website: agecon.unl.edu/landmanagement · • question: i recently inherited a farm and need help...

Website: agecon.unl.edu/landmanagement

Agricultural Land Management Quarterly Presenters

Jim JansenAgricultural Economist

University of Nebraska-Lincolnjjansen4@unl.edu

402-261-7572

Allan VyhnalekFarm & Ranch Succession and Transition

University of Nebraska-Lincolnavyhnalek2@unl.edu

402-472-1771

• Recent Trends in Nebraska Cash Rental Rates• Trends in cash rents for 2018 - 2019• Calculating cash rental rates to reflect market prices or farm yields

• Updating Agricultural Leases for the 2019 Production Season• Considerations for landlords and tenants entering the new growing season• Aglease101.org - free lease resources

• Ask an Expert• Review of submitted questions• Upcoming land management workshops and publications

Webinar Outline: Monday, February 18, 2019

RECENT TRENDS IN NEBRASKA CASH RENTAL RATESPRESENTED BY JIM JANSEN

• Annual survey conducted since 1978 of Nebraska agricultural appraisers, professional farm managers, and bankers engaged in the land industry.• Preliminary results for land values and rental rates published the second week of March.• Full report published in June.

• Nebraska Farm Real Estate website full access to these resources: https://agecon.unl.edu/realestate

Nebraska Farm Real Estate Survey

Nebraska Agricultural Statistics Districts

Nebraska Dryland Cropland Rental Rates – 2018University of Nebraska-Lincoln, Dept. of Agricultural Economics

Nebraska Dryland Cropland Rental Rates – 2017USDA-National Agricultural Statistics Service

Website: https://www.nass.usda.gov/Statistics_by_State/Nebraska/Publications/County_Estimates/

Nebraska Center Pivot Irrigated Cropland Rental Rates – 2018University of Nebraska-Lincoln, Dept. of Agricultural Economics

Nebraska Irrigated Cropland Rental Rates – 2017USDA-National Agricultural Statistics Service

Website: https://www.nass.usda.gov/Statistics_by_State/Nebraska/Publications/County_Estimates/

Nebraska Cow-Calf Pair Monthly Rental Rates – 2018University of Nebraska-Lincoln, Dept. of Agricultural Economics

• Land rental rate survey data:• Evaluate available cash rental survey data to establish a baseline in the landlord and tenant

negotiation process

Estimating Cash Rental Rates by Adjusting Survey Data

County Value Farm Value

County Rental Rate $135/ac.County Rent/Bushel $1.13/bu.

Corn Yield 120 bu./ac. APH Yield x 135 bu./ac.County Rent/Bushel

$1.13/bu. Farm Level Rent $151.88/ac.

• Rent paid to landlord by tenant based off owner’s share of net returns per acre.• Example 50/50 split:

Cash Equivalent From Crop Share

Value Corn SoybeansYield (50% share) 80 bu./ac. 25 bu./ac.

Price/bushel x $3.50/bu. x $8.40/bu.

Income $280/ac. $235/ac.

Owner Expenses -$145/ac. -$85/ac.

Net Return to Owner (Effective Rent) $135/ac. $125/ac.

UPDATING AGRICUTLURAL LEASES FOR THE 2019 PRODUCTION SEASONPRESENTED BY ALLAN VYHNALEK

• Consider critical lease issues when updating agricultural rental arrangements• Cropland

• Timing of lease payments• Irrigation equipment• Fertility & manure application• Removal of stover from property & hunting rights

• Grazing land• Stocking rates• Fencing and noxious weeds

Lease Considerations for 2019

Irrigation systems may cause trouble in negotiation of rental rates (cash leases)• Rental rate surveys assume that the landlord owns the entire irrigation system• In many cases, the tenant may own a portion of the system or bear some of annual

maintenance expenses• Rents need to be adjusted (lowered) to reflect these contributions by the tenant

Lease Considerations for 2019

• Fertility• Set minimum fertility levels in lease• Which party pays for the soil tests?• Protect landlord with minimums

• Macronutrients main concerns (N, P, & K)• Protect tenant making multiple year investments

• Lime – typically a landlord expense• Phosphorus

Lease Considerations for 2019

• Cornstalk Rent• Cornstalks belong to the tenant unless there is a provision making a different arrangement• So additional rent typically not collected by landlord (subleasing permitted?)• Fencing and water

• Baling cornstalks• Periodically baling cornstalks permittable – once in 3-4 years• Not every year (unless properly managed)

• Phosphorus and organic concerns

Lease Considerations for 2019

• Move all leases to written contracts for better relationships between landlords and tenants• Current Law for handshake, or Verbal leases: For cropland leases, notice of termination must

be given before September 1 (6 months prior to 3/1 start of new lease)• Set by Supreme Court• Notice given by registered letter• For either ending lease, or changing provisions!

• Website for written leases: www.AgLease101.org

Lease Considerations for 2019

• Grazing land leases are typically 5 month long from May to October (or June to November)• Notice of termination is not specified for a handshake agreement• Lease ends each year grazing season so a written termination notice may not be necessary for

either ending lease or changing provisions!• Exceptions may exist on grazing land that run longer than just one season

Lease Considerations for 2019

• AgLease101.org – Free PDF leases for landowners and operators

AgLease101.org – Free PDF Leases

Click Document Library

AgLease101.org – Free PDF Leases

Fillable PDF Forms

Lease Publications

ASK AN EXPERT

PRESENTED BY JIM JANSEN & ALLAN VYHNALEK

• Question: I recently inherited a farm and need help with financial and legal matters, but I do not know where to turn. What should I do?

• Answer: Landlord & Tenant Cash Rent Meetings and Farm & Ranch Succession workshops provide a great starting point to learn from unbiased resources at the University of Nebraska-Lincoln.

• Answer: Nebraska Rural Response Hotline at 1-800-464-0258 provides free one-hour consultations across Nebraska with a legal and financial professional for agricultural landowners and operators.

Land Management Questions

• Question: Where can I find appropriate “wording” or “verbiage” to include in a land lease?

• Answer: www.aglease101.org provides example leases and educational pamphlets for free.

Land Management Questions

• Question: Online participants may now submit their questions?• Answers: Review of questions and answers will be based upon remaining time

available.

Land Management Questions

• Feb. 25, 2019 — David City, Butler County Events Center, Butler County Fairgrounds. Please register by calling 402-367-7410 by Feb. 21. • Contact: Melissa Bartels, mbartels6@unl.edu

• Feb. 28, 2019 — St. Paul, St. Paul Public Library, 1301 Howard Ave. Please register by calling (308) 754-5422. • Contact: Troy Ingram, tingram5@unl.edu

• March 14, 2019 — Lincoln, Lancaster County Extension Office. Please register by calling (402) 441-7180 by March 11. • Contact: Tyler Williams, tyler.williams@unl.edu

Upcoming Landlord & Tenant Cash Rent Meetings

Topics:• Trends in Nebraska Cash Rental Rates and Land Values

• Trends in cash rent for 2019 across Nebraska• Financial implications for changes in land values and cash rents

• Proper Communication and Decision Making for Agricultural Land• Improving communication between landlords, tenants, and family members• Short and long-term decision making for agricultural land

• Ask an Expert• Review of submitted questions and from meeting participants• Upcoming land management workshops and publications

Upcoming Webinar: Monday, May 20, 2019 at 6:30 PM

Agricultural Land Management Quarterly

Jim JansenAgricultural Economist

University of Nebraska-Lincolnjjansen4@unl.edu

402-261-7572

Allan VyhnalekFarm & Ranch Succession and Transition

University of Nebraska-Lincolnavyhnalek2@unl.edu

402-472-1771