Ag Land Management Quarterly August 2020
The latest on Nebraska and values and cash rental rates, adjusting leases for disaster, preparing for the Sept. 1 deadline to terminate verbal leases and other leasing considerations for owners and tenants.
With Jim Jansen and Allan Vyhnalek, extension educators, Department of Agricultural Economics.
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[00:00:12.660]Jim Jansen: Okay. Well, welcome, everyone. My name is Finn Jansen I have 12 o'clock on my wall right now. So we'll go ahead and get started.
[00:00:22.320]Jim Jansen: I, along with Helen phonology lead these quarterly agricultural land management programs. My contact information is provided on the first slide here and Alan finale is on the right hand side of the slide, Alan, would you like to make any comments before we get started.
[00:00:40.860]Allan Vyhnalek: I know I'm okay. Jim will will make a gar comments in a few minutes to go. Take it away.
[00:00:49.020]Jim Jansen: All right, very good.
[00:00:50.250]Jim Jansen: Our presentation today quick outline here. We try to keep these presentations fairly short we have basically a two part deal. I will be taking the lead on the first
[00:01:01.290]Jim Jansen: 15 or 20 minutes and then Alan. But Alex will be taking this second half, and then after the presentation is over. We have
[00:01:09.360]Jim Jansen: Q AMP a session where you can submit questions we had three of them submitted and we were able to prepare a couple slides for them.
[00:01:16.740]Jim Jansen: And also, as we're going along. Today, more than welcome to type questions into the chat.
[00:01:22.830]Jim Jansen: And when Alan is giving his portion of the presentation, I will try to attempt to monitor those questions, if any, come in and we'll try to answer them to the best of our ability.
[00:01:33.360]Jim Jansen: So with that being said, be sure to reach out to us if there's anything we can do for you and we'll try to point out a few other meetings that we have coming up. So there's a
[00:01:42.840]Jim Jansen: Lot of uncertainty with everything right now with everything in the news and we try to provide the best information we can possible
[00:01:53.490]Jim Jansen: So the first part. Today, we just recently published at the end of June, the 2020 Nebraska farm real estate report, which provides findings on real estate topics primarily land values and cash rents.
[00:02:07.050]Jim Jansen: And each year. We also evaluate a special feature section on emerging issues and topics and I wanted to highlight that today as well.
[00:02:17.310]Jim Jansen: One thing I wanted to point out
[00:02:19.830]Jim Jansen: As I mentioned before, there's a lot of uncertainty with the virus, the transmission of the virus and also
[00:02:25.890]Jim Jansen: The effects, it's having on our financial and financial markets, which I would include in there, the corn, soybeans or livestock so well as other grains and we collected the survey information.
[00:02:39.450]Jim Jansen: Beginning and about mid January through early March before a lot of the covert 19 pandemic events have occurred.
[00:02:48.090]Jim Jansen: There are some folks that may be adjusting their cash rental rates to reflect some of these factors.
[00:02:54.240]Jim Jansen: By all means, if you are considering doing those, make sure you get that amendment put together and secure it to the lease and we're trying to report on the best information we have. And obviously, there may be some changes coming in 2021 subject to what happens to the economy.
[00:03:13.290]Jim Jansen: This briefly. For those of you that are joining us for the first time they Nebraska prime real estate surveying report was started back in 1978 by Ron Hansen and Bruce Johnson.
[00:03:25.200]Jim Jansen: Bruce Johnson shepherd report until about 2012 or 2013, I believe. And since then, just Stokes, and I have had the opportunity to work on their real estate report.
[00:03:37.560]Jim Jansen: As part of the survey we do preliminary estimates on land values and cash rents. Those are published the second
[00:03:46.530]Jim Jansen: Wednesday in March and the final report, which has additional detail beyond preliminary estimates on land values and cash rents. It has a lot of different additional information.
[00:03:56.670]Jim Jansen: Related to actual land transactions, things like who's buying land. Who's selling land. How's it been financed.
[00:04:04.380]Jim Jansen: All of that information can be found at a eat on that URL that edu backslash real estate.
[00:04:12.810]Jim Jansen: Or going to apply any popular search engine. And you can simply search for the Brassica farm the last day of report.
[00:04:18.900]Jim Jansen: You can usually find it within the first couple links and you find the website.
[00:04:23.610]Jim Jansen: To get to the entire report. Yep, to kind of there should be a button on the web page that says something like download full report, be sure to click on that and that's the best way to find it all the current information. In addition to any historical information that we have
[00:04:40.920]Jim Jansen: briefly on the state of Nebraska. We have 93 counties, how we summarize information is, excuse me, is by region of the state.
[00:04:52.020]Jim Jansen: Today we're broadcasting of Lancaster County Lancaster County is located in the East district. Everybody can see that kind of in the lower right hand corner of the slide.
[00:05:03.060]Jim Jansen: Lancaster County also is somewhat
[00:05:07.620]Jim Jansen: southern tier of it. Some of those properties might follow the trends of the southeast, a little more
[00:05:12.570]Jim Jansen: But all the information, the report is summarized based on these eight regions. So some of the information will highlight today will be based upon that.
[00:05:21.030]Jim Jansen: These eight regions are referred to a statistical districts or some folks still call them the crop reporting districts
[00:05:28.470]Jim Jansen: Either way, just know that the information is summarized by region of the state based on things that share similar production attributes expectations for lean Paul yield, things of that nature.
[00:05:43.800]Jim Jansen: A little bit of a historical perspective here we got from the inception of the report 1978 today. We have the annual marketing your average price of corn. So the average price of corn, as well as farm real estate value, the average value of agricultural land in Nebraska.
[00:06:04.770]Jim Jansen: We see that starting in about 2008 or 2009 things increased quite rapidly declined for about a five year period, then the most recent reporting. Here we noted a small increases small increase of about 3%
[00:06:23.700]Jim Jansen: The values reported here are not adjusted for inflation and given what's happening on the price of corn, which we note on there.
[00:06:32.910]Jim Jansen: Obviously the prices are not where we wish they would be at in the current state of things I picked up a little bit, since some of the weather related events of the last week or two. Now,
[00:06:42.900]Jim Jansen: But just know that we did see a small increase that 3% increases not anywhere comparable to a 15 or 20% increase we've seen in the past, but we did notice small increase when we estimated the market valuable and as a February 120 20
[00:07:01.800]Jim Jansen: Many folks on this call today if you're a landlord or an operator obviously concerned about one of our bigger land ownership expenses.
[00:07:09.630]Jim Jansen: Related to property taxes and we've talked about that almost on every call we've had but one thing I came across in the news last week I wanted to highlight
[00:07:20.130]Jim Jansen: Property taxes on agricultural land are quite high in the state relative to other states and that being said, the Brassica unicameral. The next slide here.
[00:07:31.560]Jim Jansen: In Nebraska unicameral past, I believe it was last Thursday. And if I'm not mistaken, I believe that was on August 13
[00:07:39.090]Jim Jansen: And this is an article I did not write any of the information in here. This is a extracted out of an article put together by the Lincoln journal star.
[00:07:47.610]Jim Jansen: Don Walton was the author of the article. So I want to make sure to note that this article is where we found it and you can find it online. If you I believe if you search for the title.
[00:07:57.720]Jim Jansen: But a couple big things property taxes have been on their agenda for the last several years. And there's been various things push forward. Obviously, it's a very contentious area.
