By Meggie I. Foster
Assistant Editor

PLYMOUTH, Ind. — While the agricultural economy deals with uncertain levels of volatility and a great deal of unknowns, many landowners and farmers are looking into ways to save even more costs and maximize profitability; Howard Halderman of Halderman Farm Management and Real Estate encourages Hoosiers to consider hiring a professional farm manager.

“We’re looking at cropland values in Indiana ranging from $3,000 to $8,000 an acre,” he said. “Assuming a 200-acre farm, that’s a $600,000 to $1.6 million-dollar investment. So by hiring a farm manager you’re looking at a 4 percent return on investment, with a capital appreciation of 5 to 15 percent.

“There’s a lot of upsides; how do you maximize it?”

Halderman, founded in 1930, manages nearly 675 farms, including more than 250,000 acres in 18 states including Indiana, Ohio, Michigan, Louisiana, Arkansas, Texas and California. In a presentation at the Midwest Women in Agriculture conference on Feb. 5, Halderman asked the group “what kind of reputation do you want for your farm? A wet, unkept farm or a good farm?”

He claimed the difference is how the farm is managed and taken care of over time. And, with 50 percent of landowners being absentee – according to Halderman – the importance of a manager who keeps up with trends is critically important to the farm’s long-term value.

While staying in tune with new technologies and innovations, he also said a professional farm manager can negotiate a better lease agreement, securing more cash, cash-flex or more custom and less crop share for the farm owner, depending on the situation.

“We’re seeing a shift to cash flex, which gives the landowner the upside base. Basically, first you figure out the base cash rent, then the base gross revenue (BCR), determine a pricing mechanism, determine the percent spilt over the base gross revenue, calculate the bonus, then add the bonus to the BCR,” he explained. “If your 2009 cash flex lease makes $200 an acre, the fee would be 3.5 percent of 200, or $7 an acre,” he added. “Is a $7 to $8 an acre investment worth it?”

Halderman also claims to stay on top of commodities markets, the rising costs of inputs, government support payments, seed, fertilizer and pest technology, contract product, consolidation, workforce options and regulations.

“All of this can be a lot to get track of and stay in line with trends and what will best maximize your farm’s production,” he added. “With a farm manager, tenant identification and leasing, commodity marketing, farmland quality improvements, building maintenance, timber management, Farm Service Agency program participation and other regulatory compliance and complete financial record-keeping will be taken care of.”

According to Halderman, what makes a farm manager a good investment comes in the form of them learning the objectives and goals of the farm owner, learning the tenant’s goals, evaluating the farm independently for its optimum production, then developing a management plan.

A farm manager also is responsible for reviewing the farm property and liability insurance and depreciation schedule, ordering compliance soil tests, managing capital improvement repairs, maintaining a farm bank account and complete financial reports, keeping in regular contact with the tenant and owner, handling grain and livestock marketing and complying with all government regulations.

“We work to develop a good working relationship with the tenant so we’re all on the same page,” he added.

As for service fees, Halderman said his firm offers three different types of payment options: flat fees, percent fees and blended fees. Flat fees range from $5-$15 per acre depending on the extent of services provided, while percent fees range from 5-8 percent of the gross income of the farm. He explained blended fees as $3 an acre plus $5 of the net income, or $7 an acre plus 1.5 percent of the gross income.

“The number one thing we do and specialize in is negotiating leasing the farm,” he said. “And it not always about seeking the highest bidding; it’s about finding the right tenant to best meet the objectives and goals of the farm owner, all while sustaining the farm’s maximum productivity.”

For more information on Halderman’s services, visit www.halderman.com or call 800-424-2324.