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Tips for Negotiating Farmland Rent

Dennis Pennington and, Dennis Stein (April, 2015)

Summary

Negotiating farmland rental rates can be challenging. Generally landowners and tenants want to be fair with each other and don’t want to be taken advantage of. Landowners need to cover the costs associated with owning land like land payment, insurance and taxes. Farmer-tenants need land in order to grow a crop and generate income. Most landowners and farmers alike want an easy way to determine fair rent prices. However, volatility in the market over the past few years complicates the situation. When prices and yields are good, farmers can afford to pay more for rent but, when commodity price recede, like they have recently, their ability to make higher rent commitments are eroded. Michigan State University Extension has some good resources, like the landlord checklist, for landowners and farmers in determining how to set rental rates.