My introduction into agriculture is centered around a farm that my family has owned in Central Wisconsin since the early 1980’s. The farm has 360 acres of Tillable land that had been rented to the same Grower for the last 25 years. For this, I received rental payments of $60.00 per acre per year.
In 2015, I acquired a property approximately ½ mile to the south of the original farm which encompasses 180 acres of tillable land. The lease for the farm land rental was assigned to me which provided a base payment of $150.00 per year plus a flex arrangement that has averaged $45.00 per year over the past two years. I was startled! The new property was going to provide me rental income that could approach 3 times the value of the original property lease. I would have never have known about this had I not undertaken the new purchase. This experience made me consider a few very fundamental questions:
Why is there no resource to help determine a fair market rental rate for agricultural land like those that exists in residential and commercial real estate After all, agricultural land is just another form of real estate investment.
How can I identify new Growers if I want to evaluate alternatives? Additionally, how do I make it known that my land is available for rent? I feel there would be great interest on the part of Growers if they knew the land could be rented to them.
Why do I not have access to the information about the activity that is taking place on my land? After all, it is my land!
When was the last time I re-evaluated my lease? Do I even have one? Today’s technology should provide more efficient ways to administer and negotiate leases.
Collections of rental payments are manual and often difficult to collect on a timely basis. Can this process be improved?
Shame on me, I should have asked these questions 25 years ago.
As I started to work through the process of analyzing my situation, it became very apparent to me that even the most diligent landowners are encumbered with the same problems that I face. Unlike most commodity and real estate investments, there is simply no marketplace that creates price discovery for farmland rental values. Additionally, functioning marketplaces by definition provide unlimited access to data and information that facilitates decision making. This is simply not the case with farmland rentals and sales.
When these questions were asked of the people that I trust in the area where the farms are located, they stated that these problems could only be resolved by engaging a farmland management company. Based upon this recommendation I spent a fair amount of time analyzing the different companies that compete in this industry and the services that they provide.
After the investigation period I came to two (2) conclusions. The first was that I did not feel that they could resolve my problem because they were not creating a marketplace, nor was I impressed with their level of technical sophistication. By harnessing current technology the process of managing farmland can be efficient and simple. Most importantly however, I was not looking for an outside party to manage my land.
I was convinced that with the proper use of today’s technology, a resource could be created that would empower all Landowners to professionally manage their own properties independently. Welcome to Tillable!