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Published December 03, 2012, 09:51 AM

Flexible rent's starting point

Numbers and formulas are important in determining flexible rents, but the key is “developing a relationship of trust and responsibility” between renter and landowner, a North Dakota State University Extension Service official says.

By: Jonathan Knutson, Agweek

Numbers and formulas are important in determining flexible rents, but the key is “developing a relationship of trust and responsibility” between renter and landowner, a North Dakota State University Extension Service official says.

Willie Huot, a Grand Forks County agent, is one of three extension service officials who will conduct a statewide series of meetings on flexible rent this winter. The first meeting was held Nov. 26 in Wishek, N.D.

Flexible rents, which allow renters and landlords to share in both good and bad economic conditions, are seen by some experts as increasingly attractive. That’s partly because the combination of high crop prices and drought complicate arriving at a fair cash rent, or fixed per-acre rental payment. A flexible rental agreement would protect the farmer if crop prices fall or drought hurts the 2013 crop, while also benefitting the landlord if prices and yields are good.

Huot says the first meeting in Wishek generated good questions from attendees about flexible rent.

The practice can be confusing, especially at first, since there are a number of ways in which rent can be determined.

“There are many methods, many options, with flexible rents. But the thing you need to start with is the relationship between the renter and landlord,” he says.

Determining and implementing a flexible rental agreement can be extremely difficult without a good relationship, he says.

Flexible rent can be particularly challenging when the landowner is several generations removed from farming and doesn’t have first-hand knowledge of the land or farming practices, Huot says.

The extension service’s meetings on flexible rents also will look at historical trends in land prices and rental rates. Huot notes that current land prices have risen to record highs, which could skew how some people view rental rates.

Five more meetings on flexible rents have been set around the state, and roughly 10 additional meetings are being scheduled for January and February.

Here are the times, dates and locations for the five meetings already scheduled:

•Dec. 10, 1 p.m., Farmers Union Conference Room in Jamestown.

•Dec. 11, 9 a.m., Hettinger Research Extension Center.

•Dec. 11, 1:30 p.m., Dickinson Research Extension Center.

•Dec. 12, 9 a.m., Burleigh County Extension office in Bismarck.

•Dec. 13, 1 p.m., Omega Mall (Omega Room) in LaMoure.

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