Determining how much to charge for farmland rent

WAUSAU, Wis. (WSAW) -- Every year, the agricultural staff at UW-Extension in Marathon County gets the question, “How much is rent going for?" While this seems like a straight forward question it is actually very complicated. The amount of rent a person is able to get for a piece of property largely depends on the quality of the ground, the neighbors and the market.

More fertile ground can fetch a higher price than less fertile ground. But here lies the first conundrum of determining the price, you need to have a current soil analysis to know the fertility of the land.

The altitude of the ground plays a role in determining the price as well. If the ground in question is low lying and prone to flooding, crops planted on it are not going to fare well. However, if the piece of land is higher above the flood plain and not prone to flooding, crops planted on it will fare much better. If the field has been planted before you can look at the production history to know if the ground was suited for the crop you are interested in planting.

The number of contiguous acreage is also a factor in determining the price of the land. A larger tract of land is more suitable for larger equipment than smaller tracts of land. If you have a farmer with large equipment looking to rent the field, he may be willing to pay a higher price if his other options are only small fields.

The location of the land is also important. Neighbors are important when purchasing a home and when renting land. If there are large dairies surrounding the piece of land, they may be willing to pay more so they have a place to spread their manure. If the land is connected to land they already have this makes the land even more advantageous.

It is important to also realize that land prices and rental prices vary with the crop market. When commodity prices are high then farmers are able to justify paying more for a piece of land. When prices are low farmers will thing really hard if adding a piece of land will break their bottom line.

Ultimately when looking to rent a piece of property, you want to get a farmer that is going to manage the land and not abuse it. If they don’t give anything back and only take nutrients from it then it does not matter how much they are willing to pay, because you won’t have a product to sell once they are done with it.

Also you have to find a price that a renter is willing to pay. You in return should be asking a price that covers your input costs. If the rental doesn’t cover what you need to pay on it then you are not pricing it correctly.

So what can you charge for rent? It really depends where you are at in the county. Have a conversation with the person that is interested in renting. The best thing you can do is have an open and honest conversation to hash out all the details, and then right it down.

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