 Welcome everyone to the Farming Podcast brought to you by Private Property. My name is Mbali Nwako and thank you so much for joining us today. I'm at the farm today so it's a bit of a different background or scenery in terms of what you're used to. Today I'm writing solo and I'm going to cover topics of questions rather, yeah, I'm covering questions rather on a specific topic relating to farm rentals or rental agreements or arrangements with farms and everything that has to do about renting farms. And the reason for this is because we've received a number of requests whenever we have to speak about land and the benefits of renting land, people just wanting to know a bit more in detail about farm rentals or renting farms, the pros and cons, what to look out for, the things to do, etc. So we've drafted a number of questions that are most commonly asked or most commonly phrased to us regarding renting farms. So I'm just going to go through them, I'm going to read the questions and then just answer them to the best of my knowledge, best of my expertise and maybe just give some examples as well just to put things or bring things in context so that you could understand correctly. So the first question is how can someone go about renting farm space, who do you approach? So when you're thinking about renting a farm, you need to firstly know what type of commodity you want to farm, okay? So typically if you're going to farm maize, you would need a farm with bigger hectares or a bigger size of land to farm maize. If you're going to do vegetable production, it's completely up to you how many hectares you want to cultivate or produce on. If it's livestock as well, you need to know because cattle, for example, cows would need much bigger farm space as opposed to goats and sheep. And this all depends firstly on terms of the size of the land that you're going to rent, you need to know firstly what commodity you're going to farm. That will first then determine what type of size farm you need. And how you go about finding farms to rent is firstly looking online at property sites, for example, like the private property site. There are farms for sale and there's a farms for rent section. If you check online and you find something that you really do like, go out, contact the agents, drive to the farm, see if the farm has a relevant infrastructure for you to start farming on. Ask any questions, but you need to make sure that you see the farm first so that you are satisfied with what's available on the land. And you can make an informed decision of what to put out there or develop in the farm or what you have to remove for you to obviously start your farming operations there. So checking online at private property site, at private property, for example, looking at the farms to rent. Who do you approach? Besides the private property site, you can also approach or contact property agents that specialize in farms or in agricultural properties. They would know the area in which they operate in much better than you and I. And so they would know which farms are for sale, the history of the farm, who was there, what type of farming was done on that land, et cetera. So besides the online property site, contact an agent, another thing is that you can also drive around, drive in and around farming communities and neighborhood. Speak to the employees there, speak to other farmers there, speak to the property owners that are living on agricultural holdings or farms because you might find that they do not have any desire or need to start farming, but they've got an abundance of space that you could start renting out. So these are the type of individuals that you approach, approach first and foremost when you are looking for land to rent. The next question is, what advice can you give on picking the right farm space when looking to rent land? So how you determine if this farm is space for you is firstly understanding the history of the farm. What was cultivated on that farm? How much water does the farm have? Does it have water, for example, bull hole? If you're going to be farming on dry land, you know, you need to understand is there is this area, an area that has high rainfall, for example, so that you know that by the time you start planting your grain, for example, you know that you're going to get a good harvest because there's good or high chances of rainfall. So these are some of the things that you need to look out for. Also, what could determine if this is the right farm for you is things like the soil, doing soil tests. Is the soil good enough for me to cultivate? What has been planted on that soil before? Things like, you know, how close is it to market? How close is it to the nearby communities where you could find labor? Do you have to hire people in and around the area? Or would you have to find people in a nearby town as well that you would need to transport to and from the farm? So all of these are things that you need to ask yourself to be able to make an informed decision on whether you sign on the dotted line on the lease agreement. Also, if you need infrastructure on the farm, for example, a pack shed, a pack house, worker accommodation, fencing, gate security, you need to make sure that is this farm the right type of farm for me. Does it have the things that I need to start my production? And based on your requirements and having checked that farm, then you would be able to make an informed decision of whether this is the right farm for you or not once you've decided upon the farm. The other question is, what are the main restrictions that come with farming on rented land? So I would think that the restrictions are basically dependent on your growth strategy. For example, if you're farming on rented land, we all know that you can't put an infrastructure, for example, make any major innovations because it's not your property. You're basically increasing the value of someone else's property or farm. And so it really depends on your relationship with your landlord or the owner of the farm. So for example, the restrictions is that you cannot make major developments because you are improving the value of someone else's farm. The other restrictions is that if you're going to approach funding or financing in the near, in the future, whether it's 10 years or five years, sometimes financial institutions like banks or investors typically want you to own the property so that they know that the money that they're investing into is secured. Should anything happen on the property, they can be able to take that farm or that land as some form of collateral. So and if you're renting the land, these are some of the restrictions as well. And also when you're renting farmland, you really do not know or have control of the owner's finances. Because for example, you might be renting from an elderly couple who stay in that farm or that agricultural holding. And if it so happens that they die and then their children come through after their death and they decide that I want to sell this property or I want to make major innovations. These are the things that maybe might put a risk in your farming operations because you do not have control of what happens on that property. You may find that the landowners as well should they pass away. They may be in a financial distress and where the estate has to take the property to pay off certain debts or loans. And that lease agreement that you would have signed on would essentially become null and void because the banks or the financial institutions really have to close their estate and do whatever they have to do to wind down that estate. So if the landowner is in a financial position where some of their personal assets have to be removed, this may cause a disruption in your operations or be a huge risk in the longevity of your farming business. So these are just some of the restrictions or negatives that come with renting land. You do not have complete control over the property and you just never know what might happen in future on some of those instances that I mentioned. I'm going to just read another question here. For startup farmers, what do you think are some of the benefits to farming on rented land? So as much as I've mentioned certain restrictions, the benefits on renting land is that firstly you're renting right and therefore renting provides flexibility on growth or on how you conduct your business or how you can grow your farm, you know, you might be thinking, okay, I'm going to rent this farm for just two or three seasons while I'm growing my maize or my sunflower, you know, and you can invest in your farm business for about two or three seasons, which is about two or three years and farm after that, once you've harvested, you've gotten all your money, you can obviously leave and go to a new farm. So you really don't have an asset holding you back, you know, that you have to constantly maintain and improve and develop as the seasons go by. So you can just simply rent onto that farm. You don't need to put in further capital or investment on that property. You could just literally be in and out as when the season starts and when it ends. So that's benefit number one. Benefit number two in terms of rental, you don't have to pay the property and this was all dependent on the agreements that you have with your landlord. You don't have to pay things like property rates, et cetera, and really having to maintain that farm every single month, you know, in terms of infrastructure and security, et cetera. You are there to farm and depending on what you agreed with your landlord, you need to be held responsible for what usage you would deliver. Another benefit of renting a farm is that besides the flexibility as well, you could decide to rent many other farms, you know, as part of your growth plan. So sometimes you're just not stuck into one property. For example, if you're thinking, OK, I want to farm vegetables quite intensively in greenhouse tunnels, let me invest in a two hectare farm, for example, and you find that within a few years, the business is growing and you need more space. What you may need to do is then go buy another farm or rent another farm. But if you're starting off renting certain tunnels, you could keep renting tunnels in different, in other areas that are based for your environment so that your crop can be cultivated year out. For example, you might be a paper farmer in Joberg in Houtain and in the winter season, you really can't farm papers. This is unless you don't, if you have any heating structures, et cetera, in your greenhouse tunnels. But in that winter season, you might think, OK, let me go rent another farm in a warmer area, for example, Nimbopo, Northwest, you know, so that during the winter period, you still have continuous supply of your paper crops. Whereas in the Joberg farm, you'll just substitute that crop with another winter crop. So the benefits of farming on rented land is that you have full control of how you decide to farm. It could be that you just want to farm papers, but just reuse the renting model, renting warmer areas, instead of having to build on a new farm and develop a good infrastructure that will ensure that you get a successful harvest of your papers at the end of that season. So I think the benefits of renting a farm is that you have complete flexibility. You don't have to monitor and manage an asset on a monthly basis. And if you really want to move or exit out of your business, renting a piece of property or a farm is the best form of it will really help you in your exit strategy, because there's not much that would need to happen once you exit. You know, you just make sure that whatever you've harvested within that season is completely out of the ground, and then you move on to the next. And those are just some of the benefits of renting farm space. The other question is, what sorts of factors can determine the value of farmland on lease? Yeah, so this one is quite a tricky one. And I say this because I've been approached before by certain individuals who have said, hey, Mbali, I watched your video on the farming podcast talking about leasing land. Now, my only problem is I don't know how much land to lease should be, for example. How much do we then determine the rate per hectare? Or how much do we determine the rate per farm to lease? So I think this is completely up to yourself, the individual, the person that's going to rent, and as well as the person that you're going to rent from. This is the property owner. I think what you need to do is, first, you have a conversation with them. Let them know what you're looking to do on that land and just find out what would be a fair value or a fair amount on a monthly basis for you to rent from them. To see them out, if you're happy with that value, then you can go ahead and start your production. If you're not, you can just negotiate up until you come to a point where you're happy with the value and you can ensure that once you start farming, you are able to generate enough revenue on a monthly basis to commit to that monthly fee. Another thing, especially on farm rates, so I cannot say, for example, the standard rate is, for example, 10,000 per hectare or 5,000 per hectare. In my previous farm, it was a 14 hectare. I felt like my rental fee was pretty reasonable and simply because my landlord was just a reasonable lady. So I feel like I got it off as a bargain and I was able to just start my farming operations. I have friends who are farming in the West region of Johannesburg who, for example, one particular farmer is renting next door and he's renting at 5,000 grand per hectare on that farm. So, you know, that's 5,000 grand per hectare on that farm might not be the same for a farmer who's in Omalanga region, okay, it's in region. So