Disclaimer - The following is meant only for educational purposes and not to be construed as legal advice.
The author of this article is a licensed Real Estate Managing Broker in the State of Illinois.
Managing a farm is a big job. It requires oversight of the farmer(s) who lease the land, tracking records, and monitoring soil health and fertility to name just a few. If the farm is being leased as a “crop-share” agreement, grain marketing and staying current with USDA programs are added to the list. There are times when the landowner is not able to handle the full responsibility and a farm manager is hired.
To begin, I highly recommend that your chosen farm manager is legally licensed in Illinois to manage property. You can check with your manager or the State of Illinois Department of Financial & Professional Regulation Real Estate Division if you have questions about this.
Take the task of hiring, firing, and managing your farm manager seriously. A good farm manager is a very valuable person to have on your farm team. Choose wisely and pay attention to what is going on with your farm.
As you begin the search for a farm manager there are some important factors to consider.
Number of farm visits per year
Some farm management departments require one farm visit per year to inspect your farm. These farm management departments sometimes call these inspections “drive by” inspections. Make sure your farm manager visits your farm multiple times per year. I recommend that managers inspect the farm at least four times per year. The final count would depend on the farmer and the farm conditions. If more inspections were warranted, then more should be done.
I personally know a few farms that have never been physically seen by the manager. However, some of these were inspected by a third party due to distance from the farm management office and the farm.
Understanding and maintaining soil health of a farm is critical. Every good farm manager will be able to address important issues such as soil erosion and soil fertility. I strongly recommend that all landowners educate themselves on how to read soil tests and know how often their soil should be tested. Then be prepared to judge how well the potential or current farm manager really knows what is going on with your farm’s soil.
Some farm management departments go through a lot of farm managers. Years with a company and overall experience are important facts to learn about a potential farm manager. If someone is highly experienced, the follow-up question should be about how the company monitors the farm manager’s success with their job.
Cost of service
How much a farm manager charges to take care of your farm ranges broadly. Familiarize yourself on the price range in your area and how the amount is calculated. Typically fees are calculated in two different ways: 1) a gross percentage of the cash rent or 2) a percentage of the revenue generated on a crop-share lease.
I have seen farm managers that are responsible for as few as 5,000 acres and others that manage over 20,000 acres. More important than the number of acres is the overall workload. How busy a farm manager will be is indicative of how well your farm will be managed.
A farm mananger with good office support, good farmers, good record systems, fewer farmers to manage (a few farmers operating a lot of acres), and a lot of experience can effectively manage a lot of acres. Handling a lot of different farmers that operate a smaller number of acres each requires more time and effort.
For crop share farms, marketing grain should take considerable time to manage. As you interview potential farm managers, discuss the various times and thought processes that go into selling grain. These are some important considerations:
- Does the manager sell grain only when bills are due?
- Do they sell consistently late in the season and sometimes miss market rallies?
- Do they seem to plan ahead to avoid problems, or do they manage by crisis?
Licensed real estate brokers: Selling vs. managing
As mentioned, farm managers in Illinois are licensed real estate brokers. Selling a farm brings a quicker and higher payout than managing farms. A farm manager that sells a lot of farms certainly can do a good job in managing a farm, but does this person really enjoy managing a farm as much as or more than selling one? Managing farms requires placing a priority on the management responsibilities and you don’t want other activities to “get in the way” of properly managing your farm.
Farm management company and bank lender
If your farm management company is also a bank lender, ask if the bank gives preferential treatment to farm loan customers. This can can have an effect on the process of hiring a farmer for your land. It doesn’t mean they won’t find you the best farmer for the job, but it may limit the pool of candidate.
If the bank givers preferential treatment to farm loan customers, a benefit is that the farm manager likely has information on the financial stability of the farmer.
However, since it can limit the pool of eligible farm tenant candidates for your farm, it could also mean lower competition and result in lower rent. You can ask to be a part of the farmer selection process and participate in interviews.
MEET THE AUTHOR
Kevin Brooks is the Farm Business Management and Marketing Educator for Fulton, Mason, Peoria, and Tazewell counties. He grew up on a corn and hog farm in Iowa. He received his bachelor of science degree in agriculture business from Truman State University and his master of science degree from University of Missouri in agriculture education.
Kevin is licensed in Illinois as a real estate broker with harVestco LLC in Champaign, IL. He has professionally managed and consulted on over 25,000 acres of farmland and marketed grain for farm management customers as a professional farm management and trust officer. Kevin has taught Farm Management, Agri Business Management, Crop Science, Crop Production, Soil Science, Pesticide Application, Grain Marketing, and General Horticulture at the college level.
Kevin holds agriculture teaching certifications in Illinois and Missouri. He is also a commercially licensed UAS (drone) pilot holding an FAA Part 107 license. He has worked in agricultural input sales (farm chemicals and seed) and is trained in agronomy through Purdue University and Iowa State University. Early in his career he worked for USDA, as a Farm Management Specialist, working primarily on farm loan analysis.
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Farm Coach helps farmers and landowners navigate the rapidly changing farm management environment of today's world.