Farmland Ownership Guide

Farmland Ownership Guide

Locating your farmLeases and farm operator selectionFarmland valuationCrop productionInsurance & Government Programs

Locating Your Farm

How do I find a map of my farm?

Google Maps can offer an excellent map or satellite overview of the general area of your farm if you have an address or are familiar with the area. The two most common ways to see the boundaries of your farm, an estimate of total acreage, and ownership of neighboring properties are with a county plat book or GIS database.

The legal boundaries of your farm will be outlined in a formal legal description. A primer on reading legal descriptions and surveyor notations can be found here.


Platbooks

A county plat book is a county atlas comprised of the plat maps that show the division of rural lands by property boundaries and landowners. Plat books are organized by township, and each township is broken into numbered square-mile sections. Plat books are published by private companies, and while many are printed on an annual basis, it may take several years for a change in ownership to be reflected.

Here are some examples:


GIS Databases

Many counties have created a Geographic Information System (GIS) database that integrates a map of the county with property ownership and property tax information. Land parcels are usually searchable by owner name, parcel number, township and section information, or simple map/zoom navigation. As each county maintains its own records, start with the website for the county clerk or tax assessor.

Lease Types and Operator Selection

What kind of lease is right for my farm?

Lease selection and negotiation is a critical step in ensuring your farm income, protecting your farmland assets, and meeting your financial and risk management objectives. Farm managers analyze the leasing options for each client farm, helping you understand the pros and cons of each leasing option and the specific variations applicable to your farm. At Moore & Warner, we identify and build relationships with the most capable, ethical, and financially stable operators who will work to maximize the potential of your land while enhancing its long-term value.


The three basic lease types:

Cash Rent Lease

The defining feature of a cash-rent lease is the negotiation of a per-acre cash payment a farmer makes to the landowner. Today most cash-rent leases are “flex-leases” that incorporate a base per acre payment and a variable cash payment determined by yield, commodity prices, or a combination of the two. This structure provides a landowner a minimum rent and level of return with an opportunity to share in the upside of a good year.


Crop Share Lease

A crop-share lease is more akin to a partnership in which a farmer and landowner combine their unique assets, and share decision-making, input costs, and the ultimate grain harvest. Crop-share leases specifics vary by region, but farmers typically provide labor, equipment, and cover fuel costs while landowners provide acreage and cover real estate taxes and major improvements. The two parties split input costs such as seed, fertilizer, and pesticides and at the end of the season split the grain harvest, each taking title to a predetermined fraction of the harvest.

The allocation of expenses and grain can depend on the geography, crop, and local market. In recent years a small per-acre cash payment or “supplemental rent” has become a popular way of adjusting lease economics without changing the historical crop-share ratios.


Custom Lease

A custom lease refers to custom farming, or the hiring of a skilled operator and his/her equipment to execute the planting, management, and harvest plan developed at the sole discretion of the farm manager or landowner. Under these lease arrangements, the landowner (or farm manager) makes all the agronomic decisions and the landowner is responsible for 100% of the input costs and owns 100% of the resultant harvest. Custom farming can provide attractive landowner returns, but entails a greater exposure to growing and price risk and requires the greatest amount of landowner or farm manager involvement.

Role of the Farm Manager in Lease Selection

Lease Analysis

  • Identify lease type most appropriate to landowner income needs, risk appetite, and farm characteristics

Lease Negotiation & Operator Selection

  • Identify and screen best local operators
  • Negotiate market-rate lease terms
  • Customize lease to specific farm and landowner priorities
  • Review and renegotiate lease on an annual basis

Agronomic Decision Making

  • Work alongside operator to develop planting, fertilization, and pest-control strategies
  • Share and encourage best practices from experience managing thousands of acres with dozens of operators
  • Monitor farming practices and identify and mitigate problems early to protect landowner interests

Capital Improvements

  • Identify farm improvement opportunities to increase crop yields and land value
  • Analyze pay-back and return on investment
  • Partner with operators to reduce direct landowner cash costs
  • Identify appropriate government and conservation cost-share programs
  • Solicit competitive bids and project-manage all activities and contractors

Marketing (for crop share and custom leases)

  • Develop and execute grain marketing (sales) plan customized for landowner cash flow needs, tax planning, and risk appetite

Farmland valuation

What is my farm worth?

No two farms are identical, and the value of your land will depend on a combination of many geographic, agronomic, and environmental factors. Like any other asset, the underlying fundamentals may support a given valuation, but at the time of sale, value is decided by a willing buyer and willing seller.

Formal appraisals are offered by licensed appraisers and may be needed for specific purposes, and farm managers who closely follow rural land sales will have a good sense of the market in your area.


Factors impacting farmland values:

  • Yield potential
  • Soil type
  • Aggregate acres and fragmentation of parcels
  • Climate and microclimate
  • Topography
  • Drainage
  • Improvements
  • On-going maintenance
  • Local and regional grain demand
  • Access to transportation and grain infrastructure
  • Field accessibility
  • Property taxes
  • Development potential
  • Non-farm resources: mineral rights, wind leases, etc.

