Ag Land Management Quarterly May 2020
Trends in cash rent for 2020 across Nebraska; financial implications for changes in land values and cash rents
Proper communication and decision-making for agricultural land, improving communication between landlords, tenants and family members;
ask the experts.
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[00:00:07.470]Jim Jansen: Tell you what, I'll start the presentation off and I'll run through my slides and when we get tears will go ahead and grant to it then. Okay.
[00:00:15.960]Allan Vyhnalek: Whatever you want to do. Jim sighs me
[00:00:44.520]Allan Vyhnalek: I think we're good to go.
[00:00:50.160]Jim Jansen: Alright. Well hello everyone. My name is Jim Jansen you'll just be hearing my voice today and we also have Alan vanilla in the red polo shirt joining us as well we're co leading the session today.
[00:01:01.980]Jim Jansen: Our second of the in our series of plane management quarterly, which is a short one hour presentation with Q AMP. A available at the end of it on topics related to land management.
[00:01:14.730]Jim Jansen: cash rents land values lease arrangements dealing with issues related to those. And how do we address them. And how do we think through them.
[00:01:27.000]Jim Jansen: After the presentation is over today. If you'd like to reach out to Allen, but now like or myself. Our contact information will be provided on the slides and recording that will be posted to the ag land management quarterly website.
[00:01:41.520]Jim Jansen: This webinar will be recorded and electronic format, and I believe we can also we will be posting a PDF of our slides states. So if you like to print those off for Adam cure records. You're more than welcome to do that as well.
[00:01:57.480]Jim Jansen: Majority of the information I work on here at UL is posted under my name at hedgie conduct ul.edu backslash real estate.
[00:02:06.510]Jim Jansen: And Alan's website is eggy conduct UL that Ed backslash succession. And we're also in the process right now of updating our website to farm that un l.edu so there's a lot of good information out there and be sure to take a look at these things.
[00:02:26.880]Jim Jansen: Short outline and we're glad to have everyone joining us today. Short outline on the topics we plan to be covering. Like I said, I'll be talking briefly then Alan and then we'll wrap everything up.
[00:02:39.210]Jim Jansen: The first part, we're going to be visiting about kind of where the current cash rental rates at for 2020
[00:02:46.380]Jim Jansen: The University of Nebraska, Lincoln does a survey on cash rental rates and as part of the survey, we've put out preliminary estimates in March.
[00:02:54.870]Jim Jansen: There's obviously been a lot of events happening since the second or third week in March related to coven 19
[00:03:01.830]Jim Jansen: Ran talk briefly about what's happening with commodity prices and also if you'd like to revisit the topic cash rats, regardless of your landlord or tenant.
[00:03:11.220]Jim Jansen: Will pitch the idea of a flex lease arrangement second part, Alan vanilla like will be taking the lead on proper communication and decision making.
[00:03:21.120]Jim Jansen: Given this time of uncertainty. There's a lot of issues related to communication between landlords and tenants and we want to make sure we can express
[00:03:30.720]Jim Jansen: Our views and needs and goals and try to make these things work as best as we can give them the
[00:03:37.770]Jim Jansen: Given these issues and also on the topic of short long term decision making. Now, and spends a significant amount of his time on the topic long term decision making related to succession and transition
[00:03:49.740]Jim Jansen: Of the farm and agricultural land assets of an operation as part of our ask our experts section will take as many questions as time permits, we had, I believe, three questions submitted that we two of them were really good topics to be evaluating so we'll be sure to highlight those
[00:04:09.480]Jim Jansen: So the first part catch rental rates in 20 myself, along with Jeff Stokes leads the annual Nebraska farm real estate survey and as part of this survey. We're going to be highlighting our findings on cash rental rates for 2020
[00:04:25.680]Jim Jansen: Short background on this topic that is very similar as his other talks.
[00:04:32.970]Jim Jansen: Where can we find cash rents and how is everything summarized annually since 1978 Department of Agricultural Economics has done a survey.
[00:04:43.500]Jim Jansen: Of AG appraisers farm and ranch managers and bankers from across the state that work in the land industry, two times each year we provide information on cash rents the preliminary results are published. Typically, the second week of March, and the final report is published in late two
[00:05:03.270]Jim Jansen: information related to land values cash rents farm real estate research findings that we have are published at the website AG con that you nl that edu backslash real estate.
[00:05:21.090]Jim Jansen: So today I'm going to be highlighting cash rents from our three most commonly asked cash rental rate land classes. So it'd be irrigated and dry land cash rents in addition to grazing land.
[00:05:35.370]Jim Jansen: Few things to note
[00:05:37.350]Jim Jansen: First to start it off on the topic of dry land cash rents. We did not see a very high rate of decline. In fact, we've seen a slight increase in some areas of our state related to cash rents.
[00:05:50.970]Jim Jansen: In addition to the average that was reported on the prior slide. We also have an average of the high third an average of below third and have bridge of all the responses.
[00:06:02.430]Jim Jansen: So an example for the East district where Lincoln, Nebraska, is located the lower third average or the low grade what that represents is what do people estimate to be the lower third a cash rent in the East district.
[00:06:20.370]Jim Jansen: From this information, you can gain some insight in addition to the percent change that cash rents relative to work commodity prices have ended up over the last six weeks cash rents are very hard for producers to make financially cash flow this year.
[00:06:37.650]Jim Jansen: In addition to the dry land. We also have the center pivot rates. Now, we didn't know out west and even as well as in the Eastern District some slight declines.
[00:06:46.890]Jim Jansen: And I wouldn't focus so much on the percent change. But basically what we're seeing here is we're seeing cash rents remained fairly stable.
[00:06:56.310]Jim Jansen: So when we take a look at the cash rents for center pivot and we also report gravity irrigation, but I did not
[00:07:06.060]Jim Jansen: highlight those because for the sake of time today, but the center pivot irrigated rates assume that the landlord owns the entire system. So that's the pivot.
[00:07:18.300]Jim Jansen: The pump the power unit all of the major improvements associated with that.
[00:07:23.610]Jim Jansen: If you would have a tenant provide one of those components and example if a tenant would bring out a power unit, such as a motor, you would discount the cash rent to reflect that.
[00:07:34.350]Jim Jansen: So we see a breakdown on Eastern third of the state, the higher third averages are in the low three hundreds going out to the western part of the state.
[00:07:43.980]Jim Jansen: You know, around $100 so we have a pretty good breakdown on cash rents across the state of Nebraska. In addition to the cash rents for
[00:07:53.790]Jim Jansen: Dry land and irrigated. There is also a gravity or gated rate, which can be found in the preliminary estimates report gravity irrigated rates traditionally rent somewhere around 30 to $50 an acre less than what center pivot rates do
[00:08:09.360]Jim Jansen: And on the topic of cow calf pairs. We commonly get asked, what are the going grazing land rental rates across the state of Nebraska.
[00:08:18.210]Jim Jansen: We can rent pasture on a per acre basis or on a per pair basis and I tend to focus a little bit more on or prepare basis, given the volatility that we see in the different grazing land.
[00:08:31.020]Jim Jansen: The different quality, the grazing lands of stocking rate can vary quite a bit, even in the region.
[00:08:36.630]Jim Jansen: So for one cow one calf for one month during the summer grazing season we have averages reported in the high 40S IN THE SOUTHWEST and mid 30s in the northwest to something closer to the high 50s or even low 60 in the north district. So we'd see a quite the breakdown
[00:08:59.730]Jim Jansen: These rates are not supposed to be reporting.
[00:09:04.050]Jim Jansen: What the what someone might be paying if they were taking cattle in but more so a breakdown on a per month.
