Men checking soil in field
EVALUATE FARMLAND: Different kinds of metrics that are important to landowners can be used to help them measure returns from farmland. Analyzing the information can lead to better farmland lease arrangements and decision making.

As a landowner, what are your Key Performance Indicators?

KPI's are critical factors to watch, to help you steer your business in the right direction.

Editor’s Note: Greg Townsend is an agronomist with Farmland Stewardship Solutions, a farm management and advisory service based in Des Moines, Iowa.

Owning land is a privilege that brings with it an obligation. The most important factor in buying farmland is purpose—why are you buying it? Whether you’re an investor looking for a specific rate of return or a producer looking to grow the size of your farming operation to bring in a family member, or maybe you inherited the property and want to continue its legacy. In all of these cases, having clear ownership goals is a must.

Most people feel the obligation to leave the land in better condition than when they received it.

Owning farmland is a business, steer it in right direction
Landownership should be looked upon as a business, and there are critical factors looked at in order to monitor and steer the business in the right direction.

One business metric used to evaluate factors that are critical to the success of the business is called KPI ….Key Performance Indicator. The concept of Key Performance Indicators (KPIs) is not new. However, it may be somewhat unique when quantifying the performance of farmland. Landowners can use them (KPI’s) to identify weaknesses in farming operations, as well as to help set specific targets for their farms.

You then can follow the progress to see if improvements were being made to boost productivity and sustainability of the land. Each KPI provides a valuable insight into the efficiency of utilization of farm resources and management skills of the tenant.  

If you own farmland, you need to develop its KPI’s
If you own farmland, have you developed your farm’s Key Performance Indicators?  As mentioned previously in this article, each piece of property is different in its needs and its productivity levels, right down to the field level. As we work with landowners at Farmland Stewardship Solutions, we recommend some general areas that KPI’s can be developed and measured to assess your farmland’s value:

  • Productivity/Return on Investment
  • Soil Health Maintenance
  • Soil/Nutrient Run-off
  • Wildlife Environment and Biodiversity Protection
  • Conservation Planning
  • Water Quality

Establish the best Key Performance Indicators for your farmland
It must be stressed that no single KPI should be used by itself to assess farmland performance and profitability, since each KPI is the end result of interactions between many farm inputs. It is important to make sure there is a balance between their use so that one production target is not achieved at the expense of others within the farming operation.

On-farm data collection of this information plays an important role in assessing how well your farmland is progressing. Remember, it is vital that this data is gathered and that it is analyzed. That’s part of what we do at Farmland Stewardship Solutions as we initiate a systematic approach to establishing the best lease arrangement between landowner and tenant based on data. For more information, visit farmlandstewards.com.

Landowners are invited to attend Dec. 14 meeting in Des Moines
Farmland Stewardship Solutions cordially invites farmland owners to attend an informal meeting and discussion on key current topics of interest. Crop yields the past four years have been high resulting in low commodity prices which impact landowners and farm operators regarding your lease negotiations. Join us at this meeting as we help you answer the following questions:

  • How did the 2016 crop year end up and what to expect in 2017?
  • What should we expect for land values and rental rates in 2017?
  • What are flexible cash rent leases and why are they becoming more prevalent? 
  • How has consecutive years of high yields affected my farm?
  • Do cover crops make sense for my farm? Who pays?
  • Why is data from my farm important to me?  How do I get it?  Who can help me understand it?
  • How to establish a cash rent based on your farm performance?

To get answers to the above questions, Farmland Stewardship Solutions is sponsoring the following meeting. Come be part of the discussion along with other landowners in similar situations as you. The meeting is Wednesday, Dec. 14 from 10 a.m. to noon at The Machine Shed Restaurant, 11151 Hickman Road, Urbandale, Iowa. There is no charge but your RSVP is requested. Phone 515-243-9352 or send an email to info@farmlandstewards.com.

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