When farmers first hear about Tillable, they often have a lot of questions. After all, this is a new approach to farmland rental, and we’re doing it in a way that’s very different from what’s been done in the past. Farmers sometimes assume Tillable is an auction site, where the highest bid always wins. This simply isn’t how Tillable works; in the past two seasons in which we’ve been renting land through our platform, we’ve found that most of the time, the highest bid doesn’t win. That’s because the process is designed to be fair to farmers and landowners, using proven economic principles and creating a system where a farmer’s entire operation (how they farm, their experience, their goals and the best practices they follow) are considered in deciding who rents the farm—not just the price per acre.
Here are 6 more things farmers should know about what makes Tillable different.
1. Price Discovery lets the market decide what’s fair.
When you see a farm shown as “available” for rent through Tillable, it’s going through a process we call Price Discovery. It’s designed to use the knowledge and input of the market to determine a fair market rent. It relies on 4 key components:
- No target price
- Blind offers
- Equal access to information
- A level playing field
No target price.
What that means is, we won’t tell you what the previous year’s rent was on a farm. This forces each farmer to do their homework. We want you to determine what this farm is worth to your operation based on the information that you have available, without any guidance or coaching.
You can’t see what another farmer offers and they can’t see what you offer. You must do your own homework and make your own decisions about what you think is a fair rent for any particular farm. This also prevents the price from being artificially inflated, or “bid-up.”
Equal access to information.
Every farmer has equal access to information. If the landowner answers a question, the answer to that question is posted in the Q&A section of the listing for all interested farmers to see. If there is lots of information on a farm, every farmer has that information. If there is limited information on a farm, every farmer has limited information.
A level playing field with Tillable.
Our goal is to ensure a fair market rent and protect the long-term value of the farmland asset. Auction platforms bid up the price per acre, making it difficult for a farmer to follow appropriate soil management protocols and still make money. If you make an offer on a farm on Tillable, you must understand and agree that if you ultimately sign a lease to rent that farm, you are required to report your yields, as well as fertilizer and nutrient applications. This ensures that all offers account for the cost of soil management. Additionally, if a landowner has specific requirements, like no till and use of filter strips, all offers must take those requirements into consideration.
The market for renting farmland is very inefficient, and often lags behind real economic conditions. Prices are slow to go up, but once up, they rarely come down. We believe that our marketplace will help address these inefficiencies by taking a real, current market approach to renting farmland. We believe in farmers over formulas: it is you, the farmers, who determine the fair market rental price for a farm on Tillable.
2. Price Discovery doesn’t happen every year.
If you find a new piece of land to rent through Tillable, don’t expect that it will necessarily be listed for offers again the next year. The landowner may choose not to publicly list the farm, opting to keep you as a farmer. You can then negotiate directly using information from Tillable to help you both understand current market trends, and use the platform to continue to collect and analyze data about the farm.
We encourage one-year leases as a way to ensure necessary conversations are happening about the farm each year, and that landowners and farmers are communicating regularly and adjusting terms as needed. However, we strongly believe that long-term relationships make for healthier, more productive farms, and that’s our goal—to develop relationships built on a fair price and documented stewardship of the land. The land you rent is likely one of the landowner’s most valuable assets. Tillable helps ensure the asset is protected and that your efforts to protect it are recognized and documented.
3. You only pay if you lease a farm through Tillable.
Creating an account to access the Tillable platform is free. Once you have your account, you can browse farms and save the ones you’re interested in. You can create your professional farming profile and make offers. If you sign a lease and rent a farm through Tillable, then you will pay a platform fee of 2% of the gross rent for each year of your lease. For example, if the rent on your newly acquired land is $250/acre for 150 acres, the gross rent is $37,500 and the Tillable fees would total $750 for the year. If you continue to rent the same land the following year, and the rent stays the same, then the fee stays the same.
4. We don’t think the rent should go up on all farms.
We believe that rents should reflect a number of factors, including the quality of the land, location and of course, current market conditions. The fact is, many landowners are under-rented; their land is of a quality and value that should result in a higher rent than they are currently earning—even in difficult market conditions. By using the Price Discovery process, we are relying on the people who know the land the best—farmers—to determine what’s fair. That means when the rent increases on a farm, it’s because it was previously undervalued, not because the price was artificially inflated by other influences. If the rent goes down, it means the previous rent was no longer in line with current conditions, and it needed to be adjusted. This makes Tillable very different from auction platforms, where the goal is simply to drive the rent up until the highest bidder wins.
5. If the farm you’re currently renting is listed for offers on Tillable, it doesn’t necessarily mean you’ll lose that farm.
The relationship with their farmer is incredibly important to landowners; this is why many landowners work with the same farmer for years, or even decades. However, if the farm is listed on Tillable, it’s because there’s a chance the rent hasn’t been calibrated for current market conditions in quite awhile, and it’s in everyone’s best interest to take a fresh look at what a fair rent should be. You’re certainly able to participate in the offer process for a farm you’ve previously rented, and we encourage you to do so. It’s a fact that if you’ve done a good job with the land over the years, the odds of keeping that farm are in your favor, and then you’ll be renting it at a fair market price.
If you do choose to make offers on a farm listed through Tillable, and you’re selected to rent that farm, you’ll sign a new lease through Tillable and we’ll collect payments and data as described above.
One important thing to remember is that this incumbent farmer advantage does work both ways. At least some portion of the farms listed on Tillable already have a preferred farmer, and that farmer may be participating in the offer process. However, there are always farms that, for one reason or another, have no farmer and need a new one. We can’t tell you which is which, but you do have a genuine opportunity to win every farm that is listed.
6. Tillable offers more than Price Discovery.
Price Discovery is just one part of what we offer to help landowners better manage their land, and help farmers better demonstrate their commitment to the land. Because important data and documents are captured on the Tillable platform, both you and your landowner now have a record of what’s taken place on the farm—a record that helps you show that you’re a great farmer, and that helps your landowner understand the true performance of their farm. Having things in one place, with reports available to review and analyze, keeps you and the landowner on the same page and removes any questions or uncertainty about what’s happening on the farm.
If you’re ready, we invite you to create a free account and start browsing farms in your area. Please contact us if you have any questions; our team is standing by to help! We look forward to helping you get started.