Connecting landowners and growers
Tillable offers new Hassle-Free Lease
Whether you are a landowner looking to rent your ground or a farmer looking to expand your operation, the land leasing process could get a little easier with help from a new company that has recently expanded its services into Iowa.
Started in 2017, Tillable is an online marketplace that assists landowners and farmers by using a digital platform that enables Iowa landowners to take care of their farm lease and farmers to find available land to rent.
“We are the first true online marketplace for the farmland rental market and that market is around $32 billion a year in size,” said Jamie Potter, vice president at Tillable. “We help landowners find the right farmer for their farm. We help growers find new opportunities to expand.”
Tillable offers what it calls a “Hassle-Free Lease.”
This lease, according to Potter, provides landowners a one or three year rental offer for their land and pays the landowner up front and in full while finding a farmer to work their land for the duration of the lease beginning in the 2020 growing season.
According to information provided by Tillable, the Hassle-Free Lease also provides certainty that landowners receive a fair lease payment, while eliminating the risk of market volatility, destructive Midwest weather patterns or rental contracts that ultimately damage profitability.
The three-year option is especially attractive for landowners who want longer-term protection.
“We are able to pay the landowner three years up front,” he said. “Farmland, as an investment — a lot of that return is in the form of appreciation and a lot of people understand this — a lot of people know how much their farmland is worth and it may be a million dollar asset that only generates $30,000 of rent a year, so what we are able to do with the three years up front is provide some liquidity without selling it. A lot of these farms have been in the family for years and years and it is a great investment. We certainly urge people to hold onto it. During that three year offer, we give them an option to get cash forward without having to sell that land.”
Finding a fair lease price
Potter said Tillable uses current market data combined with a digital platform to find a fair price for both the landowner and the farmer.
Some of this information, he said, comes from the field’s APH (Actual Production History) as well as other data such as soil samples.
“Over 50 percent of farmland in Iowa is rented and many of those landowners don’t know what their land is worth,” said Corbett Kull, co-founder and CEO of Tillable. “Our Hassle-Free Lease combines current market data with our digital platform to ensure they’re getting paid a fair rental price and Tillable takes on all of the responsibility of farmland ownership — from finding a farmer and negotiating leases, to making sure the land is always properly cared for.”
Potter said they use a market price that is based on fundamental economic principles that make the process fair.
“You have to take into consideration what the farm is worth given the current economic conditions,” he said. “All offers are blind. That prevents prices from being artificially bid up in an auction style.”
All interested leasees have equal access to the information about the farmland as well.
“Whatever data we have is made available to everybody that is interested in renting that farm,” he said.
Any previous rent paid on that land is not divulged, however.
“What we found is that often people think that the previous rent is the benchmark and we want that benchmark to be determined based on current economic conditions and what it is worth to growers at that point, not what it rented for previously,” he said. “This protects the landowner so that information isn’t out there and it also protects the previous grower as well, but it is also key to the process being fair.”
Performance reporting is one of the highlights, Potter said, of the Hassle-Free Lease.
The Tillable platform tracks farm performance data, using data provided by the farmer to report back to the landowner on a consistent basis, ensuring the land is treated with respect so it can continue to provide the landowner lifelong value.
“From a landowner standpoint, the farmland is often the most valuable asset the family owns,” he said. “And, unlike any other investment, people have very little data on relative performance and how that farmland is being taken care of. Our goal is to make sure that is well documented and the investment is being taken care of. We put the right farmer on the right farm.”
Potter said they find the vast majority of growers are willing to share that data with their landowners.
“It demonstrates that they really are taking care of it,” he said. “In exchange, they are able to build a reputation on our platform and expand, and that is key to them because today growing your operation is key to profitability and we help growers use their reputation to build their business.”
Although Tillable is an online tool, Potter said you don’t have to be tech-savvy to use it.
“When you work with us, you can give us a call,” he said.”We certainly do phone or e-mail. The process is really easy. If people are familiar with how you work with a financial advisor, it is very similar. You can log on to your account, see your information, but you can also call and talk to someone and they can send your information to you as well.”