The Tenant Farmers Association is warning that the difficult start to the year experienced by many farmers throughout the country will continue to impact on farm businesses for the remainder of the year.
TFA chief executive, George Dunn said “the prolonged period of cold and wet weather since Christmas has affected farmers right across the country and of all farm types and sizes. Many farmers in England have also been impacted by late or no payments from their agri-environment scheme contracts with Natural England, and continuing delays and administrative difficulties in their dealings with the Rural Payments Agency on the Basic Payment Scheme”.
“Livestock farmers have had to buy in considerable quantities of expensive feed and fodder for animals which have been kept in longer than expected. Arable farmers have had to write off some winter sown crops as well as being delayed in getting their spring crops drilled. Field operations in general have been massively disrupted. All of these issues will feed in to the bottom line of the majority of farm businesses regardless of their wider business management performance,” said Mr Dunn.
“There is no doubt that margins will be squeezed and many farmers will be under severe cash flow pressure having higher than expected costs and lower than budgeted returns. This must be reflected in this year’s rent reviews which, coupled with the future uncertainty surrounding the implementation period for Brexit, should result in at least standstills if not reductions in rents for both Agricultural Holdings Act 1986 tenancies and Farm Business Tenancies,” said Mr Dunn.
The TFA is also concerned that new tender rents for Farm Business Tenancies are being pitched at unsustainable levels.
“Even in more favourable circumstances it is difficult to see the justification for the tender rents that are often quoted for land offered on Farm Business Tenancies. With this year’s particular difficulties, rents of around £150 per acre or more are simply insane,” said Mr Dunn.
Recently issued rent statistics from DEFRA suggest average levels of rent on Farm Business Tenancies in 2016 were much below some of the headline figures often quoted.
“The DEFRA statistics indicate that average Farm Business Tenancy rents are just below £90 per acre. This shows that many landlords and tenants are doing sensible deals on rent and ignoring the headline grabbing levels that are often quoted by landlord’s agents. This must be properly included as part of the market evidence required in conducting future rent reviews,” said Mr Dunn.
“For such a time as this, policymakers too must reflect on the implications that factors beyond the control of the farming community can have on future farm business profitability and resilience,” said Mr Dunn.