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Managing Risk Through Communication

Managing Risk Through Communication. Presented by Michael C. Smith Henderson County Extension Agent January 12, 2012 RISK MANAGEMENT FROM A LAND-LEASE PERSPECTIVE. The number one complaint consistently shared by land owners is -

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Managing Risk Through Communication

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  1. Managing RiskThrough Communication Presented by Michael C. Smith Henderson County Extension Agent January 12, 2012 RISK MANAGEMENT FROM A LAND-LEASE PERSPECTIVE

  2. The number one complaint consistently shared by land owners is - “My tenant takes me for granted and fails to communicate with me.”

  3. Today’s competition for land makes it easier for landlords to change tenants than it does for farmers to come up with more land.

  4. There are two basic things todays farmers need in their tool box. 1. Resume 2. Newsletter I will provide you with examples of each. Take these seriously and use them!

  5. Today’s farmers are sophisticated and technologically advanced. Today’s landlords are the same. They are family members, individuals (mostly women in this county), and investors. They have financial goals the same as farmers.

  6. Building trust and a relationship starts with the first meeting.

  7. Let’s take a look at a set of questions that landlords should be prepared to answer and tenants should ask.

  8. What are the best methods of communication for your landlords? What information about the farm is important to them? Would they prefer a long-term relationship or are they interested in a year-to-year rental? Do they want fertility built up or just maintained?

  9. 5. Are they interested in high cash rent or high value rent? Do they prefer cash over aesthetics and fertility? How much detailed information do they expect annually? How many times per year would they like specific details versus just stopping in for a visit?

  10. Think of it this way, asking these types of questions will give you more information for decision making.

  11. Once you have covered these questions, the second meeting should contain more specific questions.

  12. Your specific margin goals? An acceptable rate of return, long- and short-term goals. Rent value? “Current rental vs. market value, yields, markets, and input costs”. Land Improvement? “Tile, waterways, fence rows, building sites, conservation, etc.” Yields? Realistic goals, yield mapping reports, and sharing opportunities.”

  13. 5. Additional income? “Alternative land uses and additional income opportunities.” 6. Marketing? “Opportunities and results” 7. Annual financial results? “Detailed comprehensive reports.” 8. Annual lease review? “Mutually agreed upon, annual information exchange.”

  14. I know this seems hard, but getting started is the hardest part.

  15. We are building a sustainable working relationship. One that will help landlords monitor farm progress with increasing value and tenants that are progressive and have the ability to meet landlords’ needs as well as their own needs to show profitability.

  16. Managing RiskThrough Communication Presented by Michael C. Smith Henderson County Extension Agent January 12, 2012 RISK MANAGEMENT FROM A LAND-LEASE PERSPECTIVE

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