View From the Cab
Farmers Talk About Building Relationships with Landlords, Cash Rents Ahead of Harvest
MT. JULIET, Tenn. (DTN) -- King Charles III just might be American agriculture's most relatable man.
His mother, Queen Elizabeth II, passed away at the age of 96 this week, bringing her reign as Britain's longest serving monarch to an end.
Charles now begins his turn on the United Kingdom's throne at the tender age of 73.
"It's just like the 90-year-old dad passing away, and his 70-year-old son gets to run the combine for the first time. There are so many parallels between that and ag, it's funny," Ohio farmer Luke Garrabrant said.
That paradigm played a part in Garrabrant's decision to begin farming on his own instead of joining his father's business. His dad is relatively young, in the prime of his career and nowhere near thinking about retirement.
"I had a desire to be more than an employee at 35- or 40-years-old working for my dad," the 26-year-old said. "I wanted something of my own, and that's why I am where I am today -- taking that leap of faith and making the tough choice to carve my own path."
Garrabrant said the biggest challenge he faces as a young farmer isn't access to capital, it's access to land needed to grow his business and support his family. "I've put myself in a pretty good financial spot to take on the growth. It's just a matter of finding those opportunities."
In this week's installment of DTN's View From the Cab feature, Garrabrant and Colorado farmer Marc Arnusch discuss the ins and outs of building relationships with landowners, cash rents trends and harvest preparations.
This unique diary-like series presents an ongoing, first-hand look at the decisions farmers make while growing commodities and living the rural life. This is the 20th installment. You can find last week's story, which discussed biologicals and carbon credits, here: https://www.dtnpf.com/….
LUKE GARRABRANT: JOHNSTOWN, OHIO
Some of Garrabrant's late-planted soybeans still have viable blooms, and he hopes this weekend's rainy forecast will help them make and fill pods.
DTN Ag Meteorologist John Baranick said it's possible the moisture could stick around until Monday night or early Tuesday. "If he doesn't get much rainfall with this batch, that might do it for the rest of the growing season. Chances aren't zero for more rain, but they're pretty low after this system."
Garrabrant will use the indoor time to finish up preparing his combine, and as early as it may seem, start getting ready for next year.
Since he's decided to close the doors on his hay operation, he's working on a few deals to swap out equipment. He's also making plans for next year's inputs.
"I spoke to one of my input suppliers today, and he's saying that chemical supply next year could be the same or worse than this year, which I was surprised by," Garrabrant said.
President Joe Biden attended a groundbreaking ceremony for a new Intel microchip facility on Sept. 9 that's being built just 6 miles from the farm. "I guess when any president comes to town it's a big deal, especially in our little part of Ohio, or what used to be our little part of Ohio."
As Garrabrant discussed several weeks ago in this space, the pace of development in his area just outside of Columbus comes with pros and cons. (For more on development, please read https://www.dtnpf.com/….)
With all of the changes, it feels like it's a mad dash to get access to land. "There is a lot of ground changing hands, whether it'd be selling, renting, whatever it may be, the ground is surely moving."
He's been fortunate to work out a few deals this growing season that will allow him to double his row crop acreage in the upcoming year. One chunk of that is land he previously leased to grow hay, but the others are new.
A local farmer planned to retire, and Garrabrant reached out to one of his landlords, who turned out to be his old school bus driver. Another is a farm that he custom planted, sprayed and harvested this year. Instead of paying him to do all the work, they decided to lease to him. Another was a friend of a friend that wanted to change tenants.
"It's always exciting when you can make an opportunity to grow the farm, especially with where I'm at in my career," he said.
With several 10,000-plus acre operations in the area, competing for land can be frustrating. Some landowners don't want to take the risk of a young operator, even if they offer to pay more for ground.
"If nobody is willing to give a young guy an opportunity, we're never going to grow and be successful and be, not necessarily the 10,000-acre farmer, but the well-established farmer that's able to pay the big dollar rents. I don't know how we go about fixing that stigmatism, but it's very frustrating as a young guy."
Frustration aside, Garrabrant's focused on making sure landowners know what's happening on the farm. He recently started a quarterly newsletter that's gotten a lot of good feedback. He also makes sure they know his phone is always on, and they can call anytime.
