COLUMNISTS

Making it work: Budgets, leases, custom work, etc.

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Farm Forum

A few recent office callers reinforced what agricultural producers know quite well; farming and ranching is not for the weak of heart.

One caller asked for land rental rates in his area. My standard response to these requests are the values found in the latest SD Ag Statistics Service, “Cash Rents and Land Values”: http://1.usa.gov/KoDhtO, and the latest version of the SDSU South Dakota Farm Real Estate Survey: http://bit.ly/1gxgjfb. Of course these calls generally involve some discussion and interpretation, and as is often the case, the values in these references are somewhat lower than he was hearing. One reason may be that the surveys are done once each year, so the information can be over a year old. In any event, increasing land rents pose constant challenges to farmers and ranchers as they try to generate a profit.

The discussion also involved share leases and what the “standard” arrangements are as he was evaluating his options. SDSU Extension is often consulted for information on share leasing arrangements of all kinds. Our standard approach is obvious; the parties need to determine what inputs each contribute, and share the crop in the same percentage. Inputs that are expected to increase yield are suggested to be shared at the same percentage as the crop as both parties stand to benefit. Ideally both parties receive a reasonable return for their efforts and investments. The tricky part is assigning values to each of those inputs that are agreeable to both parties, and that’s often where Extension comes in.

This is also the time of year when both Private and Commercial Pesticide Applicators either complete their re-certification or become certified for the first time. Common reasons for people to become certified as Commercial Pesticide Applicators are to help pay for a sprayer they recently bought, or because they already own a sprayer and feel they have time to do some custom spraying to help make ends meet. These same reasons are why most farmers and ranchers do custom work; pay for the machine, spread its cost over more acres or hours, etc.

Although cattle prices have been hovering at record levels, the breakeven price has also been reported as high, and several of the grain commodities have been declining from recent highs, all of which challenge producers.

This is a bit of an advertisement, as SDSU Extension can be a resource for producers striving to make ends meet in challenging times. Hopefully land rent surveys reflect something close to what rates in various are, not to affect them but report what they were at the time of the survey. Much of the research at SDSU is conducted to address economic thresholds of pests, return on investment to fertilizer and other inputs, etc., and can be helpful in making important decisions. The Economics Department generates crop and livestock budgets, marketing information and other profit generating tips. If we can be of help, give us a call or stop in.