[00:09:12.540]Jim Jansen: Now, in addition to the average we have the average of the high third low third and then an average of all the responses. The thing to note on these monthly rates if you would rent a pasture for one cow one calf or however many pairs, you'd have let's say for 10 pairs or whatever 20 3050
[00:09:34.440]Jim Jansen: These are assuming if you would rent for a five month period you multiply the average by five. So an example, if
[00:09:43.080]Jim Jansen: In the East district, the average is about $50 a pair. So a few times 50 times five. That would be going to typical going rate for a pair for the summer grazing season.
[00:09:54.480]Jim Jansen: And those numbers can be adjusted as well. There's a lot of people are worried about throughout this year. In addition to blow commodity prices.
[00:10:02.520]Jim Jansen: So there are ways you could adjust that if you will and grace for four months will maybe you take a month or rent off to reflect the fact the ground needed to rescue longer due to the drought and what you might have had otherwise.
[00:10:19.440]Jim Jansen: In addition to the cash rental rates. We have a lot of people that when the leases were signed, let's say in early March typically march 1
[00:10:28.920]Jim Jansen: Even to March 15th is because people like to know where their crop insurance are going to be related to their crop insurance policies.
[00:10:37.560]Jim Jansen: The mindset that we had at that time, which the cast friends, even at that time were pretty tight in terms of being able to make it cash flow.
[00:10:45.960]Jim Jansen: There's a lot of people that probably did. We're not forecasting to have the transpiring live events that have happened in the news recent
[00:10:54.090]Jim Jansen: About the last six or seven weeks now. What a devastating effects they were going to be having on our ag sector as well as energy prices and whatever it might be.
[00:11:05.310]Jim Jansen: That being said, some folks might want to take a revisit with their tenant because remember as a landlord tenant that makes you money is one that is financially profitable and it's important to remember
[00:11:18.390]Jim Jansen: Just because we might have irrigated cropland and have great corn yields that still may take a considerable amount of inputs related to the seed varieties that we grow or even the inputs that are necessary to raise a great crop.
[00:11:33.480]Jim Jansen: And that's why we're going to take a brief look here at kind of what's happening to some of the commodity prices and also if we do agree with our landlord or we agree with their tenant that we need to take a second look at our cash rental rate, maybe adjusted. How do we do that.
[00:11:51.840]Jim Jansen: The Kansas City Federal Reserve has the Omaha branch office as part of the Omaha branch office they take a look as part of their egg credit survey and I just noted this one came out on
[00:12:04.650]Jim Jansen: May 14, I believe, which is just late last week. So it's pretty recent report that they put out
[00:12:10.980]Jim Jansen: But they took a look at kind of commodity prices and they use an index here. And the thing to know is they're saying okay on the right hand side of this chart.
[00:12:19.950]Jim Jansen: If prices, if we are baseline if we'd kind of look at where prices were at an early January, how do the prices compared to where they are now.
[00:12:29.640]Jim Jansen: The two major commodities that we have here in the state. In addition to the other ones but corn and cattle are definitely a strong sector in the state. In addition to soybeans or weed or swine.
[00:12:39.690]Jim Jansen: But we see that you know we're off, depending on the commodity, unfortunately, maybe 1020 1015 20% and that being said, when we kind of take a look at that.
[00:12:53.940]Jim Jansen: We can see where awful where we had initially maybe anticipated back in March, maybe prices and march weren't quite as good as what they were at the start of the year, but
[00:13:03.810]Jim Jansen: We really see, you know, try to highlight that with my mouse here, but we really see we've seen a decline.
[00:13:09.240]Jim Jansen: And on the left hand side, things like farm income household spending capital spending. The important thing to note here is
[00:13:18.420]Jim Jansen: You know, we were hoping for a better year in 2020 compared to the last couple of years, but the Federal Reserve where they're highlighting those three squares right there.
[00:13:28.320]Jim Jansen: They're anticipating that farm income that kind of light green colored line there, you're going to be estimated unfortunately going to be down this year.
[00:13:37.710]Jim Jansen: So taking all these factors into account, it's important to come up with an equitable cash rental rate and we're just going to pitch a very, very shortened.
[00:13:47.910]Jim Jansen: Version of flex leases here. But the idea behind a flex lease is pretty straightforward. Is that the cash the cash rent. That's going to be paid as part of a flex lease.
[00:14:01.110]Jim Jansen: You're going to let that very up or down to reflect the value of something that's something maybe the value of corn, soybeans, wheat,
[00:14:10.650]Jim Jansen: If you have grazing land cattle whether cow calf pair which the product from that would obviously be a calf or even a stocker calf trying to put on a rate again trying to sell that calf again after the grazing land periods over for a certain price.
[00:14:26.460]Jim Jansen: We're trying to reflect our rent that if we have better than expected. We see the price of corn go up to $4 we see fat cattle go to about $20 30
[00:14:37.920]Jim Jansen: We see the price of soybeans. Get over $10 again under that case would see a higher cash rent and what we might have agreed to
[00:14:46.920]Jim Jansen: And if we do continue to see lower commodity prices, less than $3 bushel of corn less than $1 bushel soybeans, we would let the final cash rent be the lower
[00:15:00.930]Jim Jansen: Than the agreed upon base and as the important thing to note with a flex lease.
[00:15:06.300]Jim Jansen: cash rent you should not let it go to zero nationality Catherine go to $500 an acre if we had any really unique circumstance. Let's price is going higher.
[00:15:15.660]Jim Jansen: What we want to do is we want to have a range a minimum price to a maximum, excuse me, a minimum cash rent to a maximum cash rent.
[00:15:24.450]Jim Jansen: Maybe it's somewhere between, say, for example, if your bases. Hundred and $50 an acre maybe let the cash rent go up 20% so under that case you may be let it go up to
[00:15:37.830]Jim Jansen: 20% of 115 and or let it declined up to that. Remember, even if we do have a case where something really bad happens, especially on the cropland side where property get hailed out
[00:15:50.460]Jim Jansen: There are tools available to producers to help offset smos losses as well as livestock producers, we have to bear some production risk. So that's the general idea behind
[00:16:04.500]Jim Jansen: Flexible lease and if there's interest from the group, send me an email. Alan or host, Ryan Evans, we could put together a short, you know, half hour webinar similar in style to what we're doing today on this topic. I'm going to give two examples here.
[00:16:20.940]Jim Jansen: First example is we're taking a look at a simple flex lease for corn.
[00:16:26.730]Jim Jansen: Corn. The main idea here is
[00:16:31.170]Jim Jansen: Okay, maybe you have your creation, maybe of dry land. I know there's people are concerned about drop. But this bear with me. Let's say it's a typical year may not to dryer to what
[00:16:42.540]Jim Jansen: We have two cases up here, and each scenario, we have a base cash rent of say 170 5000 acre maybe agreed with your landlord to back that cash rent pound a little bit and typically over the last five years. We anticipate. We're going to raise 150 bushel per acre and
[00:17:03.540]Jim Jansen: When we planted the crop or even when. More importantly, maybe when we agreed to lease we anticipated corn was going to be worth three and a half dollars pushing
[00:17:13.230]Jim Jansen: That number is going to be different for everyone. Everybody has different expectations ability to market it whatever
[00:17:20.070]Jim Jansen: On the left hand side, we have a case where prices actually declined men might fall somewhat in line with what we're seeing right now where, you know, if we see $3 cash corner which is not necessarily a good thing, but might be the reality that we could potentially expect
[00:17:37.020]Jim Jansen: That's on the left hand side right there and how these numbers work is we're taking a look at the percent change in the price. So we're 45 cents lower than 350 so we ended up at
[00:17:50.640]Jim Jansen: 305 a bushel, which is about 12% lower than we initially anticipated. That being said, We're going to save about not quite 13% but if you take 12.9% in times by 175 which is our base cash rent.