it really depends on the value of the property, what the property owner feels is fair for him or her as a rental fee. Also, you could just, I think, determine also on the value of the property in and around that area. I know sometimes on property sites, like private property as well, when you check on a specific property, you can see the listings of other properties in that area and how much those farms were bought for or sold for. And sometimes they have the spawned calculator function where you can determine how much, if you have to buy the property, how much you'll be paying for that bond on a monthly basis. Some people use that figure to determine how much they should get on their farm when they're renting on a monthly basis. So I would definitely say, be creative on this one. It really also depends on the relationship that you and the land owner have and what you've agreed on and make sure that if you agree to that price on a monthly basis, you can pay for that once your production starts. Another thing that I wanted to mention, especially on the fee of renting farms, is that some farmers don't even, I know farmers who are renting on farming land but are not necessarily paying per month or on that farm. They are paying per hectare or for that specific season. So if I had to mention season, for example, let's say you're gonna be farming maize and you know that, for example, if you start planting in November, you harvest roughly in June. So some people are able to negotiate in such a way where they say, for example, hypothetically speaking, I'm just gonna throw a random number. Let's say I'm going to pay you, for example, 30,000 rand from just plowing, putting my maize on the ground from November to June. When that farmer is done with harvesting, you would give that the property owner 30,000 rand, for example. So these are just some of the, I think innovative ways in which you could really flex your muscles and see in terms of what would be the best rate for you per month or per hectare or per season for you to rent on. And it's just really an agreement or a negotiation between yourself as well as the property owner. And I think I've got the last question here. It says, what sort of restrictions, if any, can a land owner impose on a renter? Example, restricting what types of crops can be farmed on the land? So yeah, this is quite a good question. I've never been a land owner myself, but I was renting in my first farm. And if I think about my experience, there wasn't any major restrictions that I can recall. Besides the typical rules, for example, if you break for anything, you pay for what your restrictions could be. Do not sub-lease my farm. So for example, I was renting a 14-hectare farm and let's say I decided that this 14 hectares is too big for me, let me split it and maybe sub-lease. Let's say, for example, seven hectares to another farmer that was not allowed on the farm that I was renting. So I was not allowed to sub-lease that farm to another farmer so that I could pay off that monthly fee. Some of the other restrictions is, for example, if there's infrastructure on that farm as well. Again, you break, you pay, but also if the land owner might say, do not develop this farm any further, but if you do, you need to communicate with me so that I'm aware of what you're doing, et cetera. Do not put in any major improvements as well on this farm without my knowledge. So I think the restrictions could be quite broad. It depends really on what is on the farm. Some farmers, for example, if you're deciding to plant field crops, maybe some farm owners would say, yes, you could keep workers on this farm or no, they have to travel to and farm. I don't want any workers residing on this farm. So I think it's just depending on what the land owner says and what you come across and make sure that if those restrictions are imposed and if there's certain things that you can do or not do on that farm, you need to think in the future, is this gonna be sustainable for you? For example, should I go, would I need additional space? Would I need to make additional improvements? And if based on that answer and on what you signed in your lease agreement does not tie into that plan, then you know that this farm is really not the right one for you. So once again, these questions were questions that were typically raised by audiences who are watching the farming podcast and really have an interest in farming on rented land. But these are some of the questions that have since have popped up in terms of what really happens on rented land? Who has control? What do I farm? How much should I pay on a monthly basis? What's the average rate or industry standard rate? Which I must really emphasize that it's really dependent on what you negotiate with the owner, et cetera. What can you do on rented farms and what can't you do? Remember that it's completely based on what your strategy for your business is. Some people prefer to rent. Some people prefer to own property. You need to know that when you own property, you're increasing your own personal asset and value and the farm's business assets or value as well. But also know that once you own the property as well, you need to fully maintain and manage that property as well. Should you decide to exit the farming industry, then you're stuck with an asset that you need to sell. You might sell it at a higher price. You might sell it at a lower price, depending on where we are in the industry and the economy at that time. Also when you're renting as well, it gives flexibility in terms of what you can't do on the property. You might rent for two months or three months or for a specific season. Make your money, pay the landlord and then move on to the next. So these are just some of the pros and cons of renting on farming property. But yeah, if you have any other questions, please feel free to ask them. I hope I've been able to cover enough on the six questions that I spoke about. And yeah, keep engaging with us. We really would like to know what your thoughts are around farming. And if I know this is a bit of downtime in December, you can really think about is farming a decision that I wanna... Is farming something that I wanna pursue? And if you're making that decision, really think through in detail whether you wanna rent or own that farm. And even if you're renting, seek the advice of property agents. They will tell you about that area or the different farms that could be based on what you wanna cultivate or grow on that farm. So thank you so much for joining the Private Property Podcast. And please join us on Thursday as we have a guest that will be on the show. And yeah, if you have any questions about today's live as well, continue to ask those questions and we will answer them on whichever platform that you're in post this live. Thank you so much. Please share this video and I will see you on Thursday.