As the value of farmland continues to rise, it is important to understand how to build and maintain relationships with potential buyers and sellers. If you are looking to build your land base, negotiation with such individuals will become crucial. Extension educator Garen Paulson gave some tips on how to properly negotiate farmland to help achieve your farms goals in a University of Minnesota Extension article.
Land prices vary across the country based upon soil quality, landscape, and competition. Be sure to know the average land rent rates for the land you are looking to potentially rent, purchase, or sell. “Understand the land’s value. Factors like soil quality, location, size, and amenities affect the land’s value,” said Paulson.
As a landowner and farmer, determine your objectives such as rental rate, lease terms, budget, and arrangements that will make the land more profitable for you. Maintain a positive and cooperative mindset. If conflict arises, try to understand everyone’s point of view and form an agreement that is beneficial for both parties. “Clearly communicate your needs, expectations and limitations. Be honest about what you’re seeking from the arrangement,” said the extension educator. Whether you are putting in an offer or receiving one, make sure your research has been completed. As a farmer, you may want to emphasize how your farming practices will add value to the land. As a landowner, be sure to highlight the key attributes of your land such as soil type, road access, and previous production data.
As you begin to form an agreement, there will likely be some give and take on both sides of the deal that is being formed. In the case of a conflict arising, be sure to put your agreement in writing immediately. Make sure it has been reviewed by an industry professional such as a lawyer that understands the agriculture industry and its land values. Every year, review the previous year in terms of production, pricing, and address issues that may need to be resolved. This can help squash any misunderstandings and maintain a good working relationship.
Remember that land values change along just as input costs fluctuate for farmers. Adjust the agreement if there are any changes in the land’s conditions, market, and economic changes. “Remember, effective negotiation is about finding common ground and creating a win-win situation,” encouraged Paulson.
