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Renting farmland? How to calculate what you can afford and keep profitable

Reference: FCC

Renting farmland is a strategy commonly used by farmers with growth on their agenda. As land values across the country continue to climb, renting can often be a more affordable route to expansion than buying. But how do you determine what rental rates you can afford to pay?

Manitoba Agriculture and Resource Development farm management specialist Darren Bond says it’s a common question.

“It’s a question that many producers ask themselves because there are no transparent market listings like you would see for land sales,” Bond says. “Rental rates are highly dependent on land productivity and competition, and producers and landlords are reluctant to reveal them.”

Management tools like the MARD’s RentPlan resource provide a template for farmers to calculate their costs of production to determine fair market rent. Simply put, the production cost-based method subtracts all costs and profit expectations from gross revenue to determine the highest possible land rental rate... Read More