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Your Guide to Figuring the Right Farm Rental Rate

By   /  September 15, 2014  /  Comments Off on Your Guide to Figuring the Right Farm Rental Rate

Last week’s articles described how you can make more money leasing pasture, and shared a website that can help you find pasture to lease anywhere in the United States and Canada. Now, here’s how you can figure out what the right rental rate is.

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Click here to download the guide.

Click here to download the guide.

Whether you’re a beginning farmer looking for affordable access to land, or an old pro ready to expand your operation, leasing can be an affordable way to go. Landowners who want to keep their property in production, but don’t want to do it themselves, find that leasing is a good way to offset ownership costs.  For landowners, leasing can help offset the costs of ownership while keeping land in production. But how to determine a fair rental rate?

UVM Extension’s new How to Determine the Right Farm Rental Rate Guide was developed to support both farmers and landowners through the process of determining a fair cash rental rate for farmland, equipment and infrastructure in Vermont. The same methods might apply to other states in New England, the Northeast, or other parts of the U.S.

“Farmland and farm infrastructure rental rates can be tough to determine because there are many variables to consider,” says Ben Waterman author of the guide and New Farmer Coordinator at the UVM Center for Sustainable Agriculture. “However, the process can be simple. The guide explains common methods so farmers and landowners can forge lease arrangements with confidence.”

Rental rate questions are by far the most common question I get from farmers contacting me as a business specialist at UVM Extension. This guide will help property owners and tenants better understand the factors influencing rental rates and make a determination on which rate-setting strategy is the best fit for their own situation.

Divided into five sections, the 31-page guide is available for free download and offers approaches to:

  • Assess market rental rates;
  • Assess landowner’s costs of owning land;
  • Value equipment and infrastructure in a lease;
  • Factor the farm business’ net returns in the rental rate; and
  • Assess the farmer’s contributions to the lease arrangement

For more information about the guide, click here.

To download the guide, click here.

Editors Note: Want to learn more about leasing?  Click here for more On Pasture articles.

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About the author

Mark Cannella is a farm business management specialist for University of Vermont Extension. He has been working in the field of agriculture in VT for over 10 years. He has managed farm operations in vegetable production, maple sugaring and agricultural education. His current focus is the management and delivery of farm business planning programs, business management trainings and farm economic research. Mark contributes to programs that serve a diverse audience of farm producers raising different products at different scales. His areas of expertise are farm financial analysis, farm business planning, project/program management and applied food systems research.

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