western Ohio are expected to decrease anywhere from 1.7 to 3.6 percent in 2018 depending on the region and land class. Cash rents are expected to decline anywhere from 1.2 percent to 3.0 percent depending on the region and land class.

Ohio Cropland Values and Cash Rent

Ohio cropland varies significantly in its production capabilities and, consequently, cropland values and cash rents vary widely throughout the state. Generally speaking, western Ohio cropland values and cash rents differ from much of southern and eastern Ohio cropland values and cash rents. The primary factors affecting these values and rates are land productivity and potential crop return, and the variability of those crop returns. Soils and drainage capabilities are the two factors that most influence land productivity, crop return and variability of those crop returns.

Other factors impacting land values and cash rents are field size and shape, population density, ease of access, market access, local market prices, potential for wildlife damage, field perimeter characteristics, and competition for rented cropland in a region. This fact sheet summarizes data collected for western Ohio cropland values and cash rents.

2018 Study Results 

The Western Ohio Cropland Values and Cash Rents study was conducted from February through April in 2018. The opinion-based study surveyed professionals with a knowledge of Ohio’s cropland values and rental rates. Professionals surveyed were farm managers, rural appraisers, agricultural lenders, OSU Extension educators, farmers, landowners, and Farm Service Agency personnel.

The study results are based on 108 surveys returned, analyzed, and summarized. Respondents were asked to group their estimates based on three land quality classes: average, top, and poor. Within each land-quality class, respondents were asked to estimate average corn and soybean yields for a five-year period based on typical farming practices. Survey respondents were also asked to estimate current bare cropland values and cash rents negotiated in the current or recent year for each land-quality class. Survey results are summarized for western Ohio with regional summaries (subsets of western Ohio) for northwest Ohio and southwest Ohio. See the entire summary at: https://farmoffice.osu.edu/farm-management-tools/farm-management-publications/cash-rents

 

Ohio Farmland Rental Information

by: Chris Zoller, Extension Educator, ANR & David Marrison, Extension Educator, ANR

How much to charge or pay for farmland rent is a common question among landowners and farmers.  Each party wants to receive or pay a ‘fair’ rate, but questions often arise in determining a ‘fair’ rate.  There are a number of factors involved with establishing a rate with which both parties are comfortable.

What Cash Rental Rate is Fair?

Land ownership costs are summarized using the DIRTI five acronym.  The ownership costs include:

Depreciation, Interest, Repairs, Taxes, and Insurance.  Most landowners would like to at least recover the property tax.  Your annual tax statement can help determine the amount of rent needed to cover the property taxes.  For instance, assume your property tax for 20 acres is $800 annually.  This translates into $40 per acre for the landowner to recover just the property tax.

In addition to the DIRTI five, the landowner should consider the value of the extra things the tenant might do for the landowner.  It is often difficult to assign a value, but consider the value of things a tenant does such as weed control, snow removal, and other tasks.  If you are happy with your present tenant, be cautious if approached by someone offering more money.  Will they do these ‘extra’ things for you?

From the perspective of the tenant, the costs of production, productivity, marketing, transportation, capital investment, and a return to labor and management must be covered.

What Factors Determine Land Rent Value?

All land is not of equal value and there are a number of factors to consider when negotiating a rental rate.  These include: productivity, site characteristics, previous crop, and supply and demand.

Land Productivity – Topography, soil type, pH, and fertility all influence productivity.  Your local Soil and Water Conservation District (SWCD) or Natural Resources Conservation Service (NRCS) can review with you the soil survey of your county.  “Don’t Guess – Soil Test” is an important slogan to remember.  A soil test will provide a baseline number for soil pH and nutrients.

Site Characteristics – Proximity to land already rented or owned is desirable, as are large tracts of land.  A field surrounded by houses or other development may diminish the rental value.

Previous Cropping History – Land that has been fallow for years is of less value.  High yielding land will bring a greater rental rate.

Supply & Demand – The greater the interest, the greater the value.

Sources of Land Rental Values

The Ohio Agricultural Statistics Service (OASS) maintains a database of county-level land rental information.  Most Ohio counties have cropland rental values recorded, with some counties having rental estimates for pasture land as well.

The OASS divides the state into nine districts and reports values for most counties, along with an average by district.  The district averages for cropland rental range from $62.00 per acre to $190.00 per acre.  The district averages for pasture land rental range from $16.50 per acre to $50.00 per acre.

OSU Extension completes a survey of Ohio land rents and publishes a report each year.  The latest report can be accessed at:

https://farmoffice.osu.edu/farm-management-tools/farm-management-publications/cash-rents

More specific questions about local and rental prices can be directed to your local OSU Extension office.

Lease Agreements

Some general legal requirements for lease enforceability that both a tenant and landlord should be aware of based on Ohio law are based on the length of the agreement.  We recommend that a written lease always be used when renting farm ground.

Term  & Legal Requirements

Up to 1 year –  Verbal can be enforceable

1-2 years – Must be in writing and signed by both parties

2-3 years- Must be in writing, signed by both parties, notarized,  and recorded in the county where the land is located

3 years or more- Must be in writing, signed by both parties before two witnesses, notarized, and recorded in the county where the land is located

Example Leases

It is recommended once the landlord and tenant agree on a rental price a written lease should be signed by both parties. The North Central Farm Management Extension Committee has developed a website “Ag Lease 101” which helps both land owners and land operators learn about alternative lease arrangements and includes sample written lease agreements for several alternatives.

Some of the example leases available: Cash Farm Lease, Crop-Share Lease, Pasture Lease, Farm Building/Livestock Facility Lease, Farm Machinery Lease for Non-Commercial Transactions and Livestock Rental Lease. Ag Lease 101 can be accessed at:  https://aglease101.org/

Legal Questions & Answers

OSU Extension’s Agricultural & Resource Law Program helps to provide research and outreach on legal issues affecting agriculture.  A variety of Law Bulletins are available from the Farm Leasing Law Library and include the following discussions: What’s in Your Farmland Lease?, Creating an Enforceable Farm Lease, Protecting Interests in a Verbal Farm Lease Situation, Leasing Your Land for Hunting, Crop Share Leasing in Ohio, and Legal Aspects of Ohio Farmland Leases.  The Agricultural & Resource Law Program can be accessed at: https://farmoffice.osu.edu/

Resources

National Ag Statistics Service https://www.nass.usda.gov/Statistics_by_State/Ohio/Publications/County_Estimates/2017/Ohio%202017%20Cash%20Rent%20County%20Est.pdf

OSU Extension Land Rental Survey

https://farmoffice.osu.edu/farm-management-tools/farm-management-publications/cash-rents

Ag Lease 101

http://aglease101.com

Ohio State University Farm Management & Agricultural Resource Law

https://farmoffice.osu.edu/

Note

The authors are not attorneys and this publication is not intended to provide legal advice.  All legal questions should be directed to an attorney familiar with lease contracts.