[00:08:07.440]Jim Jansen: A lot of money involved. We're not taking sides on this with a simply reporting to what our understanding is on this topic and a few things we noted
[00:08:17.580]Jim Jansen: The property tax relief funds, I believe, and I, I'm not exactly sure when this is going to take effect. I believe this would be taking effect on your
[00:08:26.430]Jim Jansen: assessments that you're going to be getting notices on this fall, dude. Next year, but I'm not exactly sure if the credits going to be coming on your
[00:08:34.920]Jim Jansen: state income tax returning that will be due next winter or if we're even two years out, the basic idea here is
[00:08:44.610]Jim Jansen: The amount of money initially is going to be about 120 $5 million that's going to be set aside to provide property tax relief.
[00:08:53.430]Jim Jansen: The relief is going to be coming. As you know, in the first bullet point there as a state income tax credit, not a federal
[00:09:00.990]Jim Jansen: Federally typically see more credits there than at the state level, not always, but typically
[00:09:06.120]Jim Jansen: And that state income tax credit is going to increase to 375 million later on, given how it's currently being proposed, and I believe if I'm not mistaken. I think the governor has has signed off or as I believe he probably will sign up, I would expect to see this.
[00:09:25.410]Jim Jansen: One thing to note this fall. If you're a Nebraska citizen that can vote.
[00:09:30.480]Jim Jansen: Or if you're eligible to vote, there will be a ballot initiative put on the ballot to legalized gambling or different forms of gambling. I don't know too much of the details, but a portion of the proceeds generated from gambling would be going towards the funds to help pay for this.
[00:09:48.540]Jim Jansen: And
[00:09:50.460]Jim Jansen: Other things I highlighted here.
[00:09:53.940]Jim Jansen: Obviously this credit is a lot of property taxes help support local public schools and this will help provide some degree at least relief there.
[00:10:04.860]Jim Jansen: And the current property tax relief funds which these do not come as a state income tax credit.
[00:10:11.700]Jim Jansen: But they do provide relief to us. And this is a little bit different approach that they're taking with this credit and I was
[00:10:18.060]Jim Jansen: A little bit surprised to see the manner in which they're doing it, but it's what's been put forward and pass, and that's what we're going to see, but the current funds are at about 275 million. And if you know that peer this pool of funds to get
[00:10:33.090]Jim Jansen: Let me back up for a second, this pool of funds noted in this bottom one bullet point right here. Those appear on your annual notice already you have your mouth do
[00:10:44.730]Jim Jansen: They put forward the how much funds you help offset your direct tax obligation and then you have what you have to pay
[00:10:52.320]Jim Jansen: This right here the hundred and 25 million up here, this will be coming when you file your, your state of Nebraska income tax return in the form of a credit
[00:11:01.560]Jim Jansen: So that's the big thing to don't we do have some relief on the horizon. I'm not exactly sure. Like I said, this was this past few business days ago. So we're still I'm sure there'll be a lot more coming out, but is something to note
[00:11:15.780]Jim Jansen: Switching gears a little bit more on to the topic of cash rental rates.
[00:11:21.270]Jim Jansen: I'm just going to highlight about three or four of those the there's additional information on the real estate website and as well as different archive presentations that we've done on this topic.
[00:11:31.650]Jim Jansen: In 2020 we seen that cash rental rates. Remember, this was taken earlier on in the year.
[00:11:38.250]Jim Jansen: They appeared to be fairly steady across the state. And there were areas where we noted a slight decline or maybe only or
[00:11:44.700]Jim Jansen: percenter to increase, but we also note some that are up four or 5% or something of that nature. So if you take we ask the question, what do you estimate the average cash rental rate is for an area. This is what is reported on this slide.
[00:12:01.080]Jim Jansen: In addition to the average for you. They area we have what we refer to as how L stands for the average of a high third grade average the lower third grade.
[00:12:11.040]Jim Jansen: And an average of all the responses. So related to the high third grade. We asked the question to those folks that take the survey.
[00:12:18.360]Jim Jansen: What do you estimate the upper third calf cash rental rates is for an area. And what do you estimate the lower third cash rental rates is for an area.
[00:12:28.500]Jim Jansen: That's how the question is worded based on those responses we created an average for the highest grade average low grade and an average for the all the responses.
[00:12:38.550]Jim Jansen: And we get these ranges these ranges reflective fairly large region. And remember, there can be a cash crunch below and there might be cases where cash rents are above what is reported. But we see a fairly good range of cash rental rates reported across the state.
[00:12:55.140]Jim Jansen: In addition to the average for dry land cropland. We also report an average for irrigated cropland. And in Nebraska. We noted a couple areas where the center pivot irrigated cash rental rates were down slightly.
[00:13:10.080]Jim Jansen: Northwest Nebraska, as well as Eastern regional brassica that cash rental rates we see across state though tend to in the eastern third in the
[00:13:20.220]Jim Jansen: Mid to high to hundreds and then in the western, central areas we're talking a little bit closer to 200 and then in the western part of the state, maybe around that 142 one at mark that was noted
[00:13:36.780]Jim Jansen: The cash rental rates reported in addition to the average also assume that's a landlord owns the entire irrigation system if an operator is providing something such as the pump the power unit or another component of the system.
[00:13:55.590]Jim Jansen: You would discount the cash rent to reflect that.
[00:13:59.520]Jim Jansen: So once again, these rates assume that the landlord owns the entire system and the landlord. In addition to having to pay property taxes are probably having to pay for upkeep on the equipment as well as things like insurance on the irrigation equipment is something would happen
[00:14:18.840]Jim Jansen: Another popular rate. I didn't do the percent change on this one. But another popular rate that we get a lot of requests on our cow calf pair raising rates. So for one cow one calf during the summer grazing season.
[00:14:33.420]Jim Jansen: If you would recreating for a five month period, you would take, for example, in the south Southwest district. Here we have a rate that's not quite $50 but if the average rate.
[00:14:44.310]Jim Jansen: For an area was $50 a pair you would take 50 multiplied by five. That would be the average rate for the season, and I'm all aware, there are areas of the state where we might do extended grazing.
[00:14:57.990]Jim Jansen: All grazing springtime grazing especially out in the ranching areas, a little bit different country out there and way, those types of things are handled, but
[00:15:07.680]Jim Jansen: When it comes to grazing land. I always encourage people to negotiate and discuss who's paying for the upkeep on fencing.
[00:15:15.000]Jim Jansen: If you have a stock. Well, that has electrical power source. Who's paying for the electric bill. Who's paying for a take care of the noxious weeds.
[00:15:25.380]Jim Jansen: All these things all the cash rental rates that we have reported can reflect the difference in the party or the entity that's responsible for maintaining them, especially if you have an older landowner that may not have the
[00:15:40.290]Jim Jansen: Penis state of health, that would be appropriate to work on the outside during very hot periods and there needs to be offense replace Elena, and I have always said that
[00:15:51.210]Jim Jansen: Especially on fencing materials that should be a landowners expensive, especially when I'm talking something more than just digging in a new post I got knocked out or something.
[00:16:00.600]Jim Jansen: Those improvements would stay with the land at the tenant would vacate the property. But once again, if the tenants willing to do some of those things.
[00:16:09.600]Jim Jansen: Do you take off so many dollars a parody, you take off 30 to 50 bucks a pair for cash rent during the summer grazing season or give one month of rent for free or something.
[00:16:19.740]Jim Jansen: To account for the fact of that person using their time or equipment or postal diggers or whatever to set up that new fence or take the old one out. So we encourage everyone to focus on what's equitable and that's part of balance talk. And the second part.