Generally, Garrabrant said rents in the area seem to be mostly steady to slightly higher. Even though commodity prices are high, cash rents aren't soaring like they did during the ethanol boom. "I think a lot of guys learned a lesson during that period. Rents can go up easily, but they sure don't come back down very easily, if at all."
MARC ARNUSCH: KEENSBURG, COLORADO
Marc Arnusch is enjoying the calm before the storm. The figurative storm of silage harvest and wheat seeding, that is. In the literal sense, there's very little rain on the horizon.
There may be some cloud cover and there's a chance for an isolated shower Sept. 15 through Sept. 17, Baranick said. "Otherwise, above-normal temperatures look like they'll be sticking around through the end of September with limited to no chance of rain."
Those temperatures should help Arnusch's silage crop make it to the finish line.
"It's certainly not a barnburner, and it's certainly not going to be the best silage crop we've ever drilled, but it's not going to be the worst one, either. We're just going to be somewhere in between, and in a year like this, I'll take it," he said.
The milo, however, continues to impress. "Great tillers, great grain fill. There's just a lot of things moving in the right direction for this new crop on our farm," he said, adding that it's about a month away from being ready to harvest.
Nine million of his neighbors are laying hens, and because of the price of corn, sorghum is making its way into their ration.
"How many times in someone's farming career can they say they've had a new crop? For us, we can say that four or five times, but for most growers, I'd say it's maybe once or twice," he said. "That's what's so unique about Colorado. We can audible on the fly. We can capture some hot markets, and we can avoid trying to just be just a commodity. It really allows us to be sustainable and to survive a lot of things."
Arnusch's family has a long history farming in this area just east of Denver, and while he's had a lot of different arrangements with landlords over the years, it really started with leveraging his father and grandfather's reputations.
"But then you also have to, in my view, differentiate yourself. What do you do differently than anybody else in your area? What's your value proposition? Is there something that you can provide that they can't get from a neighbor or competitor? And for us, that was always the value-added side," he said.
Arnusch said a few of the keys to good landlord-tenant relationships is making sure you are providing value, taking care of their farms and understand their goals and objectives.
"At the end of the day, you have to perform, and that has always rewarded us. In fact, I've only had one, maybe two landlords that I've ever pursued. Most of the farms we've put under lease in the past, they've pursued us."
The third-generation grower is focused on helping the fourth find its footing. One of the farm's key employees, Casey Cantwell, is married to Arnusch's niece, Taylorann. They approached him for help starting a farming operation of their own, and Arnusch sublet them a farm owned by an absentee landowner.
"They had a successful year, but right before the Aug. 1 renewal time, they received a termination notice," he said. It wasn't because of anything the Cantwells did; rather, the landowner sold the farm and the new owners wanted to farm it themselves.
"It's a part of doing business, but as a young couple just starting out their careers, that almost feels like a death sentence. But what it really did was create an opportunity for them to establish a new relationship with a new landlord out here," Arnusch said.
They'd learned of a neighbor buying another farm in their valley, and after many conversations, the landowner agreed to rent not one, but two farms to Casey and Taylorann.
"They learned the lesson of when the world hands you some adversity, you figure out how to pivot and make it an opportunity," he said.
But growing for the sake of growth isn't smart, either, Arnusch said. His son, Brett, was approached about renting a piece of ground, but the owner's priorities weren't really in line with what Brett wanted to do.
"You have to be careful not to grow just because the opportunity is in front of you, but to grow because it's right for where you're headed," he said.
Land prices in his area are escalating rapidly. Some of it is related to water, some of it is due to investors seeking places for their capital, and some of it is because land is transitioning from one generation to the next. Those forces are making cash rent arrangements more common. Historically, crop share arrangements have been the norm.
Cash rents may be marginally higher in the upcoming season, maybe 3%, Arnusch senses, but as more nonfarm investors buy land, it could change the landscape.
"They may start looking at rate of returns based upon land values, and so as we continue to see land sell for $12,000, $13,000, $14,000 an acre, that investor may be looking for 2%-3% return on his investment. And if that's the case, cash rents will escalate rapidly."
Katie Dehlinger can be reached at firstname.lastname@example.org
Follow her on Twitter at @KatieD_DTN
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