MAN­AG­ING YOUR FARM

CON­SIDER MUL­TI­PLE USES FOR YOUR LAND AND MAKE MORE MONEY.

Successful Farming - - CONTENTS - By Shawn Wil­liamson

Tight farm profit mar­gins have some farm­ers think­ing about this ques­tion: How can I make more money with my land? The ob­vi­ous an­swer is to in­crease yields and grow higher-priced com­modi­ties. How­ever, there are a lot of other an­swers, as well. Hope­fully this ar­ti­cle will get you think­ing un­con­ven­tion­ally in re­gard to land us­age.

Many farm­ers are blessed with large, flat, ver­sa­tile pieces of ground, which fre­quently have few gov­ern­men­tal re­stric­tions on use. Some of the land lies within a few miles of a city; some of it runs along in­ter­states. Farms in the Mid­west can grow hun­dreds of dif­fer­ent va­ri­eties of trees. A lot of farms have gas lines and elec­tri­cal trans­mis­sion lines run­ning across them and an end­less sup­ply of wind and sun. There are hid­den val­ues that you some­times don’t con­sider.

Sev­eral years ago, I was think­ing about buy­ing a farm east of Gree­ley, Colorado. When I vis­ited the farm, I no­ticed a bunch of wind tur­bines next to it (and a rat­tlesnake at my feet). The lo­cal farm­ers, who would be rent­ing it, told me the farm was in­fested with vol­un­teer rye, and it would be hard to grow wheat on it. They were not very ex­cited about rent­ing it, so I dropped the deal. A few years later, the thought hit me: Man, am I dumb! I could be sit­ting with a cou­ple of wind tur­bines in Colorado right now pay­ing me $5,000 to $7,000 each. The same wind that blows across the land next door blows across the farm that I didn’t buy.

Wind tur­bines are just one of the many ways you might make more money with your land. Here are some other ideas: so­lar ar­rays, bill­boards, cell phone and ra­dio tow­ers, hunt­ing leases, gas leases, se­lec­tive tree har­vest­ing, you-pick straw­berry fields, you-pick pump­kin patches, road­side veg­etable stands, and camper and boat storage.

Let’s drill down on some of these ideas.

Charged Rev­enue

Re­cently, I’ve been get­ting so­lic­i­ta­tions to rent land prox­i­mate to the ex­ist­ing elec­tri­cal grid to build so­lar ar­rays. The de­vel­op­ers say they want 15 to 20 acres and are will­ing to pay up to $1,000 an acre on a 20-year lease. Even if it’s only half as good as it sounds, it’s worth in­ves­ti­gat­ing and a pos­si­ble win-win sce­nario. The de­vel­oper wins with so­lar en­ergy cred­its; the landowner wins with some long-term above-mar­ket fixed in­come.

Nat­u­ral gas ex­plo­ration leases slowed down a bit when the price of oil and gas tanked, but the crude oil price has more than dou­bled from the low. (You may have no­ticed the ris­ing gaso­line prices.) Nat­u­ral gas leases will fire back up again given higher prices. Those leases can run $100 to $500 an acre for a five-year deal. In ad­di­tion, they may never even set foot on your prop­erty. In those cases, there is no dis­rup­tion what­so­ever to the farm­ing op­er­a­tion – a win. If they, in­deed, search

Cell phone tow­ers are a great way to make money. The lease rates I’ve seen range from $10,000 to $50,000 a year.

for and find nat­u­ral gas, it’s a big win. You might get 1∕8 of the gas pro­duc­tion from that well for the rest of your life, which would be some thou­sands of dol­lars per month.

Cell phone tow­ers are an­other great way to make money. The lease rates I’ve seen range from $10,000 to $50,000 a year and for a tiny patch of land. With cell tow­ers, you can’t rely on the hope that de­vel­op­ers will al­ways come find you. If you’re look­ing around and notic­ing that you own the high­est point in the county, then con­tact tower de­vel­op­ers to let them know what you have and that you’re in­ter­ested.

Lit­tle static bill­boards are prob­a­bly on the way out, but new dig­i­tal bill­boards are on the way in. If you own frontage on a ma­jor in­ter­state, sign com­pa­nies may be will­ing to pay $5,000 to $10,000 per year to lease a tiny bit of land. All they need is an ease­ment to get to the sign and ac­cess to power. These lease deals can be 20 years, which is a nice al­ter­nate stream of in­come. The sign com­pa­nies pay all of the sign con­struc­tion costs and are re­quired to pay for de­con­struc­tion at the end of the lease if that be­comes nec­es­sary.

I’ve talked about the nu­ances of hunt­ing leases in other ar­ti­cles. To be brief, small groups of bow hunters and ri­fle hunters will gladly pay $1,000 to $5,000 a year for ex­clu­sive hunt­ing rights to your ex­tra­ne­ous woods. They will want 40 to 400 acres, but much of that can be till­able. If your land sup­ports white-tailed deer, there is prob­a­bly some­one will­ing to rent it. Of course, be sure to have peo­ple sign in­dem­nity agree­ments and be clear in the lease about the use of ATVs, camp­ing on the prop­erty, and not dis­rupt­ing the farm­ing op­er­a­tion in any way.

A Cut Above

Speak­ing of woods, if you have even 10 acres of ma­ture trees, it’s prob­a­bly worth hav­ing a forester come in and as­sess the in­ven­tory. Al­most any kind of hard­wood can be used to make crane mats or pal­lets. Some of the oaks, wal­nuts, or cherry trees may be ve­neer qual­ity and com­mand a higher price.

If the forester thinks you have enough lum­ber to sell, for a small per­cent­age of the sale pro­ceeds, the forester will in­ven­tory what you have and send lists out to log­gers. The li­censed log­gers will bid on what you have, and you will typ­i­cally run with the high­est bid­der. The forester will mark the trees that will be cut and should come back to make sure only the marked ones are cut. This could make you $5,000 to $25,000 with only mi­nor dis­rup­tions to your farm­ing op­er­a­tion. (Be aware that soil com­paction in the field from the log­ging trucks can be a bit of a prob­lem.)

Here are a few non­stan­dard ways to gen­er­ate in­come: Tough Mud­der races, dirt race tracks, and paint­ball cour­ses.

Some run­ners these days want to get out and get close to na­ture. They want to get muddy and wet. They want to crawl over logs and jump over fire. You can’t do that in the city, so you need a farm with park­ing for hun­dreds of cars and all of the re­quired mud and logs. The race or­ga­niz­ers pay some thou­sands of dol­lars for one day of use and prob­a­bly come back an­nu­ally.

Out in the coun­try, you may have driven by dirt race­tracks in the mid­dle of nowhere. Some­times they’re just tiny ATV or mo­tocross tracks, which you could build for al­most noth­ing and with ex­ist­ing farm equip­ment. Cer­tainly, if you are close enough to a pop­u­la­tion, you could make money charg­ing peo­ple to ride ATVs or mo­tor­cy­cles on a se­lected area of your prop­erty with or with­out a de­vel­oped track.

Lastly, 10 min­utes from my house there’s a paint­ball course in some hilly woods. A few hun­dred peo­ple come out on the week­ends and pay $20 a piece to shoot each other with paint­balls on about 10 acres. Do the math: $6,000 a week­end! It is la­bor-in­ten­sive on the week­ends, but it would al­low you to do plant­ing and har­vest­ing dur­ing the week. The cour­ses rarely change, and they didn’t cost that much to build.

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