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What is a Fair and Profitable Farm Rental Agreement?

November 6, 2013

Negotiating a fair rental agreement that satisfies both the land owner and the farmer is a challenge that can be approached from many angles.  
From: Dave Bau, University of Minnesota Extension, 507-372-3900 ext 3906, bauxx003@umn.edu, Extension Educator, agricultural business management    

This is the title of a program I am offering statewide this fall.  The simple answer is in a fair and profitable rental agreement the farmer makes a profit and the landlord receives a fair rental payment.  There will be some high rental numbers for 2014 that will be hard for farmers to make a profit at the current 2014 corn and soybean prices.  A rental agreement should balance risk versus reward.  Is there a rental agreement that balances both considering yield and prices? This would describe a flexible agreement.  How to reach agreement on what terms should be in a flexible agreement becomes the challenge. Farm land rental rates have never been higher and determining a fair and profitable farm rent agreement is a challenge in today’s economy after record corn and soybean prices last year and record farm land values.

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