A few weeks ago I had looked at some breakevens on corn and soybeans for 2015 and, unfortunately, they did not look very good. I wrote an article addressed to landlords to consider dropping rent to help things cashflow a little better. This suggestion was praised by many farmers, but created a fair amount of feedback from landlords.
Some suggested the farmers were the ones to blame for the increase in rent, and some asked why they should go down on rent when the seed companies, equipment companies, etc. will not be lowering their prices. I see merit with both and can't disagree with either argument.
My message was not directed to all landlords, but to those who have lost sight of what farming is -- not just a business, but a relationship business. As commodity prices have dropped considerably from the past few years, my hope is the retired farmer, turned landlord, would remember the tough times as a producer and remember that there was likely a mom and dad, uncle or neighbor who helped out. I am quite confident these landlords will work with their tenants and consider maintaining or lowering rent next year, if necessary, because they have built a relationship with their tenants.
There are some relationships that are simply business arrangements, such as a landlord who is merely an investor-owner looking for the tenant who will give them the highest return on their land. Inherently, there is nothing wrong with this, but this is the audience I am hoping will consider making a change next year if they have a good relationship with their tenant. As a former ag banker and current farm management instructor, I know as well as anyone that farming is a business, but I would hope it could continue to be (or return to being) a relationship business.
By relationship business, I mean that hopefully there is a healthy respect and trust between a farmer and all of his or her business partners. These partners include: family, neighbors, landlords, hired help, machinery dealers, agronomy salesmen, fuel men, feed rep, banker, accountant, marketer, insurance agent and many others. These relationships need to be built on trust and respect, which is earned by a history of acting with honesty and integrity in business dealings. If the farmer treats the landlord fairly when times are good, he will likely return the favor when times are tough.
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In the farm management program at Mitchell Technical Institute, our instructors are a trusted partner for more than 150 producers across South Dakota. We help farmers and ranchers with all aspects of managing their operations -- from record keeping to decision making. If you would like to begin a relationship with one of our instructors, please feel free to contact us at 605-995-7196 or sdcfrm@mitchelltech.edu .
Editor's note: Hofer is the director of the Farm and Ranch Business Management program at Mitchell (S.D.) Technical Institute.
