AIR NOVEMBER 18, 1998

Thank you Mark and good morning everyone. It’s certainly been good to see the sun for most of the last week and even if the sun hadn’t been shining I think it would be around Manhattan anyway after Saturday! A quick reminder that swine day is coming up Thursday, at the Holidome in Manhattan. Registration starts at 8:15 and the program at 9:20. Swine producers, plan to attend!

I had a very enjoyable day last Wednesday. I attended a day long county agent training session on farmland leases, rental arrangements and land values. If there is one thing that seems to be drawing more and more attention the past couple of years it is farm leases and farmland values. Let me put in a plug right now for a meeting on leases and land values that we are having on January 12th here in the county. I’ll have more information on that meeting in late December. There have been a lot of changes going on with leases the past 5 or 10 years and we’re going to see even more changes in the coming years. Production agriculture is becoming more complex making simple crop share leases cumbersome at times. Who pays the technology fee? What about the cost of the Roundup for Roundup Ready beans. Is that treated like a typical herbicide or is it a substitution for tillage. Bt corn doesn’t need the insecticide that used to be shared so does the landlord share the cost of the seed or just the difference in the cost of the seed. If it seems complex now it’s only going to get worse. Two big changes are probably going to come out of all of this. First of all is going to be more cash leases. This frees the landlord from worrying about shared expenses, weather, yield, harvest, etc. But this freedom comes at a price and it is normally a 5 to 10% reduction in the landlords share. If the landlord has been averaging $50 per acre net return then perhaps a $45 cash rent is equitable. But then what about payment of the rent. One third to one half should be paid up front and the remainder after harvest or by November 15 perhaps. It’s always negotiable. I don’t think that all should be paid up front, nor do I think that none should be paid up front. Another new twist is what is called the net shares lease. The landlord pays none of the production costs but gets a share of the crop. We need to do some figure crunching on these but it often comes out in that 22 to 28% of the crop range. Just a few more things to think about as we wrap up the crop year!

This is Chuck Otte, County Extension Agent, with Ag Outlook '98.

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