Stewardship

Just like owning and caring for a home, owning a farm requires proper maintenance, up-keep and investment that, over time, preserves and increases the value of the asset.

Sometimes the proper capital improvements, stewardship practices, and regular maintenance that preserve farmland values fall outside a busy renting operator’s crop-growing focus. Farm managers monitor on-farm operations and maintain the asset to ensure the long-term interests of the landowner are protected.

Crop production and farm operations

What is my farmer and farm manager doing?

Moore & Warner managed-farms grow a variety of crops including wheat, milo, sorghum, alfalfa, and potatoes, but the focus of farm-managed acres throughout the Midwest is dedicated to corn and soybeans. Below is an overview of on-farm activities throughout the seasons of the year.


Spring Planting

Spring work is focused on planting and establishing a strong crop.

Tillage: Tillage practices vary from “no till” to “minimum till” to “conventional tillage.” Tillage turns over the soil, helping prepare the seedbed and increasing soil temperature (the darker soil absorbs more sunlight). Operators who till after a corn crop may do so in the fall to more quickly integrate crop residue and speed decomposition.

Fertilizer: Depending on the crop and soil fertility plan, “pre-plant” fertilizer may be applied, and in the case of corn, “side-dress” nitrogen may be applied until the corn is too tall for field machinery.  “N, P, K” refers to nitrogen, phosphorus, and potassium (or potash), the primarily nutrients applied as fertilizer.

Pest control: Pesticide refers to both herbicide (for weeds) and insecticide (for insects). Herbicide application is most common following planting when weeds will compete for nutrients and sunlight with the germinating seeds and juvenile plants. Once the crop establishes a canopy, that canopy blocks sunlight from growing weeds, reducing their ability to compete with the crop.  Insecticide application usually follows the development of a specific in-field problem.

Planting: Planting begins once the soil temperature is warm enough to support germination and, the soil is dry enough to avoid soil compaction from tractors and field equipment, and the date is far enough into spring to reduce the risk of a crop-killing frost. In good weather, a single tractor with a 24-row planter might seed as much as 250 to 300 acres per day.

Spring – Role the Farm Manager

  • Deciding optimal tillage and planting dates with the farmer (the crop plan and seed varieties have already been chosen)
  • Verifying fertilizer application and billing (the fertilizer plan has already been decided)
  • Scouting for pests and early problems to address with the farmer
  • Choosing and enrolling landowners in insurance programs
  • Marketing grain
  • Supervising and planning spring and summer on-farm projects

Summer Growing

Once the crop is established, regular monitoring can determine whether weed, pest, or fungal problems should be addressed through additional management.

Fertilizer: In-season “side-dress” nitrogen may have been part of the annual fertilization plan, or the growing conditions may warrant considering this additional nitrogen application to boost yields. Side-dress can be applied until corn reaches approximately 3 feet in height, although the ideal window is when corn is shorter than 1 foot.

Herbicide, Pesticide and Fungicide: The canopy developed by an established crop reduces the sunlight available to weeds, generally helping to keep weed populations in control. Insect and fungal problems can develop, and active scouting and analysis can determine the economic “break-even” of additional treatment. This is the point at which yield savings of an additional application of insecticide or fungicide more than offsets the additional cost. Once the crops become too tall for field equipment, aerial spraying by a crop duster is the next option. Aggressively managing yield-robbing weeds and insects helps reduce the likelihood of persistent problems year after year.

Mowing and waterway maintenance: Roadsides and waterways planted with grasses are mowed and maintained during the summer months not just for their visual appeal, but to limit the spread of weeds, provide habitat for wildlife, and conserve soil erosion by slowing surface water.

Summer – Role of the Farm Manager

  • Scouting crops for early signs of problems
  • Conducting landowner return-on-investment analysis for additional herbicide, fungicide, and insecticide treatments
  • Supervising summer projects, e.g. painting farm buildings
  • Marketing grain

Fall Harvest

Fall and the harvest is one of the most exciting times of year as massive combines take thousands of bushels of corn and soybeans out of the field.

Harvest: Once corn and soybean plants have reached maturity, the timing of harvest depends on plant health (how much longer will it stand up in the field?) and moisture (what is the water content of the grain?). Grain is sold with a target moisture content for each crop, and drying fees are charged by the elevator when grain is above the target moisture. Grain that is stored in bins on-farm may also need to be dried, which incurs associated energy costs.

A combine will both pick (remove the corn ear or the soybean pod from the plant) and shell (remove the kernel from the cob or the bean from the pod). Its name comes from the first machines to “combine” picking and shelling. The grain is then off-loaded to a semi-truck or a grain wagon pulled by a tractor, and all the other crop residue (stalks, leaves, cobs, etc.) stays in the field as organic matter.