[00:18:08.790]Jim Jansen: Take 20 $30 an acre off we lowered in this case because you know price of corn was almost 50 cents a bushel 45 cents. We're going to lower that cash rent to $153 an acre.
[00:18:25.380]Jim Jansen: And remember these slides will be posted online. So if you'd like to go back and look up the calculations or you got questions for myself around, we can kind of help you work through these
[00:18:36.090]Jim Jansen: On the right hand side. Okay, when we sign the lease it was we anticipated three and a half dollar corn.
[00:18:43.860]Jim Jansen: And obviously this is not the scenario is probably going to be leading to buy did want to give both sides of the deal here to kind of explain this.
[00:18:51.390]Jim Jansen: If the price of corn does improve maybe this is a possibility. Maybe we work through things, things get a little bit better and all picks up again, whatever the case might be. And we do see $4 coin.
[00:19:04.530]Jim Jansen: Under that case.
[00:19:07.590]Jim Jansen: We actually see an increase in the cash rent and once again we're 45 cents of little higher than we had anticipated. If that's the case, we're going to take 12.9% which is $23 175 plus $23 final cash rent. We're going to increase it up to say $200 an acre.
[00:19:31.770]Jim Jansen: Maybe that was the initial cash rent, we agreed to. But we agreed they we back it down to 175 and try to work through this flex lease example.
[00:19:41.100]Jim Jansen: There's a wide variety of ways to set up, flex leases, there's no one right or wrong way.
[00:19:47.250]Jim Jansen: And this case, I'm just giving you an example where we're flexing on one of our major concerns which is price you can flex on kneeled you can flex on crop revenue.
[00:19:56.610]Jim Jansen: There's a wide variety of things. The thing I'll say is if you do do a flex on price. Be careful, because if you have a dry land, especially when you get into the western areas of the state.
[00:20:06.780]Jim Jansen: Just because we have $4 corner 395 corn on the right hand side here, it's still may lead to a case where we didn't ask Sarah. We haven't very good crop yield is
[00:20:16.770]Jim Jansen: Free of widespread drought across the United States. So under that case, you might want to look more at crop revenue. But if you are in irrigated producer maybe price is something you want to take a look at because you consistently have fairly stable yields.
[00:20:33.810]Jim Jansen: For those folks that got cow calf pairs and took a look here at setting up a flex lease for one cow calf pair. Remember I said the tams a monthly rate times five.
[00:20:45.450]Jim Jansen: So under this made up scenario we say that cow calf pair rental rate is 275 a pair. They expected Peter cattle futures prices, let's say 145 100 Wait, so I'd say
[00:20:58.500]Jim Jansen: Taking a look at some of the futures prices. I did when I put these slides together. We had maybe it anticipated that the futures price was going to be 145 to 100 wait for those 500 pound calves or whatever capture I'd kind of might sell
[00:21:15.240]Jim Jansen: But as we've seen in the meat sector, there's been some struggles there and let's say things around out to be about $10 100 wait roughly
[00:21:24.330]Jim Jansen: $10 100 weight less than what we initially anticipated when we sign the lease if prices are 7% lower and we do the little percent change calculation there on the left hand side.
[00:21:36.540]Jim Jansen: We would drop the cash rent, where the cow calf pairs by 7% or that calculate out to 1975 pair. So if we take to 75 and take off 1925 a pair
[00:21:51.210]Jim Jansen: Or final cash rent in this example is about just a little over 255 a pair. We're trying to adjust the rent down to reflect a lower price expectation for Cal Tech pair or for the caffeine produced on
[00:22:06.570]Jim Jansen: Being raised on a ground.
[00:22:12.090]Jim Jansen: Another example, if we do see prices, turn around, there's been record box beef prices and maybe that can translate it for the Meatpacking sector get straightened out a little bit, maybe we do see higher prices as well. If that's the case, we are getting about, let's say,
[00:22:30.420]Jim Jansen: $10 100 wait higher roughly that means to that we see the cash rent increase by 7%. So in this example, we add 1925 which is 7% of the bar base cash went on to 275 and that being said, we end up
[00:22:53.010]Jim Jansen: We end up with a effective cash random that quite $300 a pair
[00:22:58.020]Jim Jansen: So this is just an idea. I'm not saying anything is set up right or wrong, and I can tell you, I've seen a lot of leases and there's a lot of different ways to set these things up.
[00:23:07.200]Jim Jansen: But we're just trying to throw out an idea that given the uncertainty, no fault of anyone's tenant out there, but just to slow down in the economy and some of the uncertainty that we have. How do we address the lower prices when it comes to that.
[00:23:23.190]Jim Jansen: So we'll save our questions till the end here, and I believe you can submit them through the chat and we'll try to have the moderator Allen and I'll be keeping an eye on those. But with that being said, that kind of brings to the end of my session.
[00:23:41.250]Jim Jansen: My set of slides are going to have alum get started here and help take the lead and he'll leave through
[00:23:46.950]Jim Jansen: The first couple of Ask an Expert questions. So with that, I'll, are you able to
[00:23:53.130]Jim Jansen: Able to get on
[00:23:55.650]Allan Vyhnalek: Yeah, should be on. I think we're good. I think we got it all set up.
[00:24:00.480]Allan Vyhnalek: Jim did a nice job. And I think want to follow up wanting to Jim said by just making sure you understand that.
[00:24:07.770]Allan Vyhnalek: If you have a flex lease, which is what Jim just described the difficulty I see with those in gym didn't mention this as well. I want to
[00:24:16.980]Allan Vyhnalek: The difficulty I see what those is when you're going to switch what data you're going to use what date. Are you going to use to set to flex
[00:24:23.430]Allan Vyhnalek: On the price or anything like that, especially a price. What, what did you use to set to flex on the price. So just be careful that that's the only thing I'd say about that and
[00:24:33.480]Allan Vyhnalek: Other than that, flex lease works really pretty well because it helps distribute the risk between landlord and tenant or between the pasture owner their pastor owner and the tenant.
[00:24:44.880]Allan Vyhnalek: Same thing, I guess, and and it does help share the pain. And I think that's what we're talking about. For 2020 i don't think anybody's going to get rich and 2020 I think we're talking about how do we share the pain to make this work. Right.
[00:24:59.400]Allan Vyhnalek: So we talked a little bit about leases and what are we going to do about the production season 2020 and should leases be adjusted and so that think that's worked, we're talking about. Okay, here we go.
[00:25:11.370]Allan Vyhnalek: Okay, yeah. Good, I'm good. Okay. Both landlord tenant need to communicate effectively needs RELATED TO LISA'S communications will be successful successful successful Lucy.
[00:25:22.530]Allan Vyhnalek: The key success will be how well we listen, we have to listen to the party very carefully and you need to seek first to understand before you can be understood. You don't attack the other party, whether you're the tenor of the land or you don't take on the other party by
[00:25:40.290]Allan Vyhnalek: Just telling them everything you know about everything and how how things got to be changed and how this is awful that
[00:25:45.870]Allan Vyhnalek: You go better go to them and talk to them and ask them about them first listen first
[00:25:52.050]Allan Vyhnalek: And what they're saying something that's confusing or you don't understand, make sure you ask clarifying questions, make sure you
[00:25:58.050]Allan Vyhnalek: Ask the questions that help you understand their position what they're thinking and where they're coming from.
[00:26:03.180]Allan Vyhnalek: If you show them you care if you show them some empathy. If you show them that you understand what's happening in their situation.
