Renting Agricultural Land
We also discuss the adjustments to cash receipts and disbursements to arrive to accrual-adjusted net income.
The Penn State Extension Farm Business Management team recommends that farmers using cash accounting convert the resulting net farm income to an accrual net farm income at the end of the year.
Please describe your operation. Our operation is mostly hay and grain. I am a broker for Hillendale Farms and haul poultry litter. We operate on about 1,200 acres. About a thousand of that is consistent of hay, and we row crop the additional 200. How do you find out about land that you rent? A lot of our land we've been renting for a lot of years, some new land that we have rented, actually the landlord of come to me, and asked me if I was interested in renting their ground. Sometimes it's a matter of, you know somebody's giving ground up, so you ask. I am not a person that goes out and tries to take ground away from another farmer. I think we all need to work together, and I don't like to be out there back dooring somebody if you will. Do you have written leases with your landlords? We have some, and others are year-to-year leases. Our written leases, the longest I have is a 10 year, and then rest are all year-to-year. How do you determine the amount of rent? I like to base our rent on our County averages.
Obviously, with grain prices in the last couple years ground rents have definitely spiked, obviously making hay, we weren't able to pay what grain market guys were offering on ground rent. Most of my landlords are willing to work with us on the ground rent a lot of our ground hay and that's what they want to keep it as. Anything else you'd like to add about renting land?
I think this year, and next several years with the markets, I think obviously ground rents are going to change dramatically, fortunately we have some guys came in and really drove some ground rents up, and I believe that you know some landlords it's gonna be hard for landlords to go backwards I wants to go up there they don't want to come back and there's definitely some challenges in the upcoming years for farmers and landlords to work together to come with that happy medium as prices and commodities are going backwards here.
Thank you! Jim Lady, Chestnut Hill Farms