Agriculture is the number one industry in the state of Ohio, according to the Ohio Department of Agriculture, contributing more than $98 billion to the state’s economy each year. In the farm-rich areas of the state, choosing to rent land to others to farm instead of doing it yourself may be an attractive option. What is a fair price to rent farm ground? According to the Ohio State University Extension office, it’s not an easy question.
David Marrison of the Ohio State Extension recommends using the DIRTI as a baseline for your negotiations with your tenant – Depreciation, Interest, Return on investment, Taxes and Insurance. You should consider things the tenant can do for you, such as weed control on non-tillable acres, snow removal, and other tasks that may have value to you and that may maintain the value of the land.
Research the soil on your land and its potential for agriculture production. Contact your local soil and water conservation district, or extension office. (To find contact information, see Resources section.) You should also conduct a soil test to determine the nutrient content and soil pH. If the tenant will need to add significant lime and fertilizer to the soil, the land rent should be decreased.
Look at the location of your land. Is it near a neighboring farm? Is it a large tract or small tract of land? How much housing is around the land? Does it have poor drainage? All these could factor in how attractive your land is to a tenant.
Check out the recent cropping history of the land. If the farmer has to work harder to prepare it for field crops, it may make it less attractive and affect the land rental rates
Visit the National Agricultural Statistics Service (NASS) website to get the most recent data on the average rental rates for your county. The data is based on the most information the NASS gathered from agriculture producers nationwide (See Resources section for link.) In 2009, the NASS began publishing the data on a county level.
Use the Ohio State University’s Department of Agriculture, Environmental and Development Economics’ flexible cash lease calculator to determine your cash lease rent model. (See Resources section.)
Once you agree on a rental price, you should sign a written lease with the tenant.