Farm Management

A profitable farming operation requires knowledge of production practices, marketing, agricultural finance and accounting; not to mention new technology regarding equipment, seed, fertilizer, herbicide and the best soil type for your farm.

As you are aware, owning farmland is a big responsibility, but you're certainly not alone. Almost 45% of all U.S. farms and ranches are owned by people whose chief occupation is not farming. There is a lot to know about farming, especially today. Farming is a risky business - it is complicated and rapidly changing.
 Another important issue that has invaded the farm scene in the past ten years is environmental concerns. It is critical to the owner of farmland to know that no one uses or allows to be used any chemicals which may cause any present or future contamination. Chemical restrictions must be adhered to and sometimes what is in the owner's best interest may be overlooked by an unsupervised tenant.
You can enjoy the security of farm ownership, yet not have to deal with the worrisome problems that can be associated with the day-to-day operations on the farm.

As your farm manager, you and your farmland are given our personal attention. This kind of service is what our present landowners appreciate and expect. It has helped to make Farm and Ranch Co. the preferred choice in farm management.

This is an invaluable service that we can provide for you. A service that will make your ownership of farmland less worrisome and more enjoyable. We will manage your property according to your wishes and according to the methods that will generate the greatest return.

Our job as professional farm managers is to serve as an agent for you, the farm owner. The farm manager's reward is based upon his ability to generate maximum income for his client while preserving the client’s asset.

A professional farm manager can help you in numerous ways. Two of the many reasons for using a farm manager are: 1) You want to obtain the maximum rate of return on your farm, yet you don't have the expertise (or perhaps the time) to supervise the operation; or 2) When a farm owner dies, the farm becomes an asset of the estate. It is vital that the farm is maintained and its value increased for the family during estate administration, as well as in the future.
 

To accomplish these goals and others you may have set for your farm, Farm and Ranch Co. will provide numerous services. They include, but are not limited to the following:

• Consult with and assist you in identifying feasible objectives. We will develop a detailed program for the farm that can reasonably achieve the objectives.
  
• Select the most capable farm operator available, which may be the present tenant.
  
• Consult and make recommendations to the operator and to the owner concerning cropping systems, soil fertility programs, and use of herbicides, pesticides, harvesting, storage and marketing of crops.  
  
• Preparing accurate and complete reports of current progress, results of the operation, condition of improvements, and submitting them to the owner as often as necessary.  
  
• Establish crop rental rates, both crop-share and cash, based upon current market conditions.
  
• Provide information and help in estate, income, real property and rental property tax planning and management.
  
• Keep the farm in compliance with conservation plans and Environmental Protection Agency Standard.
  
• Keep track of government farm programs to enhance the farm's potential net income.

What type of business agreement does a farm owner establish with a professional farm manager?  

The contract between the farm owner and the farm management firm outlines the professional farm manager’s responsibilities. In turn, the lease agreement with the tenant specifies the tenant's responsibilities.

The three most common leases are: crop share, direct management and cash rent. Under a crop share lease, the owner and tenant share expenses and income in a pre-arranged ratio (a 50/50 arrangement is common). The farm manager selects or retains the tenant and makes the normal production, purchase and marketing decisions for the owner. Crop share leases work best for farm owners who can stand weather and price risks.

With direct management, the owner pays all expenses and receives all income. The farm manager hires the farm work done on a custom basis and the manager makes production, purchase and marketing decisions.

When a farm is cash rented, the farm manager selects the tenant, but makes no purchasing or marketing decisions. However, it is common for the farm manager to make specifications in the lease regarding crop rotations, fertility levels and tillage practices which the renter must follow. Cash rent leases work best for those owners who need a guaranteed return from the farm.

1. The Owner is a non-resident.

2. Lacks technical knowledge about agriculture.

3. Is hopeful of increased return on investment under another person's supervision.

4. Is unable to work with the tenant operators.

5. Wants to be relieved of complications and responsibility of the farm's operation.

6. Is of an age or physical condition that makes self-management impractical.

7. Is part of an estate, trust, or institution that may require professional management for its property.
 

Any person managing property for others should possess a number of personal characteristics necessary to do the quality of work required. Honesty, sincerity, and knowledge of agriculture are several attributes among many; above all, it must be apparent the manager is working in the interest of the client.

Persons or entities that own farm real estate but who do not wish to supervise it may need or desire the services of a professional farm manager.

How do farm owners (currently using the services of a farm management firm) rate them? According to a recent survey of farm owners with professional farm management, 95 percent of the respondents stated that their farm manager had lived up to their expectations. Plus, 82 percent said their farm manager had significantly improved their farms' profitability. 

The large amounts of capital involved and the necessity for businesslike procedures in managing a farm make it imperative that there be a clear understanding between client and farm manager regarding each persons responsibilities. This understanding covers the responsibility the manager has for various components of management.

The manager has full responsibility and authority in many contract arrangements. The manager is responsible for inspections to gather information, and periodic reports to provide information to the client. The client must be kept fully informed through these reports and letters. The owner may stipulate the frequency of reports from the manager. Usually the manager collects the income, pays the bills, and delivers the surplus funds to the owner. Under no circumstances should a client's funds be intermingled with the manager's personal or other business accounts. Co-mingling this money is a most flagrant breach of business ethics and is not tolerated by the profession. Managers may use a separate checking account for each client.

Marketing:  Marketing crops is often considered a part of the expected services in a management contract. Because of the required expertise and necessary time devoted to it, marketing has become an important aspect of professional management.

Fees:  No attempt is made here to determine the fee structure used by the Farm and Ranch Co. management team. Fees may vary and may be dependent upon: type of farm (crop share, livestock, or both), the size or volume of business, amount of supervision required, and if the farm is direct or custom operated. Fees may be based upon a percentage of the owner's share of income, flat annual charge, or time spent in the management of the farm. After analyzing your farm operation, we will be able to tell you how we can improve the return that you are receiving and the professional fee for our services.

At your convenience and with no financial obligation on your part, we will provide for you a confidential market analysis of your present farming operation. This analysis will provide you with information that will help you make management decisions that are in your best interest; decisions that will put more income in your pocket. Rental income has increased dramatically on farmland in the past few years. We are constantly seeing change. You are entitled to the benefits of change and increased farm earnings. We will get you these benefits.