Win Back Land

Proactive communications can help when high bidders come calling.

Don Gjere and Myron Sylling (Progressive Farmer image by Steve Woit)

Don Gjere had the problem most landowners love. It was fall of 2013, and a high bid from a prospective renter would slip an extra $22,000 into his pocket. Corn at $7 to $8 had whipped up the cash rental market. The question was what to tell his longtime renter Myron Sylling.

"The bid was for $475 an acre for two years with payment for the year up front," says Gjere, who owns a construction company near Mabel, Minnesota. "Rent in the area at the time for similar ground was $275 to $300 an acre. I asked Myron what I should do."

Sylling, from the neighboring town of Spring Grove, admits that his initial thoughts were not that magnanimous. "Naturally, I was upset at the time. I had been farming it for more than 20 years, but there was no way I could justify matching the bid," he says. "I calmed down and told him the best option financially was to take the bid, but I did warn him about what might happen."

Sylling was specifically concerned about erosion. He had long ago switched from mulch tillage to no-till on Gjere's fields because of erosion issues, noting they didn't have the aggregate structure of other fields he farmed.

Gjere took the bid, and land that had been carefully no-tilled for two decades was heavily tilled that fall. "Spring rains came, and we lost a lot of dirt," Gjere recalls. "Then, they did even finer tillage, claiming they needed to open up the dirt to get air in."

His concerns grew after discovering an employee tilling his fields had accidentally tilled a neighbor's 16-acre field, too. Herbicide applicators sprayed through waterways, killing everything.

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"They just tried to cover the acres as fast as they could and get on to the next one," he says. That winter, Gjere's concerns were laid to rest when the renter lost his financing. "I gave them a release," Gjere says. "I called Myron about renting, but he said, 'It's all chewed up.' I promised not to leave him again if he took it back."

Gjere visited the local office of the Agricultural Stabilization and Conservation Service. The waterways were redrawn, redone and seeded down. Even with cost share, the repairs ate up a chunk of the premium he had received from the previous tenant. He considers it a good investment.

"I want something to pass on to my kids," Gjere says. "I don't want the soil going down the river. Renting is not always about the money. It also should be about saving the soil."

While stories like Gjere's are not uncommon, landlord-tenant relationships are surprisingly stable. The 2017 Iowa State University Survey of Iowa Leasing Practices found that 52% of cash-leased land was in a fixed lease of five years or more. Average tenancy ran 11.6 years. Forty-one percent of cash leases had been to the same farmer for more than 11 years and 17% for more than 20 years, this last number unchanged since 2012.

FIXED ON FINANCES

Mykel Rae Taylor has spent a lot of time with surveys and focus groups seeking to understand renting. The Kansas State University economist notes the person to whom a landlord rents and why is often some combination of price, practices and other factors, such as inherited land rented to a relative or a long-term tenant. When considering a new renter, financial considerations are usually key and often outweigh good intentions, such as helping a young farmer.

"We asked a group of landlords in a focus group if they wanted to rent to a young person, and they all did," Taylor says. "When asked if they would rent land to a young farmer offering $100 an acre or to a 60-year-old offering $110, they split down the middle. When asked what it would take to finalize the deal with the younger farmer, the answer was shared financial information, character references and knowing his family background. No one wanted anything from the 60-year-old. We had one retired farmer in the group, and he was the most rigorous about knowing the financials."

Taylor is quick to say that younger farmers can win a piece of land; they'll likely have to work harder to do it. She suggests putting together a résumé including farming philosophy, professional and character references, and successes in farming, such as improving yields on land already farmed.

She adds it can also require persistence. "It often takes repeated contact with the landowner," Taylor says. "Provide an update on what you're doing. For some landowners, it's a long process."

OPEN COMMUNICATION

That same type of communication is key to holding on to land, Taylor notes. "The tenant needs to communicate with the landowner," she says. "Be transparent with them and educate them. If times are good, offer to pay a little more, but make it clear that when times are bad, you'll expect them to accept less."

She adds that communication, in particular about conservation, can be especially important if a tenant can't compete with a high bid. "Stewardship is important to most landowners, and they may not go for the high rent if they like the job the tenant is doing," Taylor explains.

Communication in general can be even more important if the landowner is female, which according to the ISU study make up 55% of landowners. "I have a lot of women in my Extension meetings, and they will talk about a desire to be respected as the landowner and as a partner with the tenant," Taylor says. "How the tenant's family is doing can be as important as the rent. Keep them engaged and share what is going on with the farm."

That doesn't mean taking advantage of a relationship with either male or female. Eventually, land will be transferred to the next generation or a new owner. Taylor suggests making it part of the conversation. "Talk about it with your landowner, and if they are planning to leave it for the next generation, ask to meet them. Don't wait to introduce yourself at the funeral," she says. "Keep in mind that they may already be pretty savvy about how their parent was treated and how the ground was handled."

Sylling is quick to admit that he has learned from losing his long-term lease and winning it back. "Tenants need to recognize the importance of more detailed discussions with landowners about what they are bringing to the land, such as improving the soil, reducing erosion, even clearing brush and mowing ditches," he says. "I think landowners can lose sight of the little things a tenant does to care for the land. At the same time, you have to be ready to walk away if it doesn't make sense. If you leave on good terms, the opportunity will be there to regain the land."

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