Agricultural Land Management Quarterly - Feb. 15, 2021

Department of Agricultural Economics Author

02/16/2021 Added

36 Plays

Description

Recent Trends in Nebraska Cash Rental Rates, calculating cash rental rates to reflect market prices or farm yields, updating agricultural leases for the 2021 production season. With Nebraska Extension Educsators Allan Vyhnalek and Jim Jansen.

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[00:04:18.180]Jim Jansen: All right, well welcome everyone I have 12 o'clock on my time for on my computer right now welcome to our first land management quarterly for.
[00:04:30.990]Jim Jansen: My name is Jim jansen and we also have Alan banality joining us today as well, and we also have Brian Evans helping us on the technology side get everything going Alan did you want to say anything quick.
[00:04:46.500]Allan Vyhnalek: No i'm good good afternoon everyone glad we have such a nice crowd on and i'll speak in a few minutes, let him go first.
[00:04:53.160]Jim Jansen: All right.
[00:04:53.880]Jim Jansen: Very good, so the way we do these presentations a lot of people are you know they work or whatever, and we try to keep this over the noon hour.
[00:05:02.310]Jim Jansen: If you'd like to find any of our slides after this presentation is over, they will be posted along with the recording at the website ag con that ul.edu.
[00:05:13.560]Jim Jansen: backslash land management if everybody sees that there today's presentation will be kind of a three part deal, the first part will be on current cash rental rates.
[00:05:25.890]Jim Jansen: will also talk about how to figure out cash rent and a new property tax credit that's available to you if you're a real estate owner in the state of nebraska.
[00:05:36.960]Jim Jansen: on agricultural land or residential homes, a very briefly talking about that alan's been Alec section will be talking about lease considerations.
[00:05:47.640]Jim Jansen: Our phone Alan and I take a large amount of land management questions that come into the here to our offices everyday.
[00:05:54.960]Jim Jansen: Alan section tries to kind of put together what he's been seen and also what we consider to be critical considerations releases.
[00:06:03.480]Jim Jansen: And then, finally, we had a we've had actually a Russia questions here in the last one or two business days.
[00:06:10.680]Jim Jansen: That will try to highlight as we're going through the material, but we also had a couple questions from a prior talk that we've, given that we feel are very pertinent to what we've been getting for coming in throughout.
[00:06:23.130]Jim Jansen: Throughout.
[00:06:24.870]Jim Jansen: Our sessions that we've done with our different land management programs.
[00:06:31.590]Jim Jansen: So, to begin with my name is Jim jansen my phone number and email address or on this slide in addition to alan's contact information.
[00:06:40.470]Jim Jansen: If you'd like to visit with either one of us leave us a message or send us a message and we'll be more than happy to get back to you.
[00:06:48.090]Jim Jansen: alan's work is mainly on succession and transition planning the notes his website on that slide and I also know where the real estate information on land values and cash rents are located in nebraska these links will be reappearing as we're going along today.
[00:07:08.760]Jim Jansen: So brief outline that I hinted as we're trying to kind of wait for people to get on our meeting today, first part, will be covering current cash rental rates trends in cash rents and the farm real estate markets here in.
[00:07:24.630]Jim Jansen: How do we calculate cash rental rates and that will be a question that we're going to be taking a look at.
[00:07:31.410]Jim Jansen: and
[00:07:33.810]Jim Jansen: As we're going along here, if you have questions, be sure to type them and either Alan Ryan or myself will be answering these questions as we get started.
[00:07:43.440]Jim Jansen: and
[00:07:44.970]Jim Jansen: When it comes to the lease arrangements Alan section will be handling that and then we also have any upcoming workshops we're getting towards the end of our meeting series, but we do have one here at the end of February, if anyway would be interested in attending in the online format.
[00:08:08.160]Jim Jansen: Okay alright, so the meeting has started and we'll get going, here it looks like we have a great crowd joining us again.
[00:08:14.040]Jim Jansen: Alright trends in cash rental rates for 2020 leading into 2021 i'll talk about what information we currently know and what we can be thinking about when it comes to calculating cash rents.
[00:08:28.260]Jim Jansen: First part many folks joining us have seen this slide before.
[00:08:32.910]Jim Jansen: The brass farm real estate survey and the report market report are have been conducted annually, since 1978 we have a lot of historical information on regional averages.
[00:08:45.210]Jim Jansen: The purpose of today's talk is to not be getting into deep detail on it just know that if you want to find information.
[00:08:53.130]Jim Jansen: The second week in march towards either the Wednesday, Thursday or Friday of that week is kind of our projection on cash rents being published and the information that we have will be published on the farm real estate website and we'll be more than happy.
[00:09:11.490]Jim Jansen: To provide you with any additional insight for through that publication and the final report comes out in June has a lot more detail than the basic preliminary estimates things like what percent land in nebraska is being financed with a cash purchase, for example.
[00:09:31.710]Jim Jansen: These rates that we have up here for 2020 and everybody wants to know what the.
[00:09:36.390]Jim Jansen: rate is and that's something that we do with our firm real estate report we're trying to actively monitor that we happen for collecting surveys right now.
[00:09:44.460]Jim Jansen: The thing i'll point out is, if you look at cash rent regardless for cattle corn whatever you're raising think of it as kind of a trajectory and depending upon where you were out last year might be influencing where cash rents could be headed this upcoming year.
[00:09:59.730]Jim Jansen: I know prices are much higher than they were last year on the crop side on the livestock side prices aren't terrible but they clearly have not risen to the degree that corn and soybeans wheat have for our majors grow crops or small grains.
[00:10:15.390]Jim Jansen: As part of our information, we will kind of start big today we'll start the regional level and we're going to strip down to the county and then down to the farm.
[00:10:22.890]Jim Jansen: So here's a couple examples from our firm real estate survey conducted here at the University of nebraska we divide the state and to eight different regions.
[00:10:31.440]Jim Jansen: These regions share similar production attributes when it comes to these cash rents, we have a breakdown here of where the cash rents are at with respect to the regional average.
[00:10:42.090]Jim Jansen: and also what we refer to as the average of the high third, which is the bottom left hand corner here an average of the lower third or low third average.
[00:10:51.510]Jim Jansen: This gives a breakdown here and we kind of see that cash rents and the Eastern third to meet tend to be higher than they are in the western two thirds.
[00:10:58.500]Jim Jansen: Especially on dry land cropland which probably relates to expectations for rainfall and also the different types of soil and productivity, that we see across the state.
[00:11:13.380]Jim Jansen: With respect to the irrigated cash rents I just kind of want to give us an overview of what we've seen.
[00:11:18.540]Jim Jansen: And then I want to get into the heart of this a little bit more when we talked about decision making, if you're going to make an offer, or if you have an offer that's in front of you, how do we accept that.
[00:11:28.470]Jim Jansen: When with respect to the Center pivot irrigated cash rents, that we have up here for 2020 these rates assume that the landlord owns the entire irrigation system.
[00:11:40.470]Jim Jansen: That includes the pivot the pump the power unit if you'd have someone renting a property that does not provide one of those things.
[00:11:49.590]Jim Jansen: That would be a case where you would discount the cash rent because the rates that are reported by you and L as well as the usda once again assume that the landlord owns the entire system.
[00:12:00.780]Jim Jansen: And the cash rental rates are just that a return on the land, but they're also return on maintaining he keeping up the irrigation equipment so that's how we figure out the cash rent when it comes to what we have in front of us here.
[00:12:18.030]Jim Jansen: cow calf or grazing land rental rates, the rate that we tend to get in my opinion, a little bit more questions on tends to be on the issue of cow calf, so this is for one cow one calf during the summer grazing season, the rates, we had recorded here in.
[00:12:35.760]Jim Jansen: reflect that so say, for example, if you're here in the east district, the average rent is about $50 a pair.
[00:12:42.990]Jim Jansen: If you're renting for the five month grazing season that's 5130 times five which would figure out to approximately 200 and little over $250 a pair cash rental rates that we broke down here reflect the differences and productivity quality, the land variety of different forces.
[00:13:01.830]Jim Jansen: And if you're an individual that's paying down the higher cash rent and something else is going to be talking about today is on the topic of.
[00:13:11.730]Jim Jansen: Who pays for what, when it comes to grazing land leases and that question and i'll let him cover that but, depending on how you answer that question that's probably going to relate to the cash revelry.
[00:13:22.680]Jim Jansen: Some folks also ask the question to us, should we be on a multi year weeks or you haven't adjusted the rent and several years.
[00:13:30.360]Jim Jansen: Well, you know this year, which stands out more than other years is that the value of what we're raising is higher.
[00:13:36.660]Jim Jansen: But on the same side of the deal if you're a Dryland cropland producer drought is clearly a concern here So how do we figure out an equitable cash rent and we'll give an example, towards the end of our slide set during Q amp a when we talked about a FLEX lease.
[00:13:55.590]Jim Jansen: Another set of information on cash rental rates come from the usda they have a division, called the national agricultural statistics service.
[00:14:03.900]Jim Jansen: they're based out of the Lincoln nebraska they have a big building on oak street big concrete building takes up almost entire city block.
[00:14:11.550]Jim Jansen: And in that building they have statisticians that new work on different things related to agriculture across North central plain states, so this would include the dakotas raskin Kansas.
[00:14:24.480]Jim Jansen: And from their survey they do it typically an odd numbered years, but they did do a survey last year and their information can be found at this link below.
[00:14:35.340]Jim Jansen: or after our presentation is over we'll be sending out the remainder of recording that when it's posted and we'll have a breakdown on the slides in the upcoming slides and where you can find this my other suggestion is to do a Google search for something on the words of.
[00:14:51.990]Jim Jansen: university or excuse me usda cash rents nebraska might be able to find it that way, as well.
[00:14:59.100]Jim Jansen: tentatively, we believe that they're going to be published again here in 2021 and their information is usually published around the second week in september's when i've seen it published.
[00:15:12.480]Jim Jansen: If you look at the University of nebraska information we give you a regional cash rental rate.
[00:15:17.940]Jim Jansen: The information, the usda provides is more of a county based now the usda is information will not be updated for roughly another six months here but.
[00:15:27.600]Jim Jansen: Think of their information as a way to kind of gain insight on how cash rental rate varies around the University of nebraska will release estimates here in about a month on where the regional cash rental rates are at.
[00:15:39.780]Jim Jansen: But you can gain some insight on how cash rain or it's very rounded region typically speaking cash rental rates in a region when they're on the eastern part tend to be for a little bit higher than what they might be in the western part.
[00:15:53.820]Jim Jansen: And if you see a county and white here, that means that there wasn't enough responses and an example there's not a lot of dry land cropland on the sand hills so either there's not a lot of that particular cropping practice or the other, or is that.
[00:16:14.280]Jim Jansen: There wasn't enough responses that they could produce an average with competence example there's probably dry land cropland up in polk county but they couldn't get enough responses with confidence to provide an average.
[00:16:33.090]Jim Jansen: Okay.
[00:16:35.340]Jim Jansen: Next slide here on the top give irrigated cash rental rates.
[00:16:40.950]Jim Jansen: We have a breakdown here and the thing i'm going to know there's two types of irrigated cropland I highlighted the Center pivot.
[00:16:47.190]Jim Jansen: there's also flutter gravity irrigation there's a fair amount of that here in the panhandle as well as the southern part little bit scattered in the eastern part of the state.
[00:16:57.000]Jim Jansen: The usda rates, especially along the interstate it here, where we see a fair amount of this still they are a weighted average that accounts for the two types of practices once again the usda provides an estimate for Center pivot irrigated cropland that.
[00:17:14.790]Jim Jansen: assumes that the landlord owns the entire system, and we had a question pop up here i'm kind of trying to keep an eye on.
[00:17:21.630]Jim Jansen: How much would you describe cash discount the cash friend, if you know what the irrigated cash rent should be, but if a tenant owns a component.
[00:17:29.340]Jim Jansen: We did an article on this back in 2018 so you can email me and i'll send you the link to it, but from my recollection and Alan can correct me when he gets to his section.
[00:17:39.840]Jim Jansen: We see somewhere and kind of based off my call volume the tenant provides the power unit, we tend to see a discount of somewhere around about 10 to $15 an acre when the tenant provides the power unit, so the electrical motor or the diesel natural gas or propane engine.
[00:17:56.130]Jim Jansen: On the pivot side i've seen anything from say low of about $25 an acre up to the high you know mid 40s maker, you know 3035 and acre if the tenant provides the pivot.
[00:18:09.780]Jim Jansen: Remember it's just not providing the pivot but the tenant if they're providing the pivot they probably are carrying insurance on that structure as well and that's another expense that the landlord would not have to bear.
[00:18:19.860]Jim Jansen: And all these numbers can be higher diesel engines if they have any kind of the mission control on them the discount is higher.
[00:18:27.120]Jim Jansen: And the other thing on the Center pivot you have any kind of precision application or newer technology like an n gun swimming out and gun the discount can be quite higher much higher because of the swing out and gun system can cost a lot more maintain and up.
[00:18:50.400]Jim Jansen: Okay, so we got that question answered a little bit here on the grazing land rental rate, we have a breakout here once again on what the average grazing land rental rate is per acre.
[00:19:01.620]Jim Jansen: I wouldn't believe this rate is for the summer grazing season, so if you're doing something different than the summer grazing season you'd probably have to adjust that.
[00:19:09.150]Jim Jansen: Well, we tend to see rates, you know the Northeast nebraska area tends to be the highest Eastern nebraska is on average is quite high and we tend to see a lower rate.
[00:19:19.020]Jim Jansen: These lower rates would be affected by the type of vegetation your grazing the stocking rate, how many acres does it take for one cow calf per unit.
[00:19:28.020]Jim Jansen: As well as a type of you know, the land formations, there can be pretty rough ground and some of these areas that makes good grazing land, but it may not be quite as.
[00:19:37.410]Jim Jansen: desirable is something that's maybe a little bit flat or something like that, and you know hard pan versus soft and grass there's a lot of different things and i'll direct the questions on who pays for what with lisa's will make sure that Alan the highlights that his slides up.
[00:19:58.140]Jim Jansen: Okay, this is something that came under my radar here in the last few days.
[00:20:04.860]Jim Jansen: Last year, at the end of last summer if everybody recalls the state of nebraska had a legislative session that was suspended last late winter early spring because of covidien and they reconvene in the summertime.
[00:20:19.890]Jim Jansen: One of the things that they passed was lb 1107 and they had a news release that came out last Friday and that's the wording on here, I did not write any of this this is directly from that news released or I paraphrase down one section.
[00:20:33.870]Jim Jansen: On the state of nebraska if you paid tax.
[00:20:38.940]Jim Jansen: On your property.
[00:20:42.090]Jim Jansen: you're eligible to get a refundable income tax credit for your state of nebraska return the third bullet point on here really defines what you're getting.
[00:20:52.020]Jim Jansen: The credit is a portion of your property tax on residential agricultural that help paid or help support the local public school district.
[00:21:04.500]Jim Jansen: Any portion of that excluding if the local school district did any kind of override lovey vote or that some kind of like a bond, for example.
[00:21:15.600]Jim Jansen: You would get back 6% so Okay, if you look at your property tax bill roughly I would say in the mid to high 50s is going towards helping support the local public school.
[00:21:27.420]Jim Jansen: Of that mid 50s of your tax bill you get 6% of it back as a credit, so if you start doing the math you can do some numbers there but be sure if you are doing your own taxes, take a look at their website revenue that brassica cuff.
[00:21:42.900]Jim Jansen: And if you don't do your taxes just make sure you visit with your tax professional will figure out what you need to take a look at.
[00:21:51.300]Jim Jansen: All right, and this is my give me three minutes here and i'm going to get wrapped up and then we're going to get down and started.
[00:21:57.600]Jim Jansen: Talking about estimating cash rents cash grants are always a very you know, one of our top demand areas when it comes to this type of topic.
[00:22:06.510]Jim Jansen: If you know from some of the regional information on what a cash flow rate should be nine, this is just a made up example.
[00:22:14.220]Jim Jansen: See here in the central nebraska area you're paying about 135 and acre and the county county averages about 135 acre.
[00:22:21.900]Jim Jansen: You also know the county yield is typically about 120 bushel you take the county rental rate divided by the county yield you get what it's called the average county.
[00:22:31.740]Jim Jansen: rent per bushel what this says is in this county $1 13 of sales price is going towards what $1 13 sales price on rented ground is going towards helping support pay the cash rent.
[00:22:47.790]Jim Jansen: Take that dollar 13 per bushel and slide it to the upper right hand corner here.
[00:22:53.220]Jim Jansen: You take thing the county rent per bushel and under this example on a property that i'm renting This is just made up fictitious example.
[00:23:01.380]Jim Jansen: Say i'm renting a property that doesn't eat on average field 120 bushel that's a little bit better ground you take the average county rent per bushel ties the anticipated yield on the spark.
[00:23:12.360]Jim Jansen: Maybe you look at like the last five years of yields and drop the high drop the low and average what's left or maybe this average the last three.
[00:23:20.490]Jim Jansen: You take the county rent per bushel times anticipated yield on a farm you get what is referred to as a farm level we adjust what we know and we take it to something that we're trying to adjust our our particular.
[00:23:35.820]Jim Jansen: situation.
[00:23:39.570]Jim Jansen: Another example we have here.
[00:23:42.330]Jim Jansen: it's called cash equivalent from crop share what I like about cash equivalent from crop share is the idea that.
[00:23:51.600]Jim Jansen: A lot of older land owners, like the idea of a crap share they feel it's equitable and it's might agree with that.
[00:23:57.660]Jim Jansen: And a good year the landlord gets warcraft and a four year they don't get as much, and it gets a little bit of a break well under this example let's say we got to feel the corn that raises hundred and 60 bushel corn.
[00:24:10.200]Jim Jansen: And landlord gets half the tenant gets half now, this is a drought year you're going to have some problems because you're bragging raises much.
[00:24:18.870]Jim Jansen: But right now, a lot of landlords are set thinking they might be thinking that corns worth $5 a bushel and it probably is worth around $5 or a little more than that, if you have the corn right now.
[00:24:32.610]Jim Jansen: And the purpose of this example, what i'm trying to get across is what you might think the cash rent should be where the landlord gets half the crop times anticipated price.
[00:24:45.030]Jim Jansen: You take the 50% of let's say the seed fertilizer and chemical expenses off your arrive at a cash rental rate of 262 61 and got it Yes, they should I put another zero on there, but the cash rental rate is much higher than what you anticipated.
[00:25:03.300]Jim Jansen: Under this case, the problem that we're having here is we haven't raised the crop yet using can price, and I think I pulled this off of not mistaken, this might have been the prices for corn at the Columbus ethanol plant.
[00:25:21.960]Jim Jansen: The price for corn right now is not 521 a bushel for this fall it's more closer to about 430 a bushel and it might be lower than that, I mean how your basis is.
[00:25:32.490]Jim Jansen: The point is, we need to be working with prices under this example, there are relevant to where a reasonable price may be.
[00:25:42.180]Jim Jansen: And, once again, maybe we will have $5 corn, but right now, if I would sign a contract do like forward contractor place a hedge.
[00:25:49.890]Jim Jansen: I don't think you can get much over 430 I mean for 30 is a pretty attractive price, because the Columbus corn ethanol plant usually has pretty strong basis they're.
[00:25:59.460]Jim Jansen: Similar deal now and we'll talk about this a little bit, so I beans, you know prices where's your current cash price of soybeans is about $2 bushel less than what they're worth this fall.
[00:26:09.840]Jim Jansen: So there's definitely a spread between what we refer to as the old prop and the new crop prices, we need the crop right now, but obviously you can't plant and harvest that crowd.
[00:26:19.710]Jim Jansen: Well, you know wearing a data better the winter, right now, so these prices you gotta be careful when you're working with them so under this example I would probably not be looking at $5 and 21 cents a bushel i'd be using something that's a little bit more conservative.
[00:26:39.450]Jim Jansen: And the third idea from cash cash equivalent from crop share, and this is my final slide here for the section, a lot of folks like the idea of a share and say you have a parcel of ground, maybe some native ground things of that nature.
[00:26:57.870]Jim Jansen: When it comes to cash equivalent for pay share.
[00:27:03.090]Jim Jansen: What is meant by that is under a case here let's say you have a property that yields about two and a half tons an acre under one third two third split the landlord gets a third of the hey.
[00:27:16.500]Jim Jansen: This guy third of the hay and they're not paying into the expenses if the landlord or if the land 10 it would be willing to say hey.
[00:27:23.700]Jim Jansen: i'm just going to buy out your share of the hay and i'll write you a check for that.
[00:27:27.540]Jim Jansen: Well, under this example the landlord would be willing to accept about $66 an acre same idea with the crop share.
[00:27:34.710]Jim Jansen: What would the tenant be willing to pay well and traditionally they probably willing to pay what the landlord would be projected are looking to be making off of the lease arrange.
[00:27:44.940]Jim Jansen: Under this case for cash equivalent from a shared $66 an acre, and this is what I like about this example is if it's dry and Cat and then hey prices are actually 120 a ton.
[00:27:57.210]Jim Jansen: You can start changing these things around same deal over here on a 5050 split let's say you throughout $20 an acre of nitrogen.
[00:28:06.120]Jim Jansen: Under 5050 split the landlord probably pays half of the seed fertilizer chemical expenses which under native hey grass, if you have small parcel ground to add throw some grass out there.
[00:28:16.920]Jim Jansen: You would probably get you know $20 an acre throw on nitrogen author under this case, the landlord gets more of the crop or remember as you take on a greater share of what's being raised you take on more risk.
[00:28:30.540]Jim Jansen: So with that I had one question I want to get to hear.
[00:28:34.650]Jim Jansen: The question that came in as a landowner who leases out the land and who the ducks the land taxes on schedule still qualify for the property tax credit, we had here on the prior slide two slides.
[00:28:49.620]Jim Jansen: So the question is basically I let's say i'm an absentee landlord right right I own the land, but I rent it to someone and I.
[00:28:57.900]Jim Jansen: Can I do, I still qualify for this, the answer is yes, just be sure i'm not going to try to dig into it too much i'm just trying to work raise awareness on this topic.
[00:29:08.340]Jim Jansen: Ultimately, got a contact you know there's a website, you can check out on here, as well as your local tax professional.
[00:29:16.530]Jim Jansen: i'm going to leave it up to them, I just want to make sure people are aware of this, because this is an opportunity for you.
[00:29:22.530]Jim Jansen: Okay, with that i'm going to buzz over here to Alan slides and he'll just tell me when he wants to advance next, and with that i'm going to go ahead and mute myself so it's your show now go ahead.
[00:29:32.970]Allan Vyhnalek: I think you, you can hear me fine right everybody hear me okay Jim.
[00:29:37.200]Jim Jansen: Yes, you're just writing.
[00:29:38.760]Allan Vyhnalek: Right that's all you know all right so.
[00:29:42.090]Allan Vyhnalek: Some comments that I have about this to Jim says my my main jobs to talk about succession, but i've been working on this.
[00:29:48.060]Allan Vyhnalek: land management stuff for about 1518 years now, so I feel feel i'm kind of the original Member of the team that the field team that was out working on it, so I feel feel a strong allegiance to this and still want to talk about it okay Jim let's go on.
[00:30:02.130]Allan Vyhnalek: Next slide.
[00:30:04.080]Allan Vyhnalek: So the number one thing I want to remind everybody now right you're off the beginning is to please have written lease it's just imperative.
[00:30:12.810]Allan Vyhnalek: I know that my father's generation my grandpa's generation even most of my generation thinks it thanks to the handshake agreement is awesome and there are word is our bond.
[00:30:24.420]Allan Vyhnalek: And I understand that clearly I do but we're not going to be here forever, where some of us are going to move on, one way or another right.
[00:30:33.510]Allan Vyhnalek: So it's it's not your grandpa's farm, we have to do have releases written down, not for us, we know what's going on, but for the next generation in case something happens to us because we ever demise so.
[00:30:48.150]Allan Vyhnalek: Please have a written lease it on the right hand side the slide is is the written list and comes from at least one on one.org.
[00:30:54.510]Allan Vyhnalek: That website, and that is a fill in the blank least you don't even use all of it, you just use what you need.
[00:31:00.270]Allan Vyhnalek: I understand if you have a written like a have a handshake agreement or a verbal least please terminate those by September 1 to the previous year.
[00:31:08.430]Allan Vyhnalek: Because handshake agreements for farmland start on march 1 so what happens here in a couple weeks is that all handshake agreement started for 20 start for 2021.
[00:31:18.450]Allan Vyhnalek: to terminate those you had to give us notice by August 31 or by September 1 2026 months ago, so don't miss that chance for next year now let's say you're on a verbal lease.
[00:31:33.090]Allan Vyhnalek: And you want to get to a written lee's you can ask the other party you guys are asked attended arrest the landlord.
[00:31:38.100]Allan Vyhnalek: If we could start a verbal expedia or at least starting march 2021 we could you could do that if the other party agrees that you started release.
[00:31:46.470]Allan Vyhnalek: Now if they don't agree then you'd have to terminate it and.
[00:31:49.650]Allan Vyhnalek: That whole thing so watch upcoming land quarterly so i'll talk more about termination but that's all I want to say about it, right now, but you can still start at least for this year, if you want to assuming a march 1 start that's that's if both parties agree okay let's go on.
[00:32:06.030]Allan Vyhnalek: here's what that at least one on one.org website looks like make sure that when you get to that main page is click on the document libraries and Upper right hand corner, they redesigned the page a little bit so i'm going to show that, please go on.
[00:32:20.220]Allan Vyhnalek: and
[00:32:22.500]Allan Vyhnalek: Here you get your free fill in the blank portable document format leases PDF leases and they're on the right hand side.
[00:32:29.700]Allan Vyhnalek: And the information about those leases and how to fill them out and some other Informations on the left hand side.
[00:32:34.680]Allan Vyhnalek: note on the left hand side clear the bottom is the farm building rental rate survey it's, even though it was done a long time ago it's still the most accurate rental.
[00:32:44.820]Allan Vyhnalek: rental rate survey, we have for foreign buildings is the best thing we've got in terms of foreign building rental rates and so.
[00:32:51.240]Allan Vyhnalek: On i'm sorry we don't have something more accurate to now that i've actually sat in on a meeting of this group, the people to write this page and ask them to please update the farm building survey and so far has not happened so we'll see okay ready for the next slide.
[00:33:06.630]Allan Vyhnalek: So for 2021.
[00:33:09.690]Allan Vyhnalek: It may or may not be too late to change these provisions for 2021 is assuming a typical started data march 1, however, both parties agree.
[00:33:17.670]Allan Vyhnalek: That you can do to change any provision, you want to as long as it's written down, you have me make note of that.
[00:33:23.280]Allan Vyhnalek: At some point time in February, we have these major discussions about what rental rate should be and Jim talked about what the rental rates are and he's last survey work.
[00:33:32.820]Allan Vyhnalek: In nast last survey work, you know, based on last year's numbers 2020 numbers and so.
[00:33:39.180]Allan Vyhnalek: Jim and I are getting a fair number of questions right now about what should happen with the server with rental rates for this year.
[00:33:45.900]Allan Vyhnalek: And you know I wish I wish I could answer the crystal ball question what happens with crop prices but Jim made an important point.
[00:33:53.400]Allan Vyhnalek: We cannot look at the current commodity prices, a $13 beans inside our corn and say oh my gosh Look how high, that is, we have to have more rent.
[00:34:03.180]Allan Vyhnalek: You can't use that for 2021 rent That was a price for the 2020 crop we're looking at 2021 crop which is only.
[00:34:11.460]Allan Vyhnalek: Which is only $11 beans and $4 corn and that's that's still a nice number and i'm not discounting dad so good number but it's not 13 and five it's 11 and four so look at that very carefully, make sure you use the 21 2021 crop prices.
[00:34:28.020]Allan Vyhnalek: and doing the right thing for the properties more important to the cash rental rate.
[00:34:32.400]Allan Vyhnalek: i've always maintained that the first discussion to the landlord and tenant.
[00:34:35.850]Allan Vyhnalek: ought to be what's our vision for the property, what can we do for the property, in other words the landlord needs to say, this is what I want to have happen to my property.
[00:34:43.590]Allan Vyhnalek: And the tenant says, this is what I can do for your property and with the intent of not talking about the run rate with intent of talking about.
[00:34:51.150]Allan Vyhnalek: How we're going to make that land better for the future, because you know, at the end of the day, going to my succession stuff I don't get to take the land with me I don't i've gone to funerals and i've never seen soil in the casket.
[00:35:04.470]Allan Vyhnalek: So the soil stays right where it's at what are we going to do to make that better because we still have to use the soil to raise the crops for future generations and feature.
[00:35:13.560]Allan Vyhnalek: Higher populations on this world, and so we do to make that better I think that's an important thing to consider.
[00:35:19.350]Allan Vyhnalek: So conservation souls important how we're going to handle disease weed insect pressures and it even includes improving fertility.
[00:35:28.200]Allan Vyhnalek: And there's even his new discussion about soil health.
[00:35:31.200]Allan Vyhnalek: And what that looks like and and quite honestly there's a whole science said it's just being developed on soil health and it's something to pay attention to what can we do to make soil healthier is, I think, an important consideration okay we're ready to go on.
[00:35:46.800]Allan Vyhnalek: Other provisions for 2021 I think we better think about or have a quick discussion about kind of reminders, if you will, is a timing of lease lease payments when I grew up we had crop shares primarily and one third was paid.
[00:36:02.070]Allan Vyhnalek: Well, maybe, maybe, maybe 20% or 30% was paid march 1 another 30% was paid or third or so was paid when the wheat harvest was made so around August 1 when we came off.
[00:36:15.240]Allan Vyhnalek: And then the last payment was made in the fall if there was attachment.
[00:36:18.750]Allan Vyhnalek: If it was a crop share, then obviously you had your crop a wheat and he had to your fault crop in our case, it was grain sorghum Milo and then that's how the payments were made.
[00:36:29.370]Allan Vyhnalek: So, but nowadays with timing lease lease payments is kind of a done by neighborhood by neighborhood deal I lived in a neighborhood in iowa.
[00:36:37.920]Allan Vyhnalek: were all payments all the cash payments were made by March 1, in other words the pharmacy and get started we're almost every dollar been paid for that crump.
[00:36:45.750]Allan Vyhnalek: And for that for that ground for the for the rent and I don't know that I necessarily subscribe to that I think that's a little tough on farmers cash flow to make you have to pay up front.
[00:36:54.930]Allan Vyhnalek: But the typical thing in nebraska, which is what I want to highlight is that about half is made by March 1 the only half may sometime in the fall on Cashman so that would be typical.
[00:37:07.380]Allan Vyhnalek: But there's still some of these older older leases elder cash least where the the third made to fall during the summer and then third and exceed the third to spring third to summer and third in the fall that's fine to.
[00:37:18.330]Allan Vyhnalek: gym already touched about our chat touched on irrigation equipment, who who owns it what you know how it's maintained that's where thing.
[00:37:25.830]Allan Vyhnalek: The difficult thing I see on repairs, is that the first.
[00:37:30.120]Allan Vyhnalek: You know least they'll say something like the tenant tries to do all the repairs, he can, and he supplies the first X number of dollars of repair equipment like new nozzles that sort of thing.
[00:37:40.560]Allan Vyhnalek: Up to like $500 or up to $1,000 per year anything over that like when you go to place replace gearboxes you go to place for replace major things on a pivot then it's a landowner expense, including the Labor.
[00:37:54.180]Allan Vyhnalek: And I don't I don't have a textbook or a research, study you tell me how exactly that plays out i'm just telling you what I hear most often when I talk to people about their leases.
[00:38:03.420]Allan Vyhnalek: fertility and maneuver management.
[00:38:06.270]Allan Vyhnalek: Just make sure that you have a conversation about this i'm having again i'm having textbook or research to tell you exactly how to do this, all i'm saying is.
[00:38:13.560]Allan Vyhnalek: When I allow them in there on my farm yes it's it's a good thing we do I want money or put on my farm from a feedlot or or hot facility or poultry facility every year.
[00:38:24.420]Allan Vyhnalek: i'm probably not I don't want to see soil tests, every year, before I allow that to happen it's a matter of communication back and forth with the landlord and tenant you're supplying them in there and then.
[00:38:34.830]Allan Vyhnalek: And then, make sure that you have clauses in place to the minimum mature facilities is maintained.
[00:38:41.040]Allan Vyhnalek: and make sure you have clauses in place to make sure that everybody's just you know everybody's on the up and up about what what communication it's all function communication okay corn stocks, the question came in on the written questions so some of the point of saying I said.
[00:39:00.780]Allan Vyhnalek: shirt Okay, the tenant has.
[00:39:06.510]Allan Vyhnalek: This person who wrote this was the landlord he said the tenant has rented out the corn stocks to a guy that has cows.
[00:39:13.620]Allan Vyhnalek: And I think the tenant got paid for the corn stocks Should I be receiving a part of that payment or question what was happening there.
[00:39:20.040]Allan Vyhnalek: And so the answer, that is, it depends on your lease if your lease is a crop share.
[00:39:26.130]Allan Vyhnalek: The share the crop would also be a share the corn stocks so yeah I would think that would be appropriate, however, if the lease was a cash lease.
[00:39:33.870]Allan Vyhnalek: The cat unless it's specifically held either cash least the corn stocks go to the tenant into the tenant gets the income from the corn stocks at the rents them.
[00:39:43.650]Allan Vyhnalek: The landlord has nothing to do with that I think we're making to wait that sometimes we make too big a deal out of corn stock gracie and I think more appropriately.
[00:39:52.200]Allan Vyhnalek: Who does the fencing for corn stock grazing she should get the credit here because that's the word putting up the fence.
[00:39:59.100]Allan Vyhnalek: taking care of the water and especially if you have a holiday in and taking down the fence after the cows are out there that's that's the that's the real key.
[00:40:06.000]Allan Vyhnalek: As long as corn stalks of gray's appropriately not overgrazed I think it's a good thing to go in there and pick up that volunteer volunteer corps in those years of corn, and the ground that.
[00:40:15.060]Allan Vyhnalek: Did fall off at the at the ends of the fields and stuff like that to get to volunteer that volunteer corn up.
[00:40:20.400]Allan Vyhnalek: So that you don't have to worry about controlling pouring volunteer corps and it's now a weed and the subsequent soybean crop so.
[00:40:28.590]Allan Vyhnalek: i'm great with grazing stocks think it's good idea now stock removal in terms of rolling it up into stock corn stock bales course cocktails are tremendous bedding source for a lot of people, especially today when it's 10 below zero all day.
[00:40:41.910]Allan Vyhnalek: Of course stocks bedding is huge very helpful very needed very, very, very good product.
[00:40:48.600]Allan Vyhnalek: But I also don't want all of my corn stocks completely harvested off my farm every year because it's too hard on organic matter.
[00:40:58.200]Allan Vyhnalek: I think it's too hard on the phosphorus and so I would just do that once once every third or fifth year or something like that I wouldn't do it every year.
[00:41:05.160]Allan Vyhnalek: I wouldn't want corn production moved off my thing all the time off my field all time um what else we got here hunting rights.
[00:41:13.410]Allan Vyhnalek: On crop ground hunting rights go to the tenant if it's a cash rent it's a crop share, then they need to have a conversation about that, but I think the honey rights primarily would stay with the landlord.
[00:41:25.380]Allan Vyhnalek: For for pastures crop accounting rights go to the to the landlord because in a typical pasture rent situation pastor and starts may 1.
[00:41:37.140]Allan Vyhnalek: October 1 or five months mates first October 1 or July, first to November 1 or some combination, there are five months.
[00:41:45.120]Allan Vyhnalek: And so, in most cases are nearly all cases the past year grant has the pasture lisa's ended and the cows are gone before hunting season season even starts so it's a it's a landlord issue so just just a couple things think about there um okay next slide I think.
[00:42:03.690]Allan Vyhnalek: Okay, so I already talked about this pastures or five months leases termination you should have a written list for past you too.
[00:42:11.880]Allan Vyhnalek: But since it's a five month lease that pasture ended that passed to rent ended it's not a continuous lease and so therefore.
[00:42:19.800]Allan Vyhnalek: You don't have to worry about terminating a patch release the tenant has to ask for that patch release every year because it has to start over.
[00:42:26.670]Allan Vyhnalek: Because, because that least ended it's not a continuous lease so there's no notice of termination needed necessarily.
[00:42:35.130]Allan Vyhnalek: The big thing here is is communicate, you know, at the end of the lease the tenant should be busy with the landlord landlord visit the tenant.
[00:42:42.090]Allan Vyhnalek: and find out well what's your attention for next year, what do you think let's let's have that kind of discussed and just kind of know where we're sitting, because that would be the appropriate way to handle past releases, in my view, okay let's go on to the next slide.
[00:42:57.240]Allan Vyhnalek: i'm passionate he says continued some control weeds and brush Okay, so we had a question come in about control weeds and pastures.
[00:43:05.820]Allan Vyhnalek: And the way I look at it, I think, Jim pretty much agrees with me we're talking about annual weeds and and just reads like muscle, you know those kind of things that is a tenant issue.
[00:43:18.900]Allan Vyhnalek: And we're talking about the perennial weeds and in eastern or two thirds in nebraska we're talking about these two red cedar tree, which is the perennial weed.
[00:43:27.510]Allan Vyhnalek: That the landlord issue now the exception to that of course is if a pastures, and such poor shape that then he went to all kinds of weeds but perennials and annuals then.
[00:43:39.000]Allan Vyhnalek: The landlord has to give the tenant of passions usable that's a landlord issue, however brush brush, in my view, is the landlord issue.
[00:43:48.750]Allan Vyhnalek: We as a especially noxious weeds muscle is a tenant issue, however here's my here's my here's here's My big.
[00:43:58.170]Allan Vyhnalek: My big thought on us if we're managing the pressure properly, and we have eat good grazing we don't overgrazed.
[00:44:05.310]Allan Vyhnalek: weeds will not be a huge problem we just have to make sure we graze properly don't overgrazed and we shouldn't have a big problem with weeds in the most normal situation so assuming a good pasture and some fertility and some things like that.
[00:44:20.340]Allan Vyhnalek: um Okay, and I think that pastors pastor everybody has a passionate we should have a discussion about what I call the big three.
[00:44:27.450]Allan Vyhnalek: Fire hail drought, those are the big three let's discuss before the least starts what's going to happen in cases of fire out there with us or grass.
[00:44:35.490]Allan Vyhnalek: hail out there with us or grass drowned out there, we lose our grass how winner the calendar to get pulled who determines when the color data pool, are we going to have a discount at least those kind of things again.
[00:44:45.840]Allan Vyhnalek: No textbook no research, study telling me how to tell you this you just have to have a discussion between landlord tenant figure this out before it starts.
[00:44:54.630]Allan Vyhnalek: How are you adjust the length ELISE and how you change the lease payments that's kind of up to you guys, but should be done yeah I think so.
[00:45:01.740]Allan Vyhnalek: If you need to you get like the sandals it's kind of a common practice up in the hills.
[00:45:06.420]Allan Vyhnalek: Did you have a third party, a neutral third party you both agree to it's going to come, look at the past year and say, well, the cows can stand for a little bit more and move over here, something like that or to get pool.
[00:45:17.310]Allan Vyhnalek: That you have to figure that out okay let's go on let's see what else I got here.
[00:45:22.350]Jim Jansen: yeah hey I had a question here, I think it'd be a good time to ask it just so we can keep the questions down, is there any liability to allowing hunting on your land.
[00:45:32.670]Jim Jansen: I guess didn't really say if it's pasture cropland but is there any liability if there would be an accident when somebody is out hunting on your ground.
[00:45:42.690]Allan Vyhnalek: So yeah well, so the answer is it there could be, of course, the whoever gets hurt might always go after the deepest pockets, especially if they are hiring aware.
[00:45:53.820]Allan Vyhnalek: And the deepest pockets will always be the landowners, so the general recommendation there it's.
[00:45:59.610]Allan Vyhnalek: Regardless of regardless of what the honey law says or doesn't say is, if you have a good.
[00:46:04.050]Allan Vyhnalek: Overall general umbrella liability policy for your for your farmland and they're not that expensive you get a million dollar policy I think mines cost me.
[00:46:11.880]Allan Vyhnalek: For my hundred 60 acres whistling county cost me about 150 bucks a year and that's cheap compared to having to deal with you know.
[00:46:18.780]Allan Vyhnalek: A problem but, but the more specific answer in this case is if I allow hunting.
[00:46:25.320]Allan Vyhnalek: I depends on if I allow hunting and i'm the landowner right because remember, I said that well Okay, so it depends, is my hunting on the crop ground or is it on the pastor ground if it's on crop ground.
[00:46:36.690]Allan Vyhnalek: And i'm cash leasing, which is typical of these sort of brassica then if i'm on crab crop ground cash they seem to hunting rights actually belong to the tenant unless they're held by police.
[00:46:46.530]Allan Vyhnalek: However, if i'm on pasture which would be more maybe more common to have honey on a pasture then it depends on.
[00:46:54.540]Allan Vyhnalek: Did I allow you to go hunting my place now Jim if I allow you to go hunt on my farm because there's deer there.
[00:47:00.450]Allan Vyhnalek: And you go out there and turn in April in a ditch and I now depends on if I charged him or not, if I didn't charge it to hunt.
[00:47:07.740]Allan Vyhnalek: there's a new newer nebraska statute and place it says the gym because I allowed him to hunt on my place for free.
[00:47:16.470]Allan Vyhnalek: Oh, by the way, isn't just hunting it's four wheeling it's horseback riding it says snowmobiling it's.
[00:47:23.610]Allan Vyhnalek: You know, a recreational any recreational thing fishing whatever lungs I don't charge their dead to suppress recreational thing will allow me to.
[00:47:32.610]Allan Vyhnalek: He can't Sue me because I was just being a good guy by letting him do his his recreational thing.
[00:47:38.910]Allan Vyhnalek: So make sure you look that up makes you have a good liability policy not be charged for hunting or charge for your recreational activity.
[00:47:46.350]Allan Vyhnalek: Then you better have you better get a special liability insurance because you're now you're in business now you're trying to make a profit, so you better make sure that's covered too.
[00:47:55.860]Allan Vyhnalek: And I hope I covered that right GM but that's that's a quick way of saying what I think I need to say, if you have more specific questions about that email one of us will talk to you about it.
[00:48:04.290]Allan Vyhnalek: or.
[00:48:06.060]Jim Jansen: You know you got a spot on the big deal is, if you charge money for that activity.
[00:48:10.680]Jim Jansen: At that point there's a potential for liability, there is a law that was passed through the egg or ecotourism act.
[00:48:17.790]Jim Jansen: That allows for recreational use of the ground if you're not charging money and alan's comment.
[00:48:23.520]Jim Jansen: Just not for hunting liability, but it's a good practice to have liability insurance it's fairly inexpensive relative to the degree of coverage you get and I do agree, of coverage would provide things like legal Defense for you need whatever right.
[00:48:38.010]Allan Vyhnalek: Okay let's go on, and I think I got a couple of questions here dancer via slide.
[00:48:44.910]Allan Vyhnalek: Okay, so when you can track do you already talked about this, so I don't know, is there any other questions type them into chat or type type them in the Q amp a lion to that, but I already talked about that gentleman's gone.
[00:49:01.350]Allan Vyhnalek: single year multi year lease so there's it kind of depends on what day what what works best for each party.
[00:49:09.840]Allan Vyhnalek: Multi year leases or more commonly used when the tenant is made a large investment in the properties, such as irrigation equipment or.
[00:49:17.130]Allan Vyhnalek: some type of soil amendment like lime or phosphorus where that debt product is going to last that slow, for more than one year, then you want to be able to utilize that product was in the soil so.
[00:49:27.600]Allan Vyhnalek: But if you have a multi year lease that's terrific i'm good with a multi year lease but.
[00:49:32.160]Allan Vyhnalek: You consider adding a clause and multiple your lease to update to rent each year to to account for economic conditions or in one case I know the farmer that.
[00:49:41.100]Allan Vyhnalek: Had a multi year lease signed in prices went out there's 2005 2006 and seven or 10 year lease signed prices went up.
[00:49:49.980]Allan Vyhnalek: And he didn't have to get in there was no there was no provisioning they're going to just to lease but what the price is going up he just went back in and kind of figure out where he should be with cash man.
[00:49:58.890]Allan Vyhnalek: And wrote that landlord a bonus check and guess what he bought all the he bought all the loyalty in the world from that landlord to keeping him as attended, because the landlord new you to be treated properly.
[00:50:10.500]Allan Vyhnalek: i'm not saying that's that's that's an accepted practice practice i'm just pointing it out as.
[00:50:14.880]Allan Vyhnalek: If you have a multi year lease and you're locked in on cash man it's it's it's low they may consider a bonus if it's high the landlord's you consider some kind of a discount possibly and it's.
[00:50:25.710]Allan Vyhnalek: Just a thought you guys do to one I knew what else do I have your over the last 15 years singer earlier releases have become more popular have been more popular.
[00:50:35.070]Allan Vyhnalek: Because Eros great flexibility to adjust for events in influencing ag land.
[00:50:40.350]Allan Vyhnalek: And it's preferred method for using working with a new party somebody brand new you want to keep them on air for multiple years and have them be that'd be a wrong thing to do so.
[00:50:48.990]Allan Vyhnalek: Just something to consider there does, I think those are the only comments I really need to make there right now.
[00:50:56.220]Allan Vyhnalek: let's go on.
[00:50:59.130]Jim Jansen: Alright, so I had a couple questions come in that I thought I might answer.
[00:51:05.100]Jim Jansen: I guess this one just popped in so let's take care of it quick where's the best to get farm or liability insurance for nebraska land and buildings.
[00:51:13.890]Jim Jansen: I would start first with your insurance agent, even if you carry insurance for like a home or residential property asked, especially if you have an independent insurance agent.
[00:51:24.150]Jim Jansen: You might be able to get a writer to your policy that to carry that you can maybe get a you know a little bit more competitive price.
[00:51:31.530]Jim Jansen: Other than that, you know look roughly in areas where your lands located there's a lot of independent insurance agents out there.
[00:51:39.090]Jim Jansen: Think about the you know how much coverage, are you getting what are you ensuring with them and it's good practice that that just have the liability insurance on the building, but heads have property insurance if something would happen, like a fire of a tractor.
[00:51:53.970]Jim Jansen: Another question that came in for me, do you have a quick link to find out county yields and prices.
[00:52:00.330]Jim Jansen: On the topic of county yields and this will work into this example here in a second I would tell you that link that was on the usda cash rental rate.
[00:52:10.590]Jim Jansen: maps of the state of nebraska by county if you can find that link and go to that website, you can actually find maps on there for county yields for things like common crops like corn soybeans wheat those kind of things.
[00:52:26.220]Jim Jansen: The other thing on yields visit with a crop insurance agent those folks have access to a lot of different types of information from their risk management agency with usda they might be able to provide you with an estimate there as well.
[00:52:40.470]Jim Jansen: On the topic of price, let me work through this example and I think that might satisfy so one thing that folks asked about.
[00:52:51.180]Jim Jansen: there's a lot of uncertainty with everything going on prices are up prices are down, whatever it might be, how do we account for changes and crop prices, especially on something like irrigated crop.
[00:53:03.690]Jim Jansen: Well there's a tool out there it's called a FLEX lease that basic idea with the plex leases let's say you have some dry land cropland is running for about 199 acre.
[00:53:13.710]Jim Jansen: And you're going to let that cash rent FLEX based upon what's happening to the crop revenue remember cropping revenue is yield times price.
[00:53:24.990]Jim Jansen: you're going to let that Catherine go up or down within a certain range now the most this example has the most you're going to pay in cash rent is to 15 acre.
[00:53:36.660]Jim Jansen: And the lowest amount would be 165 acre I think it'll make sense here, so the landlord as on the at a minimum will be getting this amount in this example.
[00:53:46.710]Jim Jansen: And the most of the tenant would pay as to 15 and these maximum and minimum rental rates, the ceiling and the floor, those are negotiated as part of the lease design.
[00:53:59.430]Jim Jansen: So there's a lot of numbers going on here and there's, this is probably a good slide to dig out and print out and kind of get a calculator out work through but I tried to give a lot of information here to provide the detail.
[00:54:10.800]Jim Jansen: We have two cases here, where we have a FLEX lease based on FLEX based on crop revenue and from this, we found in this example the base scenarios basically the top four rows here on each of these tables.
[00:54:26.610]Jim Jansen: The base capture into 199 acre we're expecting to raise about 450 bushel.
[00:54:33.930]Jim Jansen: When the topic of crop prices one price I like to take a look at is a planting and harvesting time price guarantees that in crop insurance can.
[00:54:43.320]Jim Jansen: provide you with information, the reason I like these prices they're not necessarily reflective of the cash price, but their average over a period of time.
[00:54:54.030]Jim Jansen: And also, they are the cornerstone, to the risk management portfolio of crop insurance a an operator an operator can be a tenant it can be a landlord and attended if you're on a crop here.
[00:55:06.930]Jim Jansen: So under this example we anticipate that prices are going to be about 430 a bushel and we also think that.
[00:55:17.490]Jim Jansen: we're going to raise about 150 bushel So if you multiply those together we are anticipated revenue per acre is about $645 an acre okay.
[00:55:29.790]Jim Jansen: And when it comes to the actual yield on our property we actually yield it two different cases here the one wielded about 150 bushel.
[00:55:40.920]Jim Jansen: and prices were up just a little bit better so we actually produced about 100 excuse me $728 an acre and revenue.
[00:55:50.760]Jim Jansen: And if we figure it out, we produced about 30 not quite 13% higher revenue than what we anticipated when we sign the lease.
[00:56:00.240]Jim Jansen: And under this case we're going to give a bonus that we're going to take 13% of our base cash rent comes out to be about $25 an acre and we're going to add it in there as a bonus of about 215 an acre okay.
[00:56:14.700]Jim Jansen: When it comes to.
[00:56:19.830]Jim Jansen: The farm based rent and this case we actually produced 165 bushel which I did for this upcoming year we probably going to be a little bit tighter on the dry land yield unless we get a lot more moisture I know we have a lot of snow on the ground but.
[00:56:36.030]Jim Jansen: Under this case let's say we did have better yields, this would probably be an event where if prices are going down nationally, the entire United States had adequate moisture but under this case.
[00:56:48.450]Jim Jansen: This just goes to show just because you have good yields just mean the prices are going to be necessarily that great overall the crop revenue was down down just slightly about 635 instead of 645 and under this case we're just going to discount the Catherine slight.
[00:57:04.800]Jim Jansen: Under either of these cases remember our minimum cash rent was 165 in our maximum was 250 under the example I gave if you have a case where.
[00:57:21.810]Jim Jansen: The prices, a goal let's say to 525 the Max that you're going to hit us to 15 acre.
[00:57:31.170]Jim Jansen: So I like to use a planting and harvesting time price guarantees in this example because it's a price that someone else calculates for us and it's based over a 30 day period for the planting and harvesting time crazy.
[00:57:47.640]Jim Jansen: Alright we've had a variety of questions.
[00:57:54.360]Jim Jansen: submitted to us here over the last period of time and we've really this has probably been the most questions Alan and I have taken as long as we've done this.
[00:58:03.810]Jim Jansen: I think we pretty well covered most of the questions Okay, there was one other question that came in and i'll try to open this one, and you can take it as well.
[00:58:12.180]Jim Jansen: there's been a variety of different disaster programs, and I call them a disaster program because these payments are being made when something happened.
[00:58:21.120]Jim Jansen: Over the prior production year there was a program called the coronavirus food assistance program the CFA P Program.
[00:58:28.320]Jim Jansen: There was another one that was called the PPP program the paycheck protection program that allowed agricultural operators notice I didn't say the tenant by said operators to receive different kinds of support.
[00:58:43.800]Jim Jansen: If you are on a crop share let's say Alan and I are landlord and tenant he gets half the crop and I get the other half.
[00:58:50.940]Jim Jansen: And there was a different FSA a farm service agency program payment made that payment is made in proportion to the operator share so Alan would get half the payment I would get the other half right oh.
[00:59:04.530]Jim Jansen: Great and if I am a cash tenant I collect all those payments, because i'm the one burying their production risk as a landlord if you get Catherine.
[00:59:17.790]Jim Jansen: Unless your tenant doesn't make the cash rent payment or does something to abuse the ground you basically bear no production rates.
[00:59:27.240]Jim Jansen: that's why these programs are designed for those people now if your landlord that would like to participate in some of these.
[00:59:33.810]Jim Jansen: you'd have to think about being on a crop share that's that's how you get that.
[00:59:39.240]Jim Jansen: These payments are made because something that's happened now yet understand that there's a point last summer corn was less than $3 a bushel.
[00:59:47.250]Jim Jansen: And I understand corn prices are quite good, right now, but some folks when they seem corn get over say three at may have taken the opportunity to sell that crop because.
[00:59:56.520]Jim Jansen: You know the price is just it's too much too much risk, so I think that's a roller coaster that we're probably going to be seen over the next year is, we could see prices fluctuate quite a bit so oh yeah I happen.
[01:00:10.320]Jim Jansen: Is there any other questions I failed to address.
[01:00:13.050]Allan Vyhnalek: So I got I got two of them that I want to address one was the question came on early they talked about that tax credit for your agricultural land and they said.
[01:00:21.900]Allan Vyhnalek: We I, if I understood right they lived out of state they had landed in nebraska they were being taxed on our land and bath bath nebraska and want to know if they got the tax credit or not.
[01:00:33.030]Allan Vyhnalek: I checked with our agriculture lawyer and the ag ECON department, he said.
[01:00:38.700]Allan Vyhnalek: yeah, even though they don't feel on a brass did state income tax form a normally.
[01:00:43.170]Allan Vyhnalek: In this.
[01:00:43.740]Allan Vyhnalek: edition, I want to go ahead and do I do you know the answer that Jim.
[01:00:47.670]Jim Jansen: I believe, if you're collecting income in nebraska off your property as an absentee landowner I think you would have to be filing because that income is like a business income, I think you'd have to be paying stay in nebraska and compact.
[01:01:00.570]Jim Jansen: That gets beyond my scope Austin dear fellow who is an economist based in eastern nebraska with me he wrote an article on it's posted on the farm ul that EDU website.
[01:01:14.250]Jim Jansen: he's kind of our in resident he's not a CPA but he tends to take the tax questions I would pose that to him, but if you are filing a state of nebraska income tax form, you would be eligible to get that credit.
[01:01:30.300]Allan Vyhnalek: So somebody wrote in a different a different person wrote in a question, it said, we are a land on and we have a handshake agreement.
[01:01:37.200]Allan Vyhnalek: When can we adjust the cash flow rate for the next year, so.
[01:01:41.490]Allan Vyhnalek: When do you have that conversation and how long is your handshake agreement, good for and so that's why she ever written least number one.
[01:01:48.390]Allan Vyhnalek: Number two it's whatever the landlord attended degree to you right now I hate to say it this way, the landlords and tenants over a barrel, a little bit because they know that they go to the tenant say hey.
[01:01:59.010]Allan Vyhnalek: We need have another $5 an acre for next year, starting march 1 and then tense know that if they don't.
[01:02:06.150]Allan Vyhnalek: pone that up the dog either get kicked off the land or you know it's just going to damage the relationship so a lot of times it's it'll just pay.
[01:02:13.920]Allan Vyhnalek: I wouldn't hold attended over the barrel, but I started having a conversation when are we going to do it.
[01:02:18.390]Allan Vyhnalek: The other thing I would do is I recommend is that you have that conversation and same time every year, whether it's an August or December or March February.
[01:02:27.120]Allan Vyhnalek: Just have it the same time, every year, that way, the markets going up and down doesn't influence when you had that conversation was going to do with the rent.
[01:02:35.730]Allan Vyhnalek: liability insurance.
[01:02:38.580]Jim Jansen: So somebody somebody typed in a response here basically was on the topic of liability insurance for land and also having.
[01:02:46.980]Jim Jansen: You know, insurance Homeowners insurance once again start with your local insurance company you're dealing with and see what they can do they might be able to practice something.
[01:02:54.600]Allan Vyhnalek: i'd written back ready.
[01:02:56.370]Jim Jansen: i'd really, really you're at the back.
[01:02:58.080]yeah.
[01:03:00.690]Jim Jansen: there's a question that came in here and I guess Alan and I can give your two cents, but after that will we want to wrap up with everything to stay on task here if you're in work northwestern nebraska portion of the State where they include a degree of follow on each property.
[01:03:17.160]Jim Jansen: Does a tenant pay the cash rent.
[01:03:19.830]Jim Jansen: On all the acres or not, on the fallow acres or how is that handled out.
[01:03:25.200]Allan Vyhnalek: So the Northwest in the panhandle the Northwest nebraska.
[01:03:30.030]Allan Vyhnalek: You don't typically have a Cashman at all, you have props here, so you just pay you just gather crops share on your share of the crop that's been growing that year typically not a cash rent.
[01:03:39.960]Allan Vyhnalek: And I don't know we'd have to ask JESSICA out there in the panhandle how you handle that cash rent part of that thing I don't know do we have an economist in the panhandle just gross conference gospel of she'd have to answer that question, unless you know, Jim I don't know.
[01:03:53.070]Jim Jansen: I have seen it done different ways, one way is you kind of pay an average rate across all the property that's lower than what the market going rate might be on around that you're currently planting.
[01:04:06.120]Jim Jansen: Or you simply just pay on the ground that's currently being planted now some of these fallow rotations are also including things like save wheat, for example, a crop that you know it gets started in the fall and then the harvest following summer.
[01:04:21.000]Jim Jansen: It gets a little.
[01:04:23.640]Jim Jansen: Basically, comes down to what is equitable and also there you know there's some benefits to follow, especially when again some of these years when it gets quite dry so.
[01:04:32.820]Jim Jansen: there's different ways to do it there's the thing, the only thing I think Alan would agree on there's never one cookie cutter answer to any of these questions for the entire state so okay.
[01:04:42.390]Allan Vyhnalek: But i'm going into my last topic here and then we'll get this thing wrapped up Okay, so I just a week ago we started something called landline.
[01:04:52.290]Allan Vyhnalek: And we're trying to address two problems we're trying to address the idea that we have like people, young people, especially they would like to get on agricultural land and farm or raise something.
[01:05:03.240]Allan Vyhnalek: or raise livestock crops, vegetables, fruit, we don't know what anything and they don't have access to land, because lancey darn expensive.
[01:05:12.900]Allan Vyhnalek: We also know that it's a bunch of our older generation just don't have a succession path because their children are not farming ranching currently and you're not coming back to the farm or ranch.
[01:05:22.140]Allan Vyhnalek: So we're trying to use a landline to match up both of these parties and we're allowing that to happen on this website called the land blank website and applications can be will be received.
[01:05:33.090]Allan Vyhnalek: we're reviewing those applications, we do a follow up phone interview, and if we can we can do it we're going to try and match.
[01:05:39.240]Allan Vyhnalek: The land seekers to land owners and let landowners interview or visit with the land seekers and see if they could find someone that they'd like to have help with help them work their ground.
[01:05:48.720]Allan Vyhnalek: For the last seekers this isn't just a chance to we want to try and get new operation started or try and keep that operation of the landowner going.
[01:05:58.830]Allan Vyhnalek: So just kind of keep that in mind for landowners and chance to get a hired hand this is a chance to actually get somebody going in your operation keep your operation.
[01:06:08.670]Allan Vyhnalek: So go ahead and let go the next slide if you have more information, you want more information about this are interested in this at all go the website is farmed@ul.edu and you can there's a land link.
[01:06:20.190]Allan Vyhnalek: On that page, if you do farmed out you and help you get there or it's EDU slash live link.
[01:06:26.520]Allan Vyhnalek: or contact me and i'll get you the information you're going to ask me questions i'm not spending much time on it here.
[01:06:32.910]Allan Vyhnalek: But but it's it's going to be big if we can make a few matches and keep some people out on the farm and keep some of these farm operations going I think it's going to be very beneficial for nebraska and for district of our rural economy, so I think what else we got left Jim go ahead.
[01:06:49.860]Jim Jansen: OK, so the final piece here and we're right up against her time so we'll just keep this short.
[01:06:54.750]Jim Jansen: Upcoming landlord tenant the meetings that we do the land management meetings, the theme of this year's project is called egg land leasing budgeting and management for 2021.
[01:07:06.210]Jim Jansen: it's a virtual workshop, it will be at the end of this month, so if you're joining us on our call today it's open to everyone.
[01:07:13.710]Jim Jansen: needed to take a look at gain registered it's that farmed@ul.edu managed 21 or look for this photo if you can find this photo on the farm website click on it.
[01:07:24.360]Jim Jansen: You can register there what we're doing is we're having a staff member go ahead and send this handouts out this was supposed to be an in person meeting but.
[01:07:31.980]Jim Jansen: just not going to happen, even what's going on with things and the workshop is to part the morning is Alan myself, let us, the clearer and Austin your felt.
[01:07:42.330]Jim Jansen: takes a lot deeper look at the topics we discussed today, and then the afternoon glynis buckler is going to be focusing on kind of the.
[01:07:50.070]Jim Jansen: budgeting, why do we care about budgeting what we care about budgeting, because the value of what we have, how much it can produce private rates to evaluate catrin.
[01:07:59.610]Jim Jansen: And she has a tool, a budget calculator the department's been working on and she's going to take some time to go through that so be sure it's a really good Program.
[01:08:08.550]Jim Jansen: And I think everybody would really enjoy it if you got time take a look at it, and it will be archived So if you want to copy the handouts, be sure to register provide your address, and we'll be getting those out in the mail this week.
[01:08:22.380]Jim Jansen: And finally, our final piece that we have here.
[01:08:26.250]Jim Jansen: eglin management quarterly for our may will be taking a look at our.
[01:08:32.070]Jim Jansen: Real Estate survey findings.
[01:08:35.040]Jim Jansen: Allen has some additional communication and decision makings and.
[01:08:39.690]Jim Jansen: Once again, keep the questions coming whether, after this meeting, or, if you want to submit them for the next one, to find out, we answer questions over this venue that we're delivering in that right now and more people can benefit from it, then just simply sending us an email.
[01:08:53.880]Allan Vyhnalek: So they'll do the question how do you get a printout of this program just email Jim and you'll send it to us all right, Jim.
[01:09:01.440]Jim Jansen: What I can do we have it in our budget, not for this program but for the other one I just talked about, if you want, we will be posting our hand land management handouts so just check out the website, and you can download them and promote the website.
[01:09:17.430]Allan Vyhnalek: So the other thing to know about, that is when you look at that full and measured program that we're doing on 25th of June just got done talking about that's a full two hours two hours and 15 minutes, here we did about.
[01:09:26.790]Allan Vyhnalek: You know 45 minutes programs unanswered questions, so the full 215 is on February 25 at.
[01:09:33.240]Allan Vyhnalek: Nine o'clock in the morning central time so look at farm w and l.edu and you try and get registered for that if you'd like to know more about it's still free and you get to hand out mail to you have that whole day, which include all this information, we talked about this today all right.
[01:09:48.330]Jim Jansen: Very good, I think, with that out, we started about 12 three minutes one of six we kept at it right in an hour, and I think it was a good call We appreciate everyone's.
[01:09:57.240]Allan Vyhnalek: GMO or GMO john Gable would just send them an email about that Gospel county ditch irrigation thing I think the GMO handle that you want to want.
[01:10:09.960]Jim Jansen: Okay, all right very good take care of everyone, I think, with that we're going to conclude the meeting here and thank you for joining.

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Agricultural Land Management Quarterly - Feb. 15, 2021

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