[00:26:12.150]Allan Vyhnalek: It really does help the communication that's just really an important thing. Don't go guns a blazing into any conversation about how you're wrong and how something's got to be fixed.
[00:26:24.930]Allan Vyhnalek: Always back off. Start with questions first asked clarifying questions first show that you're listening shows you care shows you understand and I pretty much guarantee your conversation about better
[00:26:39.120]Allan Vyhnalek: These are being called unprecedented unprecedented times and maybe the same thing needs to be applied to Elise
[00:26:46.620]Allan Vyhnalek: You know Jim just showed you the data we have a very large drop in all commodities and livestock last six weeks. And so something maybe out of the ordinary. Maybe necessary.
[00:26:56.580]Allan Vyhnalek: Because if we like what our farmers doing it. Let's think about long term for a second. We like what our challenges been doing
[00:27:04.170]Allan Vyhnalek: And we're happy with what the tenants been doing an intense Miss Jones usually treat all the run and ground just like they treat their own
[00:27:12.720]Allan Vyhnalek: Then we need to keep them in business. And that's important. And let's do the right thing to make that happen or whatever that happens to be. And as I said earlier, I think this is a year. We're all gonna have to shave share something
[00:27:25.170]Allan Vyhnalek: So for tenants. Here's what tendency to communicate to landlords
[00:27:29.670]Allan Vyhnalek: You need to report to landlords regularly during the growing season as we go through this thing you need to probably, you know, if you can
[00:27:36.960]Allan Vyhnalek: Find out what they're texting with their cell phone number isn't just text him rainfall amounts if they got a smartphone.
[00:27:42.690]Allan Vyhnalek: Talk to him about wheat pressure. I'm understanding from people that are really tough week Russia this year the grasses came up like like crazy and
[00:27:49.950]Allan Vyhnalek: We're gonna, we're gonna have to be careful about our we control and make sure we have that right
[00:27:54.450]Allan Vyhnalek: We don't know around insects, disease, pressure, but we need to be communicating that is that has starts to happen and other things come up
[00:28:00.780]Allan Vyhnalek: And we need to keep make sure our landlords KNOW AS TENANTS where we are with current crop prices in the farm economy and make them understand that, hey, it's real.
[00:28:11.190]Allan Vyhnalek: When Columbus says they're not going to run their dry mill for three months to drive mill for ethanol for three months that changes the basis that changes the price to farmers received
[00:28:21.900]Allan Vyhnalek: As a very real thing is ethanol plants go off and online that changes everything for the local dynamics, what's happening there.
[00:28:29.580]Allan Vyhnalek: And communications even critical for cash leases and make sure the landlord views the land, either in person or virtually. In other words,
[00:28:38.340]Allan Vyhnalek: If you got to landlords, it's not here in Nebraska or not here locally, where you're at. You take a cell phone video or cell phone picture what's going on out there and send that to them.
[00:28:48.390]Allan Vyhnalek: email it to them, or if you can go go grab them from town and take them on a drive, especially a day after a rain or something like that or the day
[00:28:57.150]Allan Vyhnalek: Or the day before the range. Well, it still looks Dr. Depending on what view you want them to see. I guess I kind of tease when I say that.
[00:29:03.990]Allan Vyhnalek: But you have to get the landlord's out. You have to see what's going on. You have to communicate carefully and properly. And I know that takes time.
[00:29:10.500]Allan Vyhnalek: And I know that you don't really think you have time to do it, but if you want a long term lease. That's where everybody treats everybody right you have to do your part as a tenant.
[00:29:19.710]Allan Vyhnalek: landlords have to do their part two, and two tenants are communicating with them. They better communicate with the 10
[00:29:26.340]Allan Vyhnalek: Doesn't mean you well it's cash Lisa have to worry about that he pays me my money. And I'm going to go away i don't i don't buy that. I think you have to talk to them about what's going on.
[00:29:35.850]Allan Vyhnalek: Consider visiting land and look around. Same point I just made a minute ago landlords got to get out there and see what's happening. And if you're not getting out to see what's happening in this part of this is on you.
[00:29:44.550]Allan Vyhnalek: If something's not going properly, you have to get out there to know what's going on. And if you're not knowledgeable about what's going on. If you're, if you're a landlord. Now that got land from your parents and your parents always management, you don't know exactly what to do.
[00:30:00.540]Allan Vyhnalek: Get out there and talk with the farmer and they'll explain what's going on and have them educate you on what's going on, that sort of thing. As for reports from tenants. If the tenants are not communicating regularly you tell them that you want.
[00:30:14.880]Allan Vyhnalek: You have expectations for communications on moisture weed control insect diseases. What's happening with their prices, all those things and communications critically for cash leases. And of course, if you have a crop Shirley's this. It's almost it's imperative, you have to have
[00:30:33.480]Allan Vyhnalek: So those are the things I want to remind people about I know those reminders. But you know what a police goes haywire.
[00:30:41.040]Allan Vyhnalek: And they call me about it. If I real analyze what the person is saying when they talk to me or email me about that lease about 90% of time that's not an exact number, but a
[00:30:51.990]Allan Vyhnalek: large majority of the time that at least has gone awry, because of bad communication. So please communicate effectively and regularly and listen to what the other person saying first
[00:31:05.760]Allan Vyhnalek: And having said all that, the landlord's could probably go ahead and tell the tennis. Hey Mike, my taxes are high. I can't drop the least my taxes are high.
[00:31:14.100]Allan Vyhnalek: And the tense can all say, by the way. Oh, by the way, I own land you I understand what's happening with high taxes.
[00:31:20.940]Allan Vyhnalek: So we're not going to get into a tax discussion today. That's kind of got put on the backburner with the cobra thing but but taxes are an issue in Nebraska.
[00:31:30.030]Allan Vyhnalek: Okay, so we're going to adjust leases and what do we think about for this year 2020. So first of all, crop share leases probably would not have to be adjusted.
[00:31:40.020]Allan Vyhnalek: Production risk is usually shared between landlords intense based on what that crop share is and the price Greece is also shared between landlord tenant, depending on their prices so
[00:31:49.920]Allan Vyhnalek: Crop crop Cheryl. This is probably don't have to be touched. Don't worry about a crop Shirley's
[00:31:55.020]Allan Vyhnalek: In my view, personal opinion, not any research study the crops, your least has been a bear the most very equitable way to lease forever and ever and ever and still is still manages to be very equitable
[00:32:07.140]Allan Vyhnalek: Flexible leases may not be need to be adjusted either depending on what those least provisions are
[00:32:12.390]Allan Vyhnalek: And so be careful you listen to what Jim said there in his talk. If you have a flex least it's flexing on price and corn goes way up. What happens to yield.
[00:32:24.480]Allan Vyhnalek: You're not irrigated. Maybe you went way down. So how can you afford to pay more if you don't have the yield. So just be careful little nuances like that.
[00:32:31.920]Allan Vyhnalek: So flex Lisa's may or may not need to be adjusted. But typically, if it's written properly a flex lease will mitigate that risk share the risk a little bit and they probably wouldn't have to be adjusted.
[00:32:43.350]Allan Vyhnalek: So that brings us or leaves us with cash leases. And I think the last number we have or thought about gathering was around 55 or 60% of Nebraska farmland is cash least
[00:32:55.140]Allan Vyhnalek: With the cash needs to be adjusted. Well, possibly. What was least say legally a change in terms of lease.
[00:33:02.580]Allan Vyhnalek: Or lease payments are providing those payments may or may not be required. You have to look at what God says.
