Farm Lease Negotiating Tips


We can benefit from marketing best practices from other sectors in our conversations with landlords.

When seeking to improve, most successful companies look outside of their industry. It shouldn't be any different when it comes to farming.
Farmers should employ a sales and marketing specialist to assist them in expanding and strengthening their businesses. Specifically, how to deal with existing and prospective landlords using high-level sales/marketing techniques.


Focus on Benefits, Not Features is a key marketing concept.


Farmers discussing lease structures with their landlords is the best recent example of this definition.

I've looked at a few of these negotiations, and producers prefer to concentrate on the contract's features and benefits to the farm rather than the landlord's benefits.

Who can blame the farmer, after all? They're too preoccupied with feeding the planet to think of how to boost their marketing abilities.

It is the producer's responsibility to understand each of their landlords' goals and to work hard to help them achieve them. Such instances are as follows:

1.Cash! Some landlords are only interested in collecting the highest cash rent possible. With these types of landlords, it's difficult to "get imaginative."
2.Fertility
3.Legacy (keeping land in the family)
4.Improvements (tile, ditching, irrigation, etc.)

5.Agronomic Management (eg. an interest in their farmland raising great crops)
Instead of focusing on how the plan benefits you, consider how it benefits the landlord.

A hypothetical before and after example of one of these letters can be found below.

Previously,

“John, commodity prices are at an all-time low. I'd like to work with you to set up a flex lease in order to come close to making money in the near future. The structure I propose is........XXXX

Following that,


“As you are aware, John, we treat all of our leased property as if it were our own. It is our mission to keep improving your land. Please find details below about a drainage project we have planned for your farm next year, which will be done at no cost to you or your family.

We believe that this will increase the farm's long-term value, especially in the wet NW corner of the field.

[Details on the drainage project]

We'd also like to collaborate with you to tighten the spacing on the new field tile. Again, we'd be able to cover the costs, but we'd like to discuss how we can arrange the lease to fit this value-added project with you. Is it possible for us to meet next week or the following week to explore this further?”

In the second scenario, you'd set up a framework to allow you to make these investments.

Concentrate on the landlord's advantage. Not the structure's specifics or the advantages.

As I previously said, I understand that some landlords are only interested in receiving top-of-market cash rent. With them, your choices are minimal. Focus on getting to know your landlords, even though they are strangers. You may be shocked to learn that they have a couple of secondary agendas that might help you reach mutually beneficial agreements.

 

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