Lower Commodity Prices Driving Rental Rates Down

A recent news update from University of Missouri Extension indicated that, “Renters and property owners are negotiating new farmland leases in response to lower farm commodity prices, says University of Missouri Extension agriculture business specialist Joe Koenen.

Communication helps landlords and tenants find a middle ground for new leases, Koenen says. Landlords in tune with lower farm prices recognize that tenants will request rent adjustments. ‘I know of renters who are negotiating leases. Several are being successful,’ he says. ‘Overall, so far it seems relatively smooth.'”

The Missouri Extension item noted that, “Some owners, however, resist the change. Landowners who invested in land with expectations of a set return seem most reluctant to renegotiate new terms, Koenen says.

“Open communication between landlord and tenant throughout the term of the lease—not just when down markets hit—is key.

“‘Communicate every year, not just when prices go down,’ Koenen says. Talk to landlords about income and expenses and how that affects your bottom line.”

The update added that, “Tenants who are good stewards of rental property should remind landowners of this. Loyalty and tradition still matter in rural areas, Koenen says.”

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