MY FARMING ALTERNATIVES

D. Howard Doster 1/17/08

Whether an owner or a tenant, each of us tests alternative ways to use our resources, from now on. Perhaps without realizing it, after considering differences in risks and other preferences, we choose the alternative we think will make us best off, from now on.

I have a long “rent” history. In addition to being an accredited farm manager and farm management teacher, I’ve been both a tenant and an owner. Now, I hear others complaining about the extra risks, higher fuel related costs, and “someone in Illinois” paying a ridiculously high rent, or whatever. I’m choosing a different alternative. Too many good tenants are about to lose their leases because their neighbors, from near or far, will out bid them. And, NOW IS PERHAPS THE BEST TIME for the rest of their careers to rent more land for 08 and/or 09!! I’ve decided to share some of my intellectual property on our website below. But, here are my personal “rent” alternatives.

I have 80 acres of average SW Ohio cropland that I have rented previously, using my outside adjustor lease. Maybe my tenant won’t want to pay $330 base rent for 08, even if I again take 100% of the outside-the-farm-gate yield and price change, from now on. In 07, even though his inside-my-farm-gate corn yields were above my budget, he sold too early and ended up paying me rent based on higher 07 harvest prices.

What are my alternatives? My tenant, or other tenants, would probably take a crop share rent similar to what my brother had in 07, but I just calculated, assuming normal yields, I’m $103 better off today using my outside adjustor lease, versus a crop share lease. I wonder how much up front privilege rent a prospective tenant would pay me in order to get a 50/50 crop share lease.

My tenant has sometimes done custom farming. Maybe I should ask him what he would charge to plant/harvest my beans. It’s likely much less than the $100 tenant margin I have in my 08 outside adjustor rent budget, but I’ll have to worry about him being timely. I wonder if he would accept my offer of, say, $50, plus the yield above the reported county average. I can’t offer him more; I’ll have to pay self-employment tax on my crop income.

Also, I have a tractor that I have previously used to pull a rented no-till drill. Maybe I can grow the crop for less than the tenant margin in my 07 lease, or in my 08 outside adjustor rent budget, or my custom rate payment. Maybe I will rent a drill and plant beans in a timely fashion.

Maybe I will even offer to rent my brother’s land, paying him what he would have realized with a share lease. Even though I’m scared of an 08 drought, I think prices now would go up more than yields would go down, assuming my yield is at least as good as the 08 national average yield. I wonder whom I can get to harvest and haul my beans.

At age 75, I must be senile to consider doing this. I’ve already made three softball teams that start league play in April.

What fun. See our website at www.DHDoster.com Email us at Howard@DHDoster.com , or call 765 412 1495 to learn more about leases. My wife, Barbara, and I are retired Purdue management teachers.

We work for either tenants or owners. We teach for free and for fun.

When you pay us, you learn more, we work more, &, we all have more fun.