[00:16:35.400]Jim Jansen: Wanted to briefly talk here on the special feature section for
[00:16:42.210]Jim Jansen: We took a look at
[00:16:46.440]Jim Jansen: There was extensive flooding across Nebraska and we took a deeper look at land leases provisions and land leases to account for damages from flooding.
[00:16:58.050]Jim Jansen: And we asked Can three or four questions I want to highlight three of them here. And the first question we was basically on the topic of did your lease contain a provision.
[00:17:11.580]Jim Jansen: To account for disaster and we didn't disaster in the form of flooding Nebraska. We usually. It's usually too dry, not necessarily too wet, and not saying it can't plug, but
[00:17:23.520]Jim Jansen: We're usually a fairly dry say during certain times fear overwhelmingly a large portion of the responses indicated they did not have a provision in place to account for flooding.
[00:17:34.380]Jim Jansen: About 15% had some kind of provision, maybe it didn't adequately account for it, but they did have something and a very small percent so they did have something to account for flooding on the ground.
[00:17:49.860]Jim Jansen: In
[00:17:51.420]Jim Jansen: If you did have what I referred to as extensive prevent plant, meaning you were not able to plant your primary intended crop corn, soybeans, maybe some kind of small, green specialty crop, whatever.
[00:18:05.070]Jim Jansen: Was there any adjustments made to the cash rent.
[00:18:09.210]Jim Jansen: About a little over a third of the responses. No adjustments were made.
[00:18:14.700]Jim Jansen: Not quite 40% of responses. They had a slight reduction in the rent 10% had no rent. We didn't ask any more details on that and then 15 not quite 15% 14% there were other adjustments made. Now, we did not ask what those other adjustments were but it may be something related to
[00:18:39.000]Jim Jansen: You know, if there was maybe some damage is done on the property. Maybe they got some credit on the operator got some credit on their rental bill that was do if they
[00:18:50.310]Jim Jansen: May we went out there with a tractor and cleaned up debris or whatever tick box played out there and levels from ground off. Something to that effect.
[00:18:59.550]Jim Jansen: Looking forward to the season. We asked, were there any revisions made to account for flooding and the leases.
[00:19:09.570]Jim Jansen: Now, still have about half police's they do not have any provisions for they didn't add anything, but at the same time, there are areas of the state where
[00:19:18.000]Jim Jansen: Maybe flooding us in that big of a concern. If you're not by the platter Roku or Bell corner wherever
[00:19:24.900]Jim Jansen: Little bit different story in northwest, or excuse me, north, east, south dakota northwest Iowa or something about a third had some that some form of partial revisit
[00:19:36.810]Jim Jansen: Revising or adjustments Elise and a little over 10% did make some based on the survey that we conducted. We did feel good that people are are making adjustments.
[00:19:49.440]Jim Jansen: Not too many weeks ago, we had a fairly serious weather event I went through a little bit of Eastern Nebraska, big, big swath of kind of central Iowa was hit
[00:19:59.880]Jim Jansen: But the thing that Alan and I are trying to get across. As part of this work is how do you plan for the unknown. We never know every anything with certainty. But, you know, try to do it to the best of your ability to account for these things and plan accordingly.
[00:20:16.470]Jim Jansen: So with that, that's kind of my highlight that I want to share with you folks today. We're kind of entering the second phase here and I believe album will pop on and I'm going to meet myself and Alan will let me know when
[00:20:29.640]Allan Vyhnalek: And be sure to enter in any
[00:20:31.050]Jim Jansen: Questions for Alan or I, and I'll try to kind of sort through those those albums going along here.
[00:20:36.930]Allan Vyhnalek: So yeah, we, we already have a question Jim, but I think that you probably want to think about that for a minute. So I'll go ahead and do my section. It won't take that long.
[00:20:44.760]Allan Vyhnalek: A good afternoon, everybody. Glad to have you on and then glad you're participating and and listening in. As we talk about the landlord and tenant relationships on communication.
[00:20:56.430]Allan Vyhnalek: The big thing we have to remember with communication is that when I see at least it's gone awry when I see at least it's in trouble when I see at least that is not working properly.
[00:21:06.900]Allan Vyhnalek: About there's no hard statistics on this, but about 90% of time. It's because of bad communication. So just remember that.
[00:21:14.100]Allan Vyhnalek: We have to really stop and listen to each other and really talk to each other and ask each other questions. So we know really what's going on with the lease. Okay, go ahead. Next slide. And
[00:21:23.460]Allan Vyhnalek: So it's a good time to have good communications which releases because it's tied to be checking out the crop or the grazing land. In other words,
[00:21:31.830]Allan Vyhnalek: It's time to go. Give the outstanding in your field the tenant should consider taking the landlord out to visit rented rented property at the landlord's not going out himself.
[00:21:41.220]Allan Vyhnalek: I myself in the landlord, and I know a couple weeks ago I took off on and after your late afternoon after work, and went down to the farm that I happen to own and walk the whole thing just to kind of see where we're at with wheat pressure
[00:21:55.110]Allan Vyhnalek: Soil Conservation, what do we need to do next. If there was irrigation what's what. What irrigation equipment needs or they're
[00:22:02.430]Allan Vyhnalek: Tied to be discussing issues about the rental property. That's what I'm talking about.
[00:22:06.090]Allan Vyhnalek: And the landlord tenant can do that together. And certainly, as you have elderly land or landlords attend should take them out there if they're physically able to do so.
[00:22:14.370]Allan Vyhnalek: I think it's just a good public relations move. I don't care if it's cash render crops here doesn't matter. It's just a good public relations move and it's just a great way to keep everybody engaged and keep that communication going forward. It's just an important thing to do.
[00:22:28.620]Allan Vyhnalek: Go on to the next one.
[00:22:32.100]Allan Vyhnalek: So here's the things you should observe for crop ground.
[00:22:36.240]Allan Vyhnalek: As the first three points here. Make sure you'd look for and even stands, especially in corn because that indicates wet spots in the field where the corns not
[00:22:45.000]Allan Vyhnalek: Growing properly because it had too much water on its roots for too long.
[00:22:49.860]Allan Vyhnalek: I look for wheat issues, especially those issues with resistance and look for insects and disease pressure look look to see how maturity how mature your plans are getting when everything kind of looks like.
[00:23:00.780]Allan Vyhnalek: Then the next bullet. The fourth bullet there should be out dented to say grazing land. If you have grazing land to be a pastor, then you look at and for pasture. You look at for a tight and conditions is the plants.
[00:23:12.540]Allan Vyhnalek: Overall weed pressure and noxious weeds or brush, see what's going on with those see if there's any those things present
[00:23:19.710]Allan Vyhnalek: Because quite honestly when you get to those to those small trees and brush.
[00:23:23.910]Allan Vyhnalek: And even the noxious weeds, the landlord may have to help that tenant out with some of the control and those on those efforts there, so be sure you're you're on top that I know what's going on and don't have happened. What happened to me.
[00:23:37.050]Allan Vyhnalek: Back into drought of 2012 I think 1312 do ground to tell somebody calls me up. Labor Day and says, hey,
[00:23:49.770]Allan Vyhnalek: This this farmer completely overgrazed my pastor. There's nothing left. I went to Cal GM
[00:23:55.590]Allan Vyhnalek: And I said, So did you ask him that. And he goes, No, I, well, yeah, I did. But they don't want to take their catalog because they've already paid for the whole pasture.
[00:24:02.550]Allan Vyhnalek: Are paid paid for the whole grazing season. Well, the whole five months. And so the bottom line is you need to have those conversations and make sure that we don't get pastors overgrazed and
[00:24:12.030]Allan Vyhnalek: Make sure that we have everything kind of under control and everything kind of in good shape. I think I'm ready to go on to the next slide.
[00:24:22.140]Allan Vyhnalek: So that's what I like to say about what we should be doing right now in terms of lease. And then we're going to go on to to a upcoming deadline that you have to be on top of
[00:24:31.920]Allan Vyhnalek: We really do strongly encourage all Lisa's to be hand written leases. We want every leads to be a written list. However, we understand there's some still some handshake or verbal agreements.
[00:24:45.960]Allan Vyhnalek: Out there and please get rid of those please get them to be a written to be a written contract or written lease.
[00:24:53.190]Allan Vyhnalek: However, if you have one of those old verbal leases. If you want to stop that lease and get to originally. So if you just need to stop that lease for whatever reason.
[00:25:02.640]Allan Vyhnalek: I just stayed in Nebraska requirements on on farm ground is that that trend that notice notification of ending a verb police or a handshake agreement has to be done prior to September 1
[00:25:16.080]Allan Vyhnalek: For the lease beginning on March 1 2021 all the Nebraska leases that are handshake or verbal agreements are assumed to start on March 1 and go to February 28 the next year.
[00:25:28.020]Allan Vyhnalek: So, at least it's in place right now started on March 1 2020 will go to February 20 2028 on March, excuse me on 2021
[00:25:38.460]Allan Vyhnalek: So six months before the 28th is before September 1 anytime. Now the rest of August, you have to. That's when you have time to terminate that verbal ease
[00:25:48.840]Allan Vyhnalek: And notification has to be done done ahead of time. And that has to be done, and by
[00:25:55.290]Allan Vyhnalek: It would be best if you did by certified letter that will you get a seat, you're back saying that they have received that notification.
[00:26:03.150]Allan Vyhnalek: And past releases are different actually uses of typically just five monthly says that's Jim just talked about.
[00:26:09.810]Allan Vyhnalek: And since a five month lease begins on May 1 and may 15 or even June 1 it ends now on October 1 October 15 or November 1 so because of passionate it's ends.
[00:26:21.270]Allan Vyhnalek: No notification needs to be given the past releases and it unless you have something I've written Lisa talks about a multiple year lease, then you just follow the provisions of the written least, that's what we want.
[00:26:30.450]Allan Vyhnalek: But because of verbal or handshake passionate Lisa's ended, then no notifications needed for passionately says
[00:26:36.960]Allan Vyhnalek: If there's any questions about that, please type them into the Q AMP. A or two into the chat. Doesn't matter will find a and we'll answer, answer those questions later on. Okay, I think I'm ready for the next slide.
[00:26:49.500]Allan Vyhnalek: Written least carries a high value over verbally, because it protects both parties of the contract. It's easier to define or spell out in court.
[00:26:57.600]Allan Vyhnalek: To specific duties beach parties are spelled out in the contract. And so there's no ambiguity as to who's going to take care of what, um, and
[00:27:06.180]Allan Vyhnalek: So it really helps when you have an unforeseen passing of either the landlord or the tenant and rigor, which require their children or whoever's taking over that that
[00:27:16.650]Allan Vyhnalek: That estate to step up manage the property within St. And, and so I know for instance that I released my brother to release.
[00:27:27.180]Allan Vyhnalek: If I'm gone. Now all of a sudden, and he and I know that if I'm gone. Now all of a sudden my children or my wife could read that Lisa know what they need to happen next.
[00:27:38.100]Allan Vyhnalek: If you don't have that written down. That's the problem.
[00:27:40.980]Allan Vyhnalek: You know, one time I had an old 85 nine year old guy come up to me and says, in my generation, our words, our bond. We didn't need to certainly stuff. And I said, I absolutely agree with you.
[00:27:50.850]Allan Vyhnalek: And your generation, the written the verbal lease with a handshake was the lease. I get that. But what if you're gone. When you leave. What happens then.
[00:28:02.940]Allan Vyhnalek: You have to understand that I've been working on this land management thing for 10 or 15 years. You don't know how many I can't even begin to count how many
[00:28:10.440]Allan Vyhnalek: Phone calls are received for people where we didn't have written ladies all we had a verbal agreement or a handshake. Now their parents are gone, or their parents are in nursing or see me.
[00:28:20.490]Allan Vyhnalek: All timers facility can no longer answer themselves and they say, I don't know what the lease, was it was never written down.
[00:28:27.810]Allan Vyhnalek: And now we have to go deal with that tenant.
[00:28:30.150]Allan Vyhnalek: And they have to hoped it to 10 is telling the truth. I'm sure the 10 probably is.
[00:28:34.770]Allan Vyhnalek: But it puts them in an extremely uncomfortable situation that we could just avoid if we understand that we should have a written list so everything's kind of spelled out, it's an important. It's important thing
[00:28:44.970]Allan Vyhnalek: I and besides, some of these people have never been shared any information about what's happening with that foreign land or what's happening with elise
[00:28:51.120]Allan Vyhnalek: And they have no current knowledge, experience in Agra industry a lot of us grew up on the farm. But we've been gone for 40 years and things have changed over 40 years
[00:28:59.220]Allan Vyhnalek: Some cases quite dramatically. So please have a written list, please have that in place. And now's the time to end those verbal or handshake agreements. Next slide.
[00:29:13.590]Allan Vyhnalek: I'm guessing I get dancing. I want to make comment about is when when we renegotiate Elise, um,
[00:29:19.860]Allan Vyhnalek: I think that, um, my recommendation, there's no there's no one set standard on this, but I think the recommendation I would have is that you do at the same time every year.
[00:29:29.160]Allan Vyhnalek: Because it avoids confusion and avoids mistrust because of price it commodity prices are going up.
[00:29:35.370]Allan Vyhnalek: When will the tenant. Want to renegotiate to lease right away right first of September.
[00:29:41.370]Allan Vyhnalek: If prices are going up when when the landlord one negotiates Elise, no not tell closer to march 1 when it actually starts
[00:29:48.150]Allan Vyhnalek: If prices are going down when when the landlord one two commodity prices going down with the landlord. Once you read negotiate least right now immediately it's get this done prices going down.
[00:29:58.980]Allan Vyhnalek: And if prices are going down. When will the tenant. Want to renegotiate to lease well as close to march 1 as I can.
[00:30:05.010]Allan Vyhnalek: So let's have one time where we need really go shakily some places for next year are negotiated at this time and August before September 1 so if they don't get down, come up with an agreement, they can cease to lease.
[00:30:18.090]Allan Vyhnalek: On February 28. A lot of them are they read negotiate in February, right before that march 1 start
[00:30:23.970]Allan Vyhnalek: And in summary renegotiated at oddball times mean some our leases for next year renegotiate when you hand off the check for this year I paid my lease. What do I do for next year than the renegotiate. At least, that's probably november december
[00:30:36.840]Allan Vyhnalek: Summer negotiated early November when before the silver the landowner Snowbird is headed for Arizona or California or Texas or wherever they go. And so some of those leases are they were negotiated at that time. I don't care what it is. Let's just keep it consistent so that
[00:30:53.070]Allan Vyhnalek: We have no mistrust trust or no playing of the markets on each, each of the parties.
[00:31:00.060]Allan Vyhnalek: Have worried about what's happening with the market when we're sitting at least. And then we should come up with some battle flexible agreement which, you know, we'll talk to you about here in a minute.
[00:31:06.750]Allan Vyhnalek: So just, just something that just something to keep in mind trying to go shake that least at the same time every year. Okay, go ahead.
[00:31:16.860]Allan Vyhnalek: OK, so those are those are my main comments just know that if you need a written lease or if you need a form to fill out a lease. There's a website called
[00:31:27.120]Allan Vyhnalek: This screenshot shows with that looks like and what you want to do when you get to that website is go to the document library link.
[00:31:34.620]Allan Vyhnalek: The link, going to the document library at least one on one work and and that will take you to this next page.
[00:31:40.170]Allan Vyhnalek: And it's got billable these forums on the right hand side of the page. And there you have your cash families, your crops, your families, your past releases.
[00:31:48.330]Allan Vyhnalek: And other types of leases that you can use. And those are fill in the blank leases. Those are very come completely says
[00:31:54.750]Allan Vyhnalek: And so you won't use all the blanks, you just fill in the blanks that pertain to your situation and you'll have at least, at least to begin with. If you're worried about what the leases.
[00:32:03.810]Allan Vyhnalek: What the least says and what it does and what it doesn't do
[00:32:06.810]Allan Vyhnalek: Please take that least to your own lawyer and have them review it, it'll cost you a few bucks. But if that gives you peace of mind, that's a very important thing to do.
[00:32:14.160]Allan Vyhnalek: That's up to you. I'm not, I'm not recommending I'm recommending is you are nervous about it all go see a lawyer, please do.
[00:32:22.620]Allan Vyhnalek: Whales what's next year.
[00:32:25.980]Allan Vyhnalek: Oh yeah questions. I think, first questions for you. So once you go ahead and unmute yourself and
[00:32:33.090]Jim Jansen: Tell you what else we got I think we had two or three questions prepared before we got started. Why don't we go through those questions. First, because they might answer some questions that might still come in, but I think we got at least
[00:32:46.260]Jim Jansen: Three, good questions waiting in the chat right now. So I'll get I'll take the first question. And then I believe we get the next two and then I'll switch back over and I'll take some of these are coming into the chat if that works. Okay.
[00:33:00.180]Jim Jansen: All right, so we had a question come in and we actually got a land management program coming up here in September, where I think we might be talking on this topic. Some folks that are
[00:33:13.230]Jim Jansen: Everybody agrees right now I think landlords and tenants that there's a lot of uncertainty with things.
[00:33:18.990]Jim Jansen: Regardless of your political playbook or whatever. There's been a lot of changes and corn prices soybeans are not the greatest price, but maybe a little bit
[00:33:28.260]Jim Jansen: Maybe a greased a little bit stabler agree higher instability cattle prices have really fluctuated a lot with slaughtering capacity. There's a lot of uncertainty.
[00:33:41.010]Jim Jansen: And there's a lease called a leasing method called flexible cash lease or flex lease and there's
[00:33:50.460]Jim Jansen: I don't know, maybe 30 different ways you could flex your cash rent you can flex based on kneeled on price or I liked personal and talk about the revenue.
[00:34:01.200]Jim Jansen: Because in Nebraska. Everybody knows just because you have good prices doesn't mean you have a good crop yield or vice versa.
[00:34:08.100]Jim Jansen: And the revenue really takes into account just not a good deal, but also if the prices relative to other things are very good. And the basic idea. We have a little church setup here. The basic idea what we have going on is, let's say Alan's the landlord and the tenant.
[00:34:26.280]Jim Jansen: And
[00:34:27.960]Jim Jansen: You know, are sitting down talking about cash rent and we've finally settle on the agreed Catherine of say 170 5000 acre and
[00:34:38.850]Jim Jansen: We sit down, we talk about things and we decide that we're going to allow the cash rent to flex up or down.
[00:34:47.850]Jim Jansen: To a certain extent per acre. And some people let it Plex maybe 10 to 20% higher or lower
[00:34:56.070]Jim Jansen: And there are flex lease is called bonus leases, where they only allow the cash rent to go higher, but I would argue if you're going to have a least setup like that. You better have a base rent that's lower
[00:35:07.380]Jim Jansen: The basic idea is here, we sit down and we negotiate and we say 175 that seems reasonable and early March.
[00:35:15.000]Jim Jansen: Well, we get September, October start harvesting the crops, we see where prices are at we've seen other crops actually yield.
[00:35:22.140]Jim Jansen: If the crop revenue is better. So maybe even a fields are down a little bit, but prices are good. If the crop revenue is better. We've paid more in cash rent.
[00:35:32.700]Jim Jansen: And and have prices and yields are not that good. Alan, would maybe accept the Lord, there's a range here and I don't care what you established for your range.
[00:35:42.810]Jim Jansen: But you cannot let the rent exceed to 10 and you can't let it go lower than 140 now you can adjust those up. You could make it to 20 you can make 200
[00:35:52.800]Jim Jansen: You could make the minimum rental hundred and 50 whatever you want to do is up to you, but I would just encourage you to have a range because sometimes the market may take off.
[00:36:02.070]Jim Jansen: And if we do have $1 corn again will them maybe their crop yields are worth a darn but so that's why we got to look at it this way.
[00:36:09.660]Jim Jansen: And these slides will be posted online. So you can go out and download them. But there's a lot of things going on here.
[00:36:16.560]Jim Jansen: But the basic idea of what we have on these two slides on the left hand table and the right hand table on the left hand table, we have a flex lease where we
[00:36:27.750]Jim Jansen: Agreed. And the example I outlined before we said we're going to go with $175 an acre rent and went down and I signed the lease together, we, we thought the corn was going to be worth about 350 a bushel. And we thought the ground should yield about 150 bushel.
[00:36:45.600]Jim Jansen: And the left hand side here. I'm trying to highlight it with my mouse left hands center here.
[00:36:54.030]Jim Jansen: The actual harvest time price was not 350 it was 305 and this might know prices are up a little bit. This last week or so. But maybe this is a scenario for this fall. If you do the math prices are actually about that quite 13 or 12.9% lower than when we initially signed the lease.
[00:37:15.240]Jim Jansen: trap of flex lease into this in this flex and there's different ways you can flex it we take 12.9%
[00:37:25.500]Jim Jansen: off our pace Catherine and in this example that final Catrin paid is $153 an acre. We are cash friend is lower. So we're going to take off about 13% and we're going to settle at the cash rent about $153 an acre.
[00:37:42.840]Jim Jansen: On the right hand side, we have a case same rent and all that kind of thing. But prices are actually better they end up instead of being 305 the end at 395
[00:37:56.610]Jim Jansen: In in this cash and then this case, we do the percent change. It's about 13% higher we would add 13% on to the cash rent which figures out to about $23 an acre. If you take your base rent times a percent change.
[00:38:14.250]Jim Jansen: So we take our base rent plus are increasing kashrut, because the prices are better than we anticipated we settle at a final cash rate of 198
[00:38:26.370]Jim Jansen: Just an idea. There's and let's say for example, prices were $4 and 50 cents a bushel. Remember the maximum cash rent that you will have to pay is 210
[00:38:40.080]Jim Jansen: And the minimum, you would have to pay is 140 because we're letting it lacks insider range. So this is just an example. I'm sure there could be a lot of questions that come out of this, but
[00:38:53.370]Jim Jansen: That was kind of the question that we had. How do you set up a flex lease or how do you flex
[00:38:59.100]Jim Jansen: cash rent based on prices and this was this one simple approach on how we might do this. Okay, we're gonna get another question here, and I believe Allah will take the lead on the next two questions. So here you go out
[00:39:12.060]Allan Vyhnalek: Okay, so, um die refer to a minute ago that you referred to the to the idea min ago this need to send the lease termination letter or a note to those to either party letting them know to lease ends by March 1 and you give them six months notice and
[00:39:32.640]Allan Vyhnalek: We don't have a lease termination letter that we give you, because it's not that difficult. You could write your own
[00:39:38.970]Allan Vyhnalek: So the things that you should probably include having it is it has to be dated you need to say who the address of the landlord and attended our a rough legal description of Prop Prop property, it would hold up in court. In other words, it's you know section 27 dash
[00:39:54.750]Allan Vyhnalek: Just Township in this county and you state.
[00:39:59.130]Allan Vyhnalek: Term staying determination least we're writing to terminate the least it and they would end on February 28 2021 and
[00:40:07.830]Allan Vyhnalek: You could if you're not if you're not happy with doing it this if you don't want to take the responsibility. Doing this have an attorney draft it shouldn't cost you too much. But that's up to you.
[00:40:18.300]Allan Vyhnalek: But, but if you're just have those basic components. It's on the screen right now. It would be fine. It would get that done.
[00:40:25.200]Allan Vyhnalek: I also say, in many cases where we're stopping a verbal lease or a handshake agreement, we're willing to probably work with that same Tenet go into the future, you put that sentence in there.
[00:40:35.310]Allan Vyhnalek: Were there were this leases, ending the verbal handshake agreements ending. However, we'd be more than happy to discuss them at least with you just you just contact us, we'll get going on that that's not an issue but but
[00:40:48.630]Allan Vyhnalek: That's up to you. And that's your desk desk pertains to your circumstance and then send us via certified mail return receipt that when you get the receipt back that the party has received it.
[00:40:59.460]Allan Vyhnalek: And they, there's no, there's no question in a court of law. You had to go to court, about whether they receive proper termination by September 1 not on September 1 not after September 1 but by September 1
[00:41:12.330]Allan Vyhnalek: Okay, so that delta t care of the answers that question, I think, I think that takes care of that just fine.
[00:41:20.610]Allan Vyhnalek: Go on to the next one, Jim.
[00:41:23.340]Allan Vyhnalek: Oh, here we go. If the ground will be sold at this just came in ground will be sold into currently sit ins on February 28. Do we have to give notification to the 10th to TO LISA'S terminate.
[00:41:34.230]Allan Vyhnalek: Okay.
[00:41:37.920]Allan Vyhnalek: So, um, it depends. Now, Jim wrote a pretty good answer here. There's fine if it's a verbal he's obviously going to September trajectory by September 1
[00:41:47.400]Allan Vyhnalek: prior to September 1 if it's a written Lee's you need to follow what's in the written lease. Did you have termination. And notice
[00:41:54.630]Allan Vyhnalek: Notice stuff covered in written leads, which you should then you just follow whatever that sense.
[00:42:00.210]Allan Vyhnalek: However, if you indented bands. And second thing, then if you have written Lisa depends on whether you, what do you have enough rollover clauses are or how that leads to just rolls to the next year. If you have
[00:42:11.730]Allan Vyhnalek: Things in there like that then you then you need to send, send some kind of termination.
[00:42:16.200]Allan Vyhnalek: However, if you have a specific specified least it's going to end on figure a 28 to 2021 and there's doesn't say anything about rolling over. It doesn't say anything about anything that lease ends. So, no, no, no. Notifications needed really
[00:42:28.560]Allan Vyhnalek: But the Professional courtesy within would be showed the other party.
[00:42:32.610]Allan Vyhnalek: That you do plan to make changes the ownership of the property and you need to stop this lease and you know the actually I just had a question. And my email this morning from party assign ground and they said
[00:42:45.990]Allan Vyhnalek: We hope that whoever we sell it to will be Stevie. They said, We know that one of the buyers is interested in purchasing this ground wants to have the current tenant stay on. And so, that's fine. But you start to end this lease and make sure it's done so.
[00:43:02.940]Allan Vyhnalek: Just make sure you get these kind of bases covered and make sure you're in good shape. And if you need to send something by September 1 and get it done.
[00:43:11.100]Allan Vyhnalek: If there's any more questions about that. Put them in a chat or put them in the Q AMP. A will find them in will answer them or just call me up my phone numbers were listed on the beginning side at the end slides. So anyway. Oh.
[00:43:24.330]Allan Vyhnalek: Yeah, quick comment about Germany slow actually sign
[00:43:28.230]Allan Vyhnalek: The flex leases, the flex Lisa's work pretty good. The number one concern from the flex lease is how Landy if you're especially if you're doing it on revenue.
[00:43:38.250]Allan Vyhnalek: Especially be doing it by price or by revenue when you land you set the price.
[00:43:42.660]Allan Vyhnalek: And that's the sticky point and content gym or myself will visit with you more about that you have questions, but setting the price reflects these it's always the most difficult thing to do if you're doing it on revenue or if you're doing it on price. Okay.
[00:43:57.180]Jim Jansen: Right. A lot of people like to take a look at the planting and harvesting time price guarantees with crop insurance.
[00:44:04.200]Jim Jansen: It's 30 days futures price average. So you're just not picking from one point in time where the prices may be a way up or down. And also it's something you can find from any crop insurance agent and find it online. All right, now we have three questions that came in, but
[00:44:20.790]Allan Vyhnalek: No, I was gonna say is, and that's a good example of what you can do. But my point is, make sure you have that conversation, because if you go through a lease.
[00:44:29.820]Jim Jansen: Right.
[00:44:30.270]Allan Vyhnalek: The landlord. Remember the highest
[00:44:31.650]Allan Vyhnalek: Prices year the tenant. Remember the lowest prices year. And the way it's been bouncing around some some years does could be a whole Grand Canyon apart so be careful of. Just make sure you have a conversation at a time of wisdom suggested is just fine. That's good. That's good work.
[00:44:48.450]Jim Jansen: Okay. All right, we got three questions that came in, out, I'll take the first one and then you take the next one. All right.
[00:44:55.440]Jim Jansen: question that came in.
[00:44:57.780]Jim Jansen: First question is our property tax credits and reference to the article that was presented earlier on in the first part of the presentation are the usable if are the property tax credits usable if they are as the landlord is not a resident of the brass
[00:45:18.780]Jim Jansen: Well, my understanding is, I'm not a tax person. So make sure you know refer to whoever. What if you're generating cash rent in the State of Nebraska.
[00:45:29.790]Jim Jansen: My and I would think you'd probably have to file US state of Nebraska income tax return for that portion of income, even if you're not even if you live in Iowa or wherever outside of the state.
[00:45:43.950]Jim Jansen: The other point I didn't state on here that property tax credit, I believe, and like I said this. There's not a lot, no one on this and keep your eyes on your local newspaper. I'm sure there'll be more articles to come in applies just not to land, but also residential homes.
[00:46:03.330]Jim Jansen: And. And the example I seen. I think they gave an example of a house and like the Bellevue
[00:46:10.380]Jim Jansen: Greater Omaha area worth 200,000 and they estimated that like $128 or something around that amount. So it's not a huge number, but it is a tax credit. So it does help offset some tax and, you know, look for any opportunity you can
[00:46:30.240]Allan Vyhnalek: The second question now, Jim. Jim, and before we go. It says, Does the first part of that question center those property tax credits.
[00:46:37.050]Allan Vyhnalek: usable for foreign property. I assume the answer that is yes.
[00:46:41.400]Jim Jansen: Right, yes yes farmland, as well as residential, I believe, and on the residency deal if someone owns those properties but doesn't live in the state. I think the key aspect there is is that she'd have to be filing a state of Nebraska income tax return to get the credit
[00:47:00.960]Jim Jansen: So,
[00:47:03.060]Jim Jansen: Okay, I'll read the second question for question and can cue it up pretty well here. Is there an example of where we should consider or what we should can speak considering for provisions and Elise related to storms are flooding.
[00:47:18.870]Jim Jansen: Is there anywhere we could get an example wording or example provisions on that topic.
[00:47:25.350]Allan Vyhnalek: So,
[00:47:28.560]Allan Vyhnalek: So the bottom line is on that depends on what kind of leash, you have, if you have a crop Shirley's then both parties are are probably participating in their share of the crop insurance and and the other risk insurance.
[00:47:45.540]Allan Vyhnalek: When the insurance anything else like that which you'd be another part of the storm thing and
[00:47:51.840]Allan Vyhnalek: Therefore, the if you, if I'm participating as a landlord it Lord in my crop insurance and which includes great damage, then I will be covered by that insurance. I wouldn't have to necessarily have anything to lease. Now I'm just collecting cash payment.
[00:48:05.820]Allan Vyhnalek: Then
[00:48:07.560]Allan Vyhnalek: I think that the most important thing here is to have the conversation before the year starts. What happens if I have flooding or storm damage that sort of thing.
[00:48:15.870]Allan Vyhnalek: Let's get that covered before the year starts, am I expecting my tenants to still go ahead and pay for cash rent or am I willing going to be willing to give him a discount
[00:48:24.030]Allan Vyhnalek: It shouldn't be subject to our feeling when it after the catastrophic event occurs, it should be a discussion we have prior to. Now, I don't know, Jim. Do you have any specific recommendations. I can't say that I have any specific recommendations. So once you
[00:48:39.930]Allan Vyhnalek: Accept to always consider that there will be some kind of agenda the payment made back to that.
[00:48:45.510]Allan Vyhnalek: Tenant, especially if there is a catastrophic event, do you usually do the crop insurance and so they can make some kind of cash payment. I mean, yeah, they may not be a full payment, because you can do something you have any other comments, Jim.
[00:49:00.510]Jim Jansen: Yeah, if you're receiving prevent plant crop insurance and devotees there. I've seen in an article, not too long ago there was a lawsuit that occurred. I only know what state. It was in
[00:49:12.990]Jim Jansen: It was along the lines. If you are signed an operator science at least to rent a parcel ground is unable to farm the ground.
[00:49:22.320]Jim Jansen: Receives prevent plant crop insurance proceeds from their crop insurance policy, they still have to pay rent on the property. Now, the question here is kind of asking, Should there be some kind of a provision made in there. And I would argue, even if you're getting
[00:49:41.520]Jim Jansen: Prevent plant money that may not necessarily cover you know there's certain expenses that you still may have to pay, regardless of the situation, but
[00:49:51.600]Jim Jansen: Should there be a reduced cash rent show the tenant be maybe get some credit for time spent on remediating issues on the property Allen voter wrote a couple articles on this last year, the difference between heavy and hard work.
[00:50:06.510]Jim Jansen: You know, hard work is getting out there and having to pick up rocks and throw them in a loader bucket heavy work is heavy dirt moving equipment some farmers have some of that type of stuff, some don't. Some I have, you know, some of that kind of stuff.
[00:50:20.580]Jim Jansen: The other thing at talking about risk, just the topic of risk and leasing I moved us back to egg least 101 dot org here.
[00:50:29.100]Jim Jansen: On the left hand side of the screen. They have educational publications. If you're new to this topic or you just want to have a refresher, whatever.
[00:50:38.400]Jim Jansen: They got some really good in addition to lease forms. You can look even if he decided to do your own least you can always take a look at what's out there for least for us because that's
[00:50:49.590]Jim Jansen: Their free there might be some provisions that you pick up and want to employ in years. So the anything else to add on there. Oh.
[00:50:58.050]Allan Vyhnalek: Yeah, so we didn't talk about pastor
[00:51:01.620]Allan Vyhnalek: Pastor passionate least, for instance, I think that you have to consider talking about the big three or the big four dipping, I look at this
[00:51:07.950]Allan Vyhnalek: And you have that discussion before the passionate, he starts to big three for passionately says our drought, we kind of talked about that. Hey, well, what if it fails, your grass flat and fire. What if you have a fire event have gone through, like we had no
[00:51:22.440]Jim Jansen: Interest here for five years ago, I mean it.
[00:51:24.540]Allan Vyhnalek: Takes out your passion, what are we going to do to amend, at least if we have one of those catastrophic things happen.
[00:51:31.560]Jim Jansen: And probably the fourth one, then would be
[00:51:33.360]Allan Vyhnalek: Grasshoppers or some other insect or disease issue that would take out a whole pasture and cattle can no longer be
[00:51:39.300]Allan Vyhnalek: grazed so
[00:51:40.530]Allan Vyhnalek: I think that just I haven't those discussions.
[00:51:42.480]Allan Vyhnalek: Because these begins and knowing what you're going to
[00:51:45.120]Allan Vyhnalek: Are you going to handle it within Elise
[00:51:47.190]Allan Vyhnalek: Is an important thing to
[00:51:50.580]Allan Vyhnalek: Take care of that. That'd be all I have to say about that.
[00:51:55.650]Jim Jansen: Now that's that's a good point. All right. We're down to our last question here now.
[00:52:01.110]Jim Jansen: It kind of relates a little bit of on the topic that was discussion in one of our documented questions, but the basic idea here, and I won't read it word for word, but we'll try to break it down a little bit.
[00:52:12.570]Jim Jansen: The USDA has a program. It's called the Conservation Reserve Program. I believe that's the correct way to refer to it.
[00:52:21.930]Jim Jansen: The Conservation Reserve Program or Corp is when someone signs a long term contract. There's been some changes made to it, but typically the contracts around about 10 to 15 years
[00:52:34.860]Jim Jansen: There's some short and contracts with the new farm bill but the point is you're taking a parcel of ground.
[00:52:41.070]Jim Jansen: Typically dry land cropland that might be highly irritable little sandy are not always but you're taking cropland in moving it
[00:52:49.800]Jim Jansen: Into a native grass state pour a vegetative state for wildlife and when you sign that lease whoever owns the land they signed that lease those provisions go with that ground even
[00:53:03.360]Jim Jansen: You know, there's a lot of older landowners that puts their ground and says CRP, they know they're going to get the rent profit for sure.
[00:53:10.200]Jim Jansen: And they know what they're getting. You know what they have for social security and they know how to make ends meet that way.
[00:53:15.900]Jim Jansen: But if for properties being sold that has let's say three more years left on the contract.
[00:53:22.980]Jim Jansen: If the contract still goes for three more years. You have to adhere to whatever is in that lease. Just like if you sign a lease. If I rented Allen's ground for five years and he passes away.
[00:53:37.830]Jim Jansen: I still have to adhere to those terms of that leads. So whatever terms are in that Corp contract. Some of the newer contracts require the planting of things like wild flowers, maybe certain times of brush.
[00:53:52.680]Jim Jansen: Different types of vegetation, be aware of that. If you're considering buying Corp. Make sure you're aware of what they're requiring in that
[00:54:00.960]Jim Jansen: So you can try to adhere to that, to the best of your ability, with respects to big string, you're in compliance. But that's my comment. I know you got a little CRP, do you want to make any comments sell on that.
[00:54:13.710]Allan Vyhnalek: I do, I do. I see it on my
[00:54:15.360]Allan Vyhnalek: Farm and the
[00:54:16.470]Allan Vyhnalek: Bottom line is Conservation Reserve Program means that you're going to put in some kind of grass or flower. Flower mix or something like that, it stays in that for the entire 10 years so
[00:54:25.170]Allan Vyhnalek: They did you do nothing and let the weeds grow know you already have 42 so kind of crop there. You shouldn't have weeds growing. Do you have to plan specific type of clients know this already be taken care of and you you will you will let the tenant.
[00:54:40.590]Allan Vyhnalek: Put that plan on and do the planting at the beginning they get paid for it to you. They're part of the deal. And then it's set is set for the 10 years. They just set set like that for 10 years so you don't worry about it and you leave the CRP end because in many cases that was done.
[00:54:56.640]Allan Vyhnalek: Most people
[00:54:57.780]Allan Vyhnalek: Put in a higher rental rate.
[00:54:59.910]Allan Vyhnalek: Than what you're going to get right.
[00:55:00.960]Jim Jansen: Now, at least.
[00:55:01.680]Allan Vyhnalek: That would be true on my car.
[00:55:04.170]Allan Vyhnalek: rental rate I get off that CRP is is very good and really pays the bill terms of taxes and habits, some leftover versus
[00:55:12.840]Jim Jansen: Drop that ground because it wasn't good.
[00:55:14.250]Allan Vyhnalek: Ground I slow now much
[00:55:16.380]Jim Jansen: topsoil. A lot of yellow Play.
[00:55:18.870]Allan Vyhnalek: Not very productive grounds. So I'm happy to answer.
[00:55:25.410]Jim Jansen: All right, very good. I don't see any other questions, it looks like we're getting towards the end of our hour here. So those of you that are joining us over your own Charter.
[00:55:33.540]Jim Jansen: Few more things that we wanted to highlight here. I'll take this one and then you can kind of talk about what we're going to be doing on our next week.
[00:55:42.270]Jim Jansen: We have traditionally and when in years when we can deliver in person programming a little bit better than we can now we always try to do a new
[00:55:51.480]Jim Jansen: New workshop and our new upcoming workshop that we have is the new landlord tenant Kashrut workshop. It's going to be set for September 10 which is, I believe, the second Thursday, if I'm not mistaken.
[00:56:04.410]Jim Jansen: In September, it's going to be hosted at 12 o'clock. The program will be about an hour and a half long. We're going to have three presenters.
[00:56:13.020]Jim Jansen: Allen myself and Austin Duracell, who also as an economist here at UL we're gonna be talking on a variety of topics. So the first part, we're going to go a little bit more into cash rents.
[00:56:25.650]Jim Jansen: And beyond the cash rental rates at the district level, we're actually going to be talking about county level cash rents USDA
[00:56:32.940]Jim Jansen: puts out some information on that topic. And we're going to be sure to highlight that and also dig into flex Lisa's a little bit more
[00:56:40.260]Jim Jansen: Alan has some additional landlord tenant. If you talk about, and also the topic of succession given Kobe 19 right now is something a lot of us, regardless of our age need to think about
[00:56:52.950]Jim Jansen: And then the final piece Austin's going to be visiting with everyone on is utilizing USDA programs.
[00:56:58.980]Jim Jansen: We mentioned CRP is this one of them were Austin is going to try to give a little bit of an overview on what are the major programs that are out there right now that are eligible that everyone can be eligible to participate in
[00:57:11.970]Jim Jansen: And our in person program that we have funding to do subject coven 19 which at this point. It's kind of a tough deal. Try to figure this out.
[00:57:21.510]Jim Jansen: But we're going to be in the process of setting ACTUAL LOCATIONS AND DRY doing additional information.
[00:57:27.840]Jim Jansen: You know, stay tuned to your local extension office good McCall whatever they usually try to pass that information on if they got email us or check out farmed at UCLA edu they Ryan Evans, or
[00:57:40.920]Jim Jansen: A webpage. Host He does a really good job of trying to keep this stuff up to date. So either one. Take advantage if you like our presentation today. We just kind of keep rotating through different topics that are emerging. And be sure to reach out to us so
[00:57:56.580]Jim Jansen: I'll let you take care of this one out. So
[00:58:00.540]Allan Vyhnalek: We have done is
[00:58:01.830]Allan Vyhnalek: ag land management quarterly webinar every three months for all of last year. And then this will be number eight for this year, there's the one for the two year period.
[00:58:12.600]Allan Vyhnalek: On Monday, March, excuse me, November 16 at noon or 12pm noon, and it'll be, you know, you do the same thing you did this time, just get to the website, click and you're in
[00:58:23.430]Allan Vyhnalek: And GL will be talking about some USDA information you'll go back over the 2020 cash level rental rate is estimates older going to release those assurance. A Yeah, this would not be the are typically but they're releasing those estimates, probably in September, sometime
[00:58:38.400]Allan Vyhnalek: Next month. And so if you're covering them at that time, I'll talk about how we
[00:58:43.350]Allan Vyhnalek: Look at the end of the Lisa see out Sumo. Sumo Elise's look like and talk about some considerations from square one. If you don't have your lease provision set up yet.
[00:58:51.450]Allan Vyhnalek: What do we consider for next year. How do we make that work out what do we do differently.
[00:58:55.260]Allan Vyhnalek: And then we'll also be answering questions, just like we did today. So you have your questions ready you can actually go to that.
[00:59:01.110]Allan Vyhnalek: Land Management page and it says submit your questions ahead of time that we can have, we can have the best answer kind of scoped out before the program starts. So those are things going to be doing in three months.
[00:59:12.390]Allan Vyhnalek: On Monday, the 16th November at noon.
[00:59:14.460]Allan Vyhnalek: Or switching it to noon, and that's done be our next webinar on demand. Besides, especially when the gym, just talk to you about
[00:59:23.280]Jim Jansen: It. Yeah. We, the first year we did this program. We did it at 630 at night and we've had a lot of people express they really plus we recorded two so you can
[00:59:31.980]Jim Jansen: Watch it anytime and he always more than welcome to visit with us. The other thing on my the first part of our presentation we're going to be taking a look at that.
[00:59:41.850]Jim Jansen: Commodity revenue safety net available to operators. So if you're on a crop share, you'd be able to participate in either arc egg risk coverage or PLC priceless coverage and we'll have a little bit better indication on where those payments might be headed. So with that,
[00:59:59.580]Jim Jansen: I think we're basically spot on. We did really good time time in the South. This time, Alice, you usually we're a little longer, a little short but came right out.
[01:00:08.730]Jim Jansen: So if you'd like to visit without or if we have our phone numbers there. We don't answer for not in their office just leave us a message. We have the ability to check those from wherever we're at
[01:00:18.060]Jim Jansen: So email, phone, whatever the number I have appears by mobile. And I think we got Alan's office phone right there. So more than welcome to contact and visit with either of us.
[01:00:29.520]Allan Vyhnalek: Thanks.
[01:00:31.020]Allan Vyhnalek: Very much and look forward to hear from you. If you have questions.
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