[00:33:09.840]Allan Vyhnalek: Do you do you dare digested least, you don't have to if drama, drama land or do I have to adjust the lease for a tenant. Absolutely not. If it's cash least and they have to owe me money, they owe me money.
[00:33:20.910]Allan Vyhnalek: But you have to think about your professional relationship with that business partner that might be under financial stress. And so think about what is going to what's going to happen to make this all happen.
[00:33:31.590]Allan Vyhnalek: The Wild Card going into all this, especially with cash leases and all that is we know that at some point in time, the government's going to come in with some cash infusion for the farmers.
[00:33:42.990]Allan Vyhnalek: For the tenants and if we're under cash least and we don't necessarily expect any of that to come to land or just know that and so
[00:33:52.560]Allan Vyhnalek: That belongs to the tenant because they took the risk and producing crop all government subsidies that sort of thing are going to the tenant because
[00:34:01.650]Allan Vyhnalek: They're taking the risk in production. That's where, that's where, that's where that belongs so cash needs adjustment can be a landlord tenant joint decision.
[00:34:12.240]Allan Vyhnalek: And what party one party think should happen just not what one party things should happen does not necessarily matter though it can be mutually agreed on.
[00:34:19.920]Allan Vyhnalek: Done. Nobody should be demanding and when it has to be this way or that way, you should have to degree agree on that.
[00:34:25.290]Allan Vyhnalek: And one thing I like to think about is a gym gave you a price example I'll give you a gross revenue example gross crop revenue per acre compared to the national rate.
[00:34:33.420]Allan Vyhnalek: So we have center pivot out here and we're renting renting it $300 an acre Cashman that's, by the way, was
[00:34:39.240]Allan Vyhnalek: At the high range, per se, Nebraska, in the middle of between middle and medium in the middle of number and the high number for northeast to the central Nebraska. So $300 an acre is pretty realistic for Eastern Nebraska.
[00:34:50.250]Allan Vyhnalek: And we would expect 240 bushels of corn per acre. That's probably not a bad number. Actually, it's probably pretty robust
[00:34:57.540]Allan Vyhnalek: Probably a little high. Especially if you consider any pH and we had a price to 85 additional fall price 25 per bushel, which is not completely unrealistic right now. You could get more than 25 according to fall booze pricing.
[00:35:10.740]Allan Vyhnalek: And if we don't price corn, which a lot of farmers don't typically want to have what's to say that it's even to 85 in the fall.
[00:35:17.940]Allan Vyhnalek: Right. But you put and put whatever you could you redo this yourself, just put whatever number you nerds, you want to
[00:35:24.180]Allan Vyhnalek: Be anyway gross revenue. Then we 240 bushels times 25 or $684 per acre gross revenue. And that means that their rent at 200 excuse me, a $300 an acre would would compromise 44% of the gross revenue.
[00:35:39.270]Allan Vyhnalek: Ran for corn. Corn crown should typically be in a 25 to 35% range.
[00:35:44.280]Allan Vyhnalek: And depends on your area in Nebraska and what those percentages are and whether you're dry land or irrigated, all that sort of thing. But 25 to 35% is going to cover a lot of it.
[00:35:52.980]Allan Vyhnalek: And so 44% of the gross going to the cash rent payment is not going to be a very good situation for the tenant. I'm just telling you it's not a good situation. So do that calculation to see where you're at.
[00:36:06.090]Allan Vyhnalek: If the tenants paying more than 35 and 37% of the gross revenue and cash rent. They're going to have a tough year. So just know that
[00:36:15.570]Allan Vyhnalek: Let's look at that 608 four gross income per acre. One. One other way. So if we look at the 2020 un outcrop budget for center pivot irrigation corn, the total expense the operator for producing the crop is $510 per acre. The total expense for producing the crop is 510
[00:36:35.880]Allan Vyhnalek: So,
[00:36:37.680]Allan Vyhnalek: That leaves us hundred and $74 to pay all the rest of the expenses which would include cash rent. Now if you don't take the cash costs to this let's eliminate the field operations. In other words, the farmers going out there and farming for free. That's hundred $41
[00:36:54.840]Allan Vyhnalek: But that doesn't that barely gets us 300 and so we're expecting, essentially, what we're doing is we're expecting the farmer to farm for free.
[00:37:03.750]Allan Vyhnalek: Go out there and do all the tillage do all the work, all of that and not get paid for it. And if the rent says he thinks to rent is too high. I hope that I've demonstrated to you why.
[00:37:14.130]Allan Vyhnalek: I think it's too high, probably too, given this year.
[00:37:18.030]Allan Vyhnalek: Alright, so if you got questions or comments again use the chat. I'm not monitoring Napa Ryan is and you'll send us notes will answer more questions, the rallying cry should be. We're all in this together and everyone will have pain. So just understand
[00:37:32.550]Allan Vyhnalek: That's, that's just my take on all this having a great and Lucy is imperative.
[00:37:37.440]Allan Vyhnalek: Make sure you go and get those all started on September 1 termination notes has to be given by September 1 for any verbal a handshake agreements we talked about that almost every time we do this webinar.
[00:37:47.310]Allan Vyhnalek: You've got fill in the blank lease agreement said, at least one or one dot orgy on the right side of the screen is example what that looks like. You go to that website. Go to the document library and download this lease and it's a fill in the blank, please.
[00:38:00.300]Allan Vyhnalek: It should not you grandpa's farm anymore. You need to have a written lease and those PDF leases, there's that there's a web page. And there's that document library and it's it's how you can get to that free PDF leads to fill out. It's a good place to start.
[00:38:13.620]Allan Vyhnalek: Just as a reminder, at least 101 dot o RG website.
[00:38:19.140]Allan Vyhnalek: Okay, then, is what has this with the rest that screen looks like and you got
[00:38:23.940]Allan Vyhnalek: These publications on the left side screen which gives you the information about how to write Elise and give you some background on the right hand side, the actual forums.
[00:38:33.540]Allan Vyhnalek: Okay, here's the question answer part again. If you haven't submitted questions, please do so.
[00:38:38.730]Allan Vyhnalek: Um, first question I think is my question. And so we'll take a look at here essentially we're saying that your question is what should you do when you have no faith in your current lawyer.
[00:38:49.830]Allan Vyhnalek: And it needs to drop and estate planning to will well I don't have faith in my current lawyer, what I do here. Let's go back.
[00:38:59.580]Allan Vyhnalek: Find a different word I wrote an article just recently were during the covert thing here a couple weeks ago.
[00:39:06.360]Allan Vyhnalek: On how to selecting a lawyer, how to select the lawyer for estate planning and you go to Aggie contact you know.edu slash succession, you could pull up that article.
[00:39:15.240]Allan Vyhnalek: And essentially, it says that you can interview potential lawyers. You don't have to take the one you're using and you can interview potential ones that you might use
[00:39:22.680]Allan Vyhnalek: You can ask them about their charges before you incur them. A lot of people will give you an a lot of lawyers to give you an hour for free.
[00:39:28.650]Allan Vyhnalek: So you didn't you talk to them about how the charges would it be encouraged and be prepared to when you go see the lawyer, be prepared and so I can save you some time to the lawyer if you just listen to this next part, very carefully.
[00:39:41.400]Allan Vyhnalek: You go see a lawyer by doing and say plan or succession plan. Make sure you have a detailed balance sheet completed for your entire operation when I mean detailed I mean detail, I want to know how much land you got
[00:39:53.760]Allan Vyhnalek: what it's worth, what do you have, what do you have left to pay on it. I want to know how much equipment you got what it's worth, what you have left to pay on it. I want to know.
[00:40:02.250]Allan Vyhnalek: Your household value household goods value. I want to know your vehicles and vehicle value in what you have left to pay on them. I want to know all that stuff. I know.
