Land rent negotiations are going to be very challenging this year. At current commodity prices it is going to be important for producers to know their costs and look at options to limit downside risk, explains Dale Nordquist of the University of Minnesota. That's why they created FairRent, a program to help find good rental values.
"The common reaction we get to 'FairRent' is that there is no such thing," said Dale Nordquist, CFFM Extension economist. "And that will likely be true this year. It looks like there will be a large divide between break-even rental rates and the current market for cash rents. Given this divide, it will be even more important for everyone to be equipped with the numbers when they enter into this fall's negotiations."
The University of Minnesota’s FairRent program is now online. Registration takes just seconds, and you can begin planning out your future rent agreements. You can choose between nine different rent options:
- Cash rent
- Share rent
- Flex on percent of gross
- Base rent plus bonus on yield only
- Base rent plus bonus on price only
- Base rent plus bonus on yield & price
- Flex on yield ratio only
- Flex on price ratio only
- Flex on yield & price ratio
From there, you can put in specific crop input amounts, with expected yields and prices, and hit “calculate” to figure a return. You can then use this worksheet when negotiating rent.
FairRent is free. Sign up at https://fairrent.umn.edu/ and begin creating rental plans. FINBIN is another great source of information of crop production costs for rental plans. It is at http://www.finbin.umn.edu/.