There are many reasons to own farm land, among which is the opportunity to make a profit from the investment. Few people these days have the time, equipment or knowledge to make an optimum profit from their acres, so they rent the land to professional farmers who assume all of the work and risk. The land owner makes his money regardless. The best way to insure getting a fair rental rate for you land is to prepare a bid packet, advertise and accept competitive bids for the right to farm your property.
Include a map or maps of the acreage so the bidder will be able to find and inspect the property.
Include soil maps from the USDA, which shows the types of soils on the acreage. This will give the bidder an idea of what the land will produce.
State the terms of the rental clearly, including how many years the agreement will cover and what sort of crops are expected or prohibited, as well as any required crop rotations. State any prohibited tillage systems, such as fall plowing, and any chemical use restrictions, including certain classes of pesticides. Outline a payment schedule of when rent checks are due. Some contracts include one-time, up-front payments and may reflect due dates before or after the beginning of each year for tax purposes.
Include any specific or unusual uses you plan for the property. List any special restrictions you want to reserve for yourself such as hunting rights, permitting livestock to glean crop residues, or using the land for special activities such as horseback riding or off road vehicles once the crops are harvested.
Draw up a bid form with blanks for the bidder to enter his name, corporate name, legal address, telephone contact numbers, email address, signature and any other information you deem appropriate.
Place an advertisement in the local newspaper of the nearest town and those in surrounding towns.
Post fliers at places farmers will see them, including fertilizer dealers, farm machinery stores or commercial grain elevators.
Make special appointments to see the farmers who own or rent land adjacent to the acreage you are renting. These people may pay a premium to be able to farm nearby land and save travel expenses.
Open the Bids
Set a firm time and date for bids to be accepted and for the bids to be opened.
Consider having a public bid opening process where bidders are welcome to attend. It’s not uncommon for bidders to hand carry their bids and submit them at the last minute.
Hire a lawyer or real estate firm to handle accepting the bids and the bid-opening process if you are renting a large parcel of land or expect the bid offers to be substantial. A few hundred dollar retainer can offer great peace of mind and minimize chances of post-bid legal issues.
Offer a multiple year rental agreement and/or procedures to continue the agreement in future years. This will help insure the farmer adheres to good agronomic practices and fertilization to keep from depleting the land.
Once you have a high bidder, meet with the farmer and put your agreement in writing to insure a clear understanding for both parties.
- corn image by Cathy Kovarik from Fotolia.com