[00:40:11.340]Allan Vyhnalek: investment accounts retirement accounts life insurance policies, you want to have all that stuff noted
[00:40:17.460]Allan Vyhnalek: And written down and categorized and he got on the land. Make sure you have it all split into whether it's a joint tenancy or joint tenancy with writers survivorship or an LLC or C Corp or an S Corp all those all those land ownership.
[00:40:38.370]Allan Vyhnalek: Designations need to be noted to. That's what I mean by detailed balance sheet, very detailed and then
[00:40:44.970]Allan Vyhnalek: It, whoever decision maker is in your family, but you and your wife are the decision makers, then just write down what you'd like to have happen to your assets if you have that written down those two things done.
[00:40:54.390]Allan Vyhnalek: You're going to you're going to go to a lawyer be much better prepared to have a succession plan developed or inheritance plan or any of those things to kind of put together.
[00:41:01.890]Allan Vyhnalek: If you don't have those things and you go to lawyer and the lawyer says, Sure, I'll be happy to happy with succession plan. What do you own and they start writing this down.
[00:41:10.170]Allan Vyhnalek: And what do you, what do you, what do you think it's worth and he started writing that down and the whole time, they're charging between 200 and $400 an hour. So just save yourself that time, save yourself the expense and go in and
[00:41:23.130]Allan Vyhnalek: Go in prepared and know what you're going to do. And if you don't like the large as you go find a different layer that's not hard. There are lots of good good editors these mistakes didn't understand egg understand
[00:41:35.670]Allan Vyhnalek: That work. And the second question is mine to attend. It doesn't play a landlord in accordance to terms of lease agreement or the amount when it's do
[00:41:45.210]Allan Vyhnalek: This least continue until the termination date. In other words, this call just came in to me, by the way, and came in last week. And essentially, somebody had not paid the tenant had not paid their landlord.
[00:41:56.610]Allan Vyhnalek: For several years, it was more than one didn't pay any rent. It was a relative deal, but still rent should be paid.
[00:42:04.560]Allan Vyhnalek: They wanted to people have asked a question when I know. Do I have to wait till September 15 data September 1 deadline to give them termination. Notice that they're not going to farm to farm anymore.
[00:42:13.680]Allan Vyhnalek: And essentially, the answer the question is no. I mean, you start proceedings. As soon as they default on at least 30 soon as the default on a payment. Now, depending on what your provision, say, is how you're going to work on.
[00:42:25.560]Allan Vyhnalek: The grounds for possibly victim. You're dismissing attendance and so certain states, depending what state you're in, have different rules for when this can happen.
[00:42:33.900]Allan Vyhnalek: To demand rent within a set period of time and then be infected. You know, so my advice on this is because I'm not an attorney, and I don't say things is cleaning through La La flows, I should
[00:42:44.610]Allan Vyhnalek: Don't go by what I say go, go find an attorney and get communicate this that uncooperative tenant is Scott rent do and follow the proper procedure for later dealing with late payment and consult an attorney for legal advice, it will cost you some money. I understand that, but
[00:43:02.400]Allan Vyhnalek: They're the ones that have the legal background to make this work correctly so be sure you contract contact an attorney. I think the other question we have on hand is one to GM is going to handle. So I'm going to turn it over to you.
[00:43:18.600]Jim Jansen: Okay, very good. Now, you did a nice job on that one. And like I said, you know, Alan's case that he described where he had someone not paying another party for multiple years they may not even had a
[00:43:32.100]Jim Jansen: Least in writing or verbally citizen 10 or farm the ground and didn't really say much. Most important thing is always ask what is in the lease.
[00:43:40.800]Jim Jansen: Lot of leases may have a penalty if the cafe and stop paid within X number of days, or if it is paid, but it's paid 30 days later, whatever maybe have a fee or 5% interest charge or whatever. There's multitude of ways.
[00:43:57.090]Jim Jansen: And that at least one on one website that are highlighted there is. I haven't read it recently, but I believe there's provision in there for late payments.
[00:44:07.980]Jim Jansen: Okay, question that came in to me a
[00:44:11.220]Jim Jansen: Little bit renewed interest on green band facilities, I forget where I heard it at the other day, but it sounds like green Ben sales are up this year, which you wouldn't think given the tight finances, but
[00:44:21.360]Jim Jansen: Looks like operations are intending to store some that green to maybe see if they get a little bit higher price at some other point in the future.
[00:44:29.730]Jim Jansen: But if I have a green been president on my site or if I'm renting a property in there happens to be green bends there and if, as long as those beds are not included in strictly in with the land lease and I want to use them.
[00:44:43.110]Jim Jansen: How much should you be paid the charge monthly or annually or seasonally and
[00:44:49.320]Jim Jansen: Should this be included with the Catherine. Well, the first thing I would say is, what do you have, do you have 1000 bushel of 3000 virtual Ben, or do you have a 10,000 or 30,000 whistle.
[00:45:03.390]Jim Jansen: When some of those smaller bands were built the expectation for crop yields are a lot different than what they are. Now the crop fields, even under challenging circumstances still raise a lot of good yields.
[00:45:15.480]Jim Jansen: So it depends on what you got. And assuming you do have something that's in a relatively good shape or something that you can find someone to work with.
[00:45:26.400]Jim Jansen: Consider if you do rent it Alan and I our opinion and we have no research data to support this.
[00:45:33.210]Jim Jansen: We suggest a flat rate. And the reason we say a flat rate, you know, maybe something like a dime to two dimes a bushel.
[00:45:40.140]Jim Jansen: Is if you have a tenant that rents it for only a month and then pulls the green out, you know, after the first year, maybe two months.
[00:45:48.300]Jim Jansen: Who are you going to rent that site to well, most people, you only get one opportunity here to rent out a green Ben site because if they clean it out, there's probably not going to be someone that really wants to haul it in there in the dead of winter.
[00:45:59.610]Jim Jansen: So a flat rate probably is lower amount if you have an older facility or if it's not quite as desirable, maybe a little bit more. And once again, you got to kind of work with them. If you're getting really, really good cash rent, maybe just a couple small grain bins, maybe just consider
[00:46:18.000]Jim Jansen: Maybe consider it in with the rent. But if you have a newer facility or larger facility, maybe 20 senses a little high. Well, work with them on it. Okay.
[00:46:27.570]Jim Jansen: And the thing is, if you're charging a fee that fee either you're charging a base fee so much a bushel, and you're charging for the electricity to, you know, run the blower's or that kind of thing.
[00:46:41.250]Jim Jansen: If you are not charging a separate fee for electricity while your monthly or annual or seasonal rates can have to cover the electricity. One possible if there's a separate meter, especially for some of these big blowers. They can burn up a lot of power in a short period of time.
[00:46:57.750]Jim Jansen: If you have a separate hookup. Great. And if you don't have a separate hook up
[00:47:02.550]Jim Jansen: You know, try to estimate, to the best of your ability, what's you know take a rolling average of what your utility bill is usually for your farm and does a jet up for a couple months in the fall.
[00:47:13.740]Jim Jansen: I don't know, you know, try to separate that video.
[00:47:16.860]Jim Jansen: But
[00:47:18.270]Jim Jansen: With that being said,
[00:47:22.200]Jim Jansen: I'm going to flip it here to our next slide. And let's see, I see. I comments to throw on that slide there. Oh.
[00:47:29.040]Allan Vyhnalek: No, not necessarily. I think he handled just saying I I prefer the yearly charge, rather than a monthly charge and I prefer having those meters on a separate deal a question God sending to assume the question is
[00:47:42.150]Allan Vyhnalek: Are you ready for that or know how
[00:47:45.330]Jim Jansen: Tell you what, it's kind of on your topic. Why don't I read it and you can kind of think about when I read it and you'll provide an answer. Okay.
[00:47:51.390]Jim Jansen: Sure. So we're going to flip it. We're opening it up. Now I see why it's great to see how many people we got on. And I think this new time that we're trying this meeting might be a good way to get people on but
[00:48:03.180]Jim Jansen: You got questions be sure to type them in the chat there. So we have an individual that's considering leasing out the ranch.
[00:48:09.990]Jim Jansen: Obviously for a grazing probably cow calf pairs.
[00:48:13.590]Jim Jansen: Do you have any suggestions on AG attorneys in Nebraska that are skilled in maybe more of the ranching side of the business out instead of the farming side that you might be more acquainted with being that you spent a fair amount of time in Columbus,
[00:48:29.910]Allan Vyhnalek: Well, you know, I probably would have two or three names that I could give them but i don't i don't know that I'm going to do that because mostly because
[00:48:39.990]Allan Vyhnalek: It's not the university's job or make recommendations like that for personal people personal recommendations. I think that that's a
[00:48:48.450]Allan Vyhnalek: That gets into a slippery slope. Because if I lose sleep somebody out. It's a perfectly good attorney. Then I'm going to be in trouble with that person. And so I I'm a little bit nervous about that.
[00:48:57.690]Allan Vyhnalek: If you would give me a call. I would talk to you about that whoever the anonymous viewer is and call me on my cell phone. Here's the number 429105573
[00:49:12.210]Allan Vyhnalek: I'll talk you through that a little bit 429105573
[00:49:20.550]Jim Jansen: And also if you do call on the number that we had on the slide.
[00:49:25.590]Jim Jansen: You can leave him a voicemail. He has ability to check that, too. So
[00:49:31.230]Jim Jansen: You know,
[00:49:32.670]Jim Jansen: I was gonna say we're working remotely so
[00:49:36.240]Allan Vyhnalek: So yeah, you could you could call that number on the slide, and it comes to me anyway so it would work. So
[00:49:42.240]Allan Vyhnalek: Yeah, either way.
[00:49:43.920]Jim Jansen: And the thing is an attorney.
[00:49:46.890]Jim Jansen: Chances are, you probably know someone in your area that's gone through an estate and transition or rents are land out ask for references from the locals.
[00:49:55.170]Jim Jansen: You know some of the ranch in Arizona State are fairly remote. But I think the Trade Centers send tends to be where professionals tend to congregate al might know some names.
[00:50:06.360]Jim Jansen: You know, other agribusiness professionals. Maybe you got a banker that you're working with. Is your banker have someone that they know locally in that area that would be good.
[00:50:17.190]Allan Vyhnalek: Well,
[00:50:17.700]Allan Vyhnalek: Jim, check with
[00:50:18.510]Allan Vyhnalek: Search Engine banker check with Farm Credit check with your local realty people
[00:50:23.340]Allan Vyhnalek: Check with your neighbors that have gone through some stuff. They're all going to be able to give recommendations on who a good egg professional would be in whatever business, but especially an attorney.
[00:50:34.440]Jim Jansen: Okay, I'm not seeing any more questions. And we're not quite done. So if you do have a question. You got a minute to type something in, I just want to touch base on here. Yeah, there's another question.
[00:50:45.750]Allan Vyhnalek: It came into chat. It said web limitations are usually in place with setting up a cash rents were landowner is migrating from a seat to an S Corp.
[00:50:57.180]Allan Vyhnalek: I didn't know I would.
[00:50:58.770]Allan Vyhnalek: Yeah, I talked to a lawyer, but I don't know if there would be an easy limitations.
[00:51:03.000]When you go
[00:51:05.250]Jim Jansen: First, my first disclaimer is I'm not an attorney, the second disclaimer is I know there's some very unique laws or rules or regulations related to corpse. If you're trying to dissolve one to go to an S Corp or an LLC or whatever structure.
[00:51:19.920]Jim Jansen: That would be a great question for a licensed CPA that does tax work or an attorney competent and that kind of kind of thing to be taking a look at
[00:51:28.380]Allan Vyhnalek: My only comment on that is, if you're setting up a cash rent.
[00:51:31.260]Allan Vyhnalek: Going from a C Corp an S Corp is my understanding is, that's like a five year process. So you wouldn't want to cash rent to go past a cash rent lease will pass that five years, you'd want it to end.
[00:51:44.550]Allan Vyhnalek: You know, least within that timeframe of that conversion. But again,
[00:51:48.480]Jim Jansen: That's
[00:51:48.870]Allan Vyhnalek: That's not a legal opinion. I don't know that.
[00:51:51.360]Allan Vyhnalek: You have to talk to an attorney.
[00:51:56.340]Jim Jansen: Right now you and I'll kind of has a son limitation on being able to do in person stuff. And we'll be see we're not exactly sure where we stand with producer stakeholder outreach for this fall or winter but one session that we did back in February, Alan. But I like myself Austin.
[00:52:16.200]Jim Jansen: Your felt, who's our counterpart, per se, Nebraska, was a meeting series called managing a gland and 2020 and beyond. And if you really like some of these topics we described here that as we wrap up.
[00:52:28.890]Jim Jansen: The website is firstname.lastname@example.org to new websites that Ryan Evans, our kind of our digital media specialist that we got that we work with.
[00:52:40.380]Jim Jansen: Is he just launched it. I think it was a week ago or two weeks ago. It's stepping up very long. They did an excellent job putting it together.
[00:52:48.300]Jim Jansen: And you can take a look at our lane management resources on there and take a look at the meeting.
[00:52:53.490]Jim Jansen: At this was done at the Lancaster County Extension office and they did a pretty nice job of recording it and pretty good.
[00:52:59.610]Jim Jansen: Audio and it kind of cut up our presentations into maybe a little bit more manageable clips or he could kind of go through there and do the topics and pick out the ones that you liked her smoke kind of things.
[00:53:12.180]Allan Vyhnalek: And I think that are all your I think all your
[00:53:15.930]Allan Vyhnalek: Handout the handouts for that meeting are available online, too. So he watched at gym. There's a question that came in for you from from David again any general predictions, a high land prices could change over the course of this calendar year.
[00:53:31.770]Jim Jansen: When we talk in our rural real estate appraisal class and campus about what are the driving forces of land values, the two things I always look at and they're pretty simple.
[00:53:41.550]Jim Jansen: How much does it costs to finance alone. And I say that, I mean, what are the current prevailing market interest rates.
[00:53:48.630]Jim Jansen: I think interest rates for, you know, long term say 1520 year what notes. They're really low. They're really low, because the Federal Reserve is trying to stimulate the economy.
[00:53:59.340]Jim Jansen: Now it's not good. If you're like someone that has money that she got some cashew nuts or on a CD at a bank. He'd be doing pretty good. Find a
[00:54:06.900]Jim Jansen: One year CD at a percent half but low interest rates tend to lead to higher values.
[00:54:14.820]Jim Jansen: Now, the flip side of that coin, though the problem that we have is the other thing that influences land values is the earning potential whether you buy a parcel of land and rent it out or you're the actual operator on it sole proprietor, whatever.
[00:54:29.670]Jim Jansen: The earning potential is seen it and some of the examples are pretty nice. Sally lay them out.
[00:54:37.530]Jim Jansen: When we see the lower margin floor cash rents for whatever it might be.
[00:54:43.110]Jim Jansen: That tends to be a negative force short run, assuming that some of this coven 1980 comes to the ag sector, we could see things slip a little. And when I say a little, maybe three or 5%
[00:54:56.460]Jim Jansen: I don't think we're going to see a fallout like we did in the 1980s, primarily because interest rates for you know 15 plus percent and whatever. I think they're fairly stable. Can we see slippage over time. No, I say over time. The next three to five years. Yes.
[00:55:14.220]Jim Jansen: This was the first year in our real estate report that we noted a small increase for the entire state and goes two or 3% but prior to that we have seen a small decline each year for the last four or five years before that so
[00:55:27.960]Allan Vyhnalek: Well,
[00:55:29.370]Allan Vyhnalek: Summit cancer. So I'm in
[00:55:30.450]Allan Vyhnalek: There goes my app on
[00:55:32.850]Allan Vyhnalek: On land values is simply
[00:55:34.380]Allan Vyhnalek: This good high quality ground what
[00:55:36.540]Allan Vyhnalek: Did by two or more neighbors with deep
[00:55:38.250]Allan Vyhnalek: Pockets is not backing off at all.
[00:55:42.090]Allan Vyhnalek: And improve lower quality medium quality lower quality ground is starting to slip a little bit. It's going down because of earnings virgin just got done talking about earning
[00:55:53.760]Allan Vyhnalek: Hires another one came in and the overall guidance and working with tenants who have verbal agreements in terms of setting up written Lisa's how to best approach to
[00:56:02.340]Allan Vyhnalek: Pro approach or purpose to go on as well to attendance, who have verbal agreements.
[00:56:08.820]Allan Vyhnalek: Working with tenants who have verbal agreements. Okay. Well, no, you terminate the least you got right now. You have to terminate by September 1 you send a simple note.
[00:56:17.820]Allan Vyhnalek: We're ending this Lee verbally. So we're going to a written lease and you make sure that you send it
[00:56:23.130]Allan Vyhnalek: For this farm. Give it a little description dated sign it, send it to us you registered letter. So the other party has to sign they received it. So you have that proof.
[00:56:32.580]Allan Vyhnalek: To end up in a court of law. You have that proof and you in debt to terminate at least in any letter. You can even say, hey,
[00:56:40.470]Allan Vyhnalek: I have no problem with you as a tenant. I want to have you continue on as a tenant. We're just going to have a written lease. We're gonna have some of this stuff spelled out
[00:56:49.920]Allan Vyhnalek: That's all you're saying you're not kicking them off. I mean I maybe you will. I mean, that's up to you but
[00:56:55.050]Allan Vyhnalek: But I think that those that's just really important to go through that and actually at the next meeting on August 17 Jim's got slide up right now. It's one of the main things will be talking about that. I'll be talking about myself.
[00:57:06.990]Allan Vyhnalek: That determination deadline, but
[00:57:08.730]Allan Vyhnalek: There's some other things and knowledge him talk about those things coming up in
[00:57:12.810]Jim Jansen: And only other comment I'd add to Allah. He described the process if people ask, why do you want to go to a written list over verbally.
[00:57:21.090]Jim Jansen: To simply say you're doing a state planning and I don't care how old you are a form of estate planning is having your directives and in writing. What did you agree to
[00:57:31.290]Jim Jansen: You know, think of we Alan and I always tell people to get a three ring binder that I could pick up for me tomorrow and manager ground as we're going through probate or state stuff if something happened.
[00:57:43.080]Jim Jansen: That we've taken a lot of questions. There's a lot of people in the state that don't have very good direction on that.
[00:57:48.510]Jim Jansen: So just be aware of. There's different things out there that you can do and you know attorneys can help you through that process. If you're really uncomfortable, but
[00:57:59.610]Jim Jansen: I think you just said direct line of conversation with the tend to say, hey, I'm getting older, or
[00:58:04.680]Jim Jansen: I'm doing some estate planning stuff and I just really want to have this writing and it's that's protect just you, but also protect the tenant from whoever does your estate.
[00:58:13.710]Jim Jansen: Because it's a written document outlining what was agreed to it protects for a good beliefs protects both parties because they know what they're getting into. Right. Oh.
[00:58:24.240]Allan Vyhnalek: Absolutely correct. And I didn't go and all that.
[00:58:26.580]Allan Vyhnalek: But yes, that's part of my regular
[00:58:28.290]Allan Vyhnalek: Talk. I mean,
[00:58:29.340]Allan Vyhnalek: The thing is scares me.
[00:58:30.420]Allan Vyhnalek: So when I get to the call from the daughter who's mom's been in a nursing home, and now mom can answer for herself dad's gone moms in a single now she can answer for herself daughter has to take over puts us the
[00:58:42.840]Allan Vyhnalek: executor or the power of attorney for business purposes for that estate for during she's a durable power of attorney, I should say.
[00:58:49.980]Allan Vyhnalek: So Jessica, the business decisions for a mother and a mother's the state and now she has no written leads to go by. We have to do better than that, we have to have written leases to protect the people that would succeed us if we're gone tomorrow and there's least we have to deal with.
[00:59:06.720]Jim Jansen: You bet. All right. And the final thing here. I think we're got one minute left school this wrap this up and we'll go from there.
[00:59:15.210]Jim Jansen: The next one of these online webinars or zoom sessions that we're doing is going to be hosted on
[00:59:21.930]Jim Jansen: August 17 we're going to try it at this 12 o'clock time. And if you really do not like this 12 o'clock time send us an email and we'll take it into consideration, but seems like we had a pretty good attendance at this meeting online now.
[00:59:34.770]Jim Jansen: We're going to be highlighting the final report will be done by then and take a look at little bit deeper look at our final report estimates on land buys and maybe even a little worn cash rent.
[00:59:46.110]Jim Jansen: And we as part of our survey. This year we had a special feature section that talks about addressing disaster leases, this came from the flooding of 2019
[00:59:56.190]Jim Jansen: And the other pieces to it. Alan sectional the taking a look at communicating crop progress. You can a hint to that that. But who needs to know what you know who should be visiting the property and
[01:00:08.280]Jim Jansen: Kind of the one on one on verbal and written leases and how do you terminate those verbal to go to written and all those good things. And once again, keep submitting those questions as they come in, even sent out or I an email that you want to talk about it.
[01:00:24.360]Jim Jansen: We after that I stopped taking questions yet. But we did have a couple set for this session. So we're really happy about that. But with that, Alan, do you have anything else you'd like to add
[01:00:39.540]Jim Jansen: You're I think you're still muted.
[01:00:42.510]Allan Vyhnalek: I have to, I have to unmute myself. I'm sorry. It's a good session good webinar and we're glad to have this many people on and
[01:00:48.780]Allan Vyhnalek: He said again soon as a Jim. Do you have our contact information on the last slide. Pick that up there.
[01:00:54.270]Jim Jansen: I do not have it on the last slide by
[01:00:56.490]Jim Jansen: Can move it back, go back.
[01:01:00.180]Allan Vyhnalek: We'll pull end up with the contact information on our slide here and
[01:01:04.950]Allan Vyhnalek: Eating, make sure you let us know where we
[01:01:09.600]Allan Vyhnalek: Make sure you let us know if anything will lead us up and
[01:01:12.000]Jim Jansen: For another
[01:01:13.110]Allan Vyhnalek: 30 seconds to a minute and then we're
[01:01:14.460]Allan Vyhnalek: Going to get off but
[01:01:16.890]Jim Jansen: Yeah, go ahead. Now,
[01:01:20.130]Jim Jansen: Yep, thanks for having me. Go ahead and mute myself now and will probably meet himself and cut his camera off. But so we'll leave it up for a minute or two. It's in Ryan is Ryan you to stop the recording.
[01:01:30.270]Allan Vyhnalek: Right here.
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