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Grand Rapids, MI | Well..perhaps another consultant is needed to chime in here ;-) Of course you will get what you pay for :-)
I think Russ has a good point about risk. I am certainly not the expert on alfalfa, but my understanding is the price can vary substantially depending on the quality and the form of the crop.
That being said, I would expect the landowner would expect to be paid for the "highest and best use" of the land. Therefore if it was renting for corn/soybeans before, I would see little reason for the price to decline due to the alfalfa use. Carl makes some good points re: being good for the land, but my guess is it would be rare for a landowner to put much value on this, or if he/she would it would likely be a situation where they know they have compaction or some other problem that they know alfalfa would cure. The only other exception I know of is some people just want a field of alfalfa around their house or farm for asthetic reasons.
All this being said, if share cropping for alfalfa is uncommon for your area, I think you will have to do and present some analysis comparing a proposed arrangement to a corn/soy share crop. If there are variations in the timings of the landowners cash flows, I would either seek to adjust them out in the share percentages or use a time value of money analysis like a NPV to compare. Of course for less financially sophisticated landowners the former may be an easier sell. The bottom line is if you can show a similar return for a similar risk, and sell the environmental benefits of the alfalfa, I would think you have a winning proposal.
If you need assistance in putting together the numbers or a presentation, my firm may be able to help. If you are interested we should talk off the board about that.
Hope this "consultants" answer helps some :-) | |
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Extension Agent is an IDIOT