Fall Tillage: On farms with conventional or minimum tillage practices, fall tillage turns over the top layer of soil, speeding up the decomposition of crop residue and helping prepare the ground for spring planting.

Fall Fertilizer: After harvest is an opportunity to apply fertilizer in advance of the following spring crop. Depending on the crop plan and soil fertility, lime, potash (potassium), and phosphorus are typically applied in the fall, as well as certain types of nitrogen fertilizers.

Other Field Work: Installing or repairing field tile (drainage lines the help remove excess water), re-shaping waterways, clearing ditches, and reconditioning field-access points whose soil has become compacted are projects that are frequently started or completed in the fall in between harvest and early winter rains or freezing temperatures.

Fall – Role of the Farm Manager

  • Deciding optimal harvest timing with farmer
  • Riding alongside farmer during harvest to identify farm performance and trouble areas
  • Verifying crop yields
  • Evaluating performance of seed varieties
  • Filing for any landowner insurance claims
  • Renegotiating lease for next crop year
  • Managing on-farm projects like tile improvement, field grading, etc.
  • Marketing grain
  • Beginning planning for next growing season

Winter Planning & Maintenance

Winter is generally a time for marketing, planning and maintenance.

Marketing and budgeting: Late fall and early winter are tradition times to develop the farm budget, financial projections, and grain marketing plan for the coming year.

Crop planning and seed selection: The major seed companies unveil new varieties every year, and late fall and early winter is the time to research new seed options, review the results of field trials, meet with seed company representatives, and plan the crop for the coming year.

Input purchasing: Most fertilizer, seed, and input dealers offer discounts for inputs purchased in the late fall or early winter. Financial and tax planning and farm cash flow are important considerations in timing input purchases.

Equipment and building maintenance: The colder months become a time to make repairs, maintain, and adjust field equipment and carry out any interior projects on farm buildings.

Winter – Role of the Farm Manager

  • Developing farm annual report and coordinating with landowner and accountants for annual taxes
  • Developing crop plan with farmer for coming year
  • Negotiating input purchasing for early and bulk discounts
  • Completing farm budget and performance targets for coming year
  • Planning grain marketing and hedging strategy for coming year to meet landowner cash flow and risk management needs
  • Marketing grain

Insurance

Do I need insurance for my farm?

Farmland is an incoming-generating asset worth protecting.  When the options for liability and crop insurance policies overwhelm landowners, it’s time to seek professional guidance.   A note to landowners:  the passage of the Agricultural Act of 2014 (“Farm Bill”) will require important one-time decisions for the 2015 crop season that will impact crop insurance and program eligibility for the entire 5-year authorization of the farm bill.  Moore & Warner encourages all farm owners to evaluate their farm insurance strategies before new regulatory deadlines.


Liability Insurance

Regardless of lease type, we recommend all owners carry farm liability policies tailored to cover any unique on-farm activities (e.g. recreational use).  We also recommend farm owners supplement basic farm policies with an umbrella policy when a financial or ownership position warrants additional coverage.


Crop Insurance

Landowners with production risk (i.e. crop-share or custom leases) should consider crop insurance to cover against yield and/or revenue losses that could meaningfully impact farm profitability and income. Insurance type and coverage levels depend on the specific weather and production history of a farmland parcel, total farm holdings, and landowner risk profile.

  • Multi-peril crop insurance covers a variety of production risks including drought, flooding, and disease.
  • Crop-hail insurance protects against crop losses due to a major hail event.
  • Wind insurance offers protection against wind events, specifically for corn, which can be susceptible to breaking or “greensnap” that can stunt or stop plant growth, or diminish harvest-ability.
  • Weather insurance includes a suite of custom insurance products introduced in the last several years that allow producers and landowners to insure against specific weather events — like too little rainfall — regardless of realized crop losses.

Government Programs

Does my farm qualify for government programs?

Managing and protecting the financial and natural resources of your farms means regularly reviewing and enrolling in eligible government programs.  Most farms are eligible for one or several programs. Instituted by federal, state, and local governments, these programs achieve a variety of objectives from risk reduction to environmental and soil conservation to rural business development.


Direct Payments

The 2014 Farm Bill phases out the direct farm payments, frequently referred to as farm “subsidies,” in exchange for a larger and more comprehensive crop insurance program.

Crop Insurance

The 2014 Farm Bill (effective through 2019) introduces a new federal crop insurance program. This program requires a one-time, irrevocable election to enroll a farm in either Price Loss Coverage or Agriculture Risk Coverage programs and this election will remain in effect for the Farm Bill’s entire 5-year authorization.

Conservation Programs

A multitude of conservation and cost-sharing programs exist at the federal, state and local levels. Farms will qualify for different programs, and enrolling a farm parcel requires a knowledge of both applicable programs, the proper application process, and the funding cycles that open windows of opportunity for enrollment. Popular programs include: