Farmland letting remains subdued, says CAAV

Area-based subsidy payments have subdued farmland letting across England and Wales since their introduction in 2003 – and continued to do so in 2018.

According to the annual Central Association of Agricultural Valuer’s (CAAV) Agricultural Land Occupation Survey, very little land changed hands in the year to 31 October 2018, with fresh lettings falling by 15% to 4,651 acres. Jeremy Moody, secretary and adviser to the CAAV, attributes this to area payments, which rewards the occupation of land, “We are seeing a situation whereby good land is not being used as effectively as it could be; more land could be let were it not for the Basic Payment.”

In addition, the average length of Farm Business Tenancy (FBTs) – including seasonal grazing – declined from 3.97 years last year to just 2.9 years in 2018 – or from 4.98 years to 4.14 years where short-term lets of under a year are excluded.

“This appears to reflect the caution of both owners and prospective tenants about being committed to longer term arrangements ahead of potential post-Brexit changes to trade and support,” says Mr Moody. “A 10-year tenancy let in autumn 2018 would run until autumn 2028 and so potentially see the complete removal of Basic Payment and many other changes to markets and rules.”

However, larger and fully equipped units are generally let for longer on average – at seven and a half years – than bare land, enabling both landlord and tenant to plan for the future.

Despite the stagnation of the sector since 2003, the extensive adoption of FBTs means that the tenanted sector in England and Wales is larger than it was before the 1995 reforms. “Now half of all let land across the two countries is in FBTs,” says Mr Moody.

“While old tenancies under the Agricultural Holdings Act 1986 still cover a significant share of agricultural land, successions are to predominantly larger, well equipped farms, rather than bare land.”

Where old succession tenancies ended, the land was re-let in 65% of cases, while 92% of FBTs were re-let. “Fresh lets marginally outweighed losