By Claire Vath
Progressive Farmer Assistant Editor

Stories of a tenuous relationship between a landowner and tenant make good local fodder, but you won't get one of those stories from Richard and Glenda Randall.

The west-central Kansas growers have been renting land for more than 20 years. In addition to the ground they own, the couple rents 3,500 acres and grows irrigated corn, wheat and sorghum.

The Randalls have two landowners, and they couldn't be more pleased with either. "Both our landowners are very hands-on," Richard Randall says. And, Glenda Randall adds, both parties—the Randalls and their landowners—work hard at keeping open the lines of communication.

"If we're putting fertilizer on the fields, we always share what type of fertilizer we use and how much it's going to cost," she says. "So they know in advance about some of the bills that are going to be coming. We work on making our crop-insurance choices with the landowners to see whether they want to take out more on the hail side, etc. We make all those decisions with them."

That communication is absolutely crucial for a long-term business relationship between landowner and tenant as the number of farm leases continues to grow, says Kansas State University Extension specialist Kevin Dhuyvetter. According to a study on farm tenure by the USDA Economic Research Service, "Leased land has assumed an increasing share of farm operations as farm numbers decline and average farm size increases."

Twenty years ago, Dhuyvetter helped the Randalls put together their first land lease. "At that time, I was out in western Kansas, and the typical tenant would go to his landlord and ask him to buy a center-pivot," Dhuyvetter says.

The Randalls' case was a bit unusual. "Richard's landlord came to him and said that he needed to go ahead and move to center-pivot because it was the best thing to do for the operation, and the landlord and tenant figured out a way to make it work," Dhuyvetter adds.

There are plenty of laws in place, both at a state and federal level, to protect all parties involved in a lease/lessee situation. But a good rapport counts for a lot when dealing with both sides of the business relationship. Poor communication and lack of trust can break a situation, Dhuyvetter says.

Here are some tips Dhuyvetter offers to his clients:

Get it in writing. This protects both parties when there are disputes. "Make sure to agree on crop plans and keep the landlord updated on the farm operation so there are no surprises," he says. Include costs of farming and commodities to let the landowner know what it's costing you to farm.

"You never know what's going to happen down the road," Glenda Randall says. "Putting it in writing gives security to financial situations."

"Every year we give our landlords a production report," Richard Randall adds. "Before we renew our leases, we go over them to make sure all parties are in agreement."

Do it in person. A little face time can go a long way to building a good relationship. Face-to-face communication can be more effective for resolving issues.

Treat the relationship as a business. Many times, Dhuyvetter says, landowner and tenant have a nonbusiness relationship, as well, but, "Farming is a business," he emphasizes. "The more you treat your family farm as a business, the more likely it'll stay in the family."

Notify the other party of changes. "Nobody likes surprises," Dhuyvetter says. "Let's say I'm farming your land, and if I tear up a tree, I can farm more efficiently. I'm doing what I think is best, but I have to remember it's not my land. It's the landlord's asset.

"I may have been farming it for so long I think it's mine, but I shouldn't just assume you'll [the landowner] agree with the change," he adds. "People have really emotional ties to their land."

Document in writing and with photographs, if applicable, any issues on the land.

"We've had no issues with our landlords," says Richard Randall, who's also the chairman of the Kansas Wheat Commission. "We work very hard at keeping open communication with our landlords."

Remember that knowledge is power. The Randalls use their Extension service as a resource to stay current with lease arrangements, attending seminars like the ones Dhuyvetter conducts.

When Dhuyvetter holds a seminar, he always asks attendees whether they view the other party as a competitor or a partner.

"An easy question, right?" he asks. "But think about it: If I'm farming as your tenant, I make more money by paying you less. You can see why landlord and tenant are somewhat competitors, but no one ever says that."

Be ethical. Ethics is absolutely No. 1 for sustaining a long-term lease/lessee situation throughout generations, Dhuyvetter says.

"Land is changing hands every day," he says. Often new landowners/landlords are either absentee or lack the knowledge of what's going on in the market.

"My biggest advice to tenants is make sure you're staying in line with the market," Dhuyvetter says. He often sees situations where the land will be turned over to the next generation, and the new landowners realize they're not getting fair market value from their tenants.

"That situation is just not sustainable for the tenant," says Dhuyvetter, who sometimes advises his tenants to voluntarily raise their rent if they're way below the market.

Put disputes in context. Is it worth spending time, energy and mental anguish fighting? Is it better just to part ways?

Trust is crucial. Landowners don't often know what's going on, and they trust what their tenants tell them, Dhuyvetter says. "It's easy for tenants to take advantage of the landlords.

"If you don't trust a tenant, it's better to part ways," he says. "When there's a lack of trust, you can't put everything in writing to protect you. Even mediation is often a short-term fix. Once trust is destroyed, that's it."

Keep it simple. "There's been a push for cash leases and multifactor leases where there's a base and the money will vary," Richard Randall says. "All of that's great, but it can get pretty complicated.

"The simpler you can keep everything, the easier it is to track," he says.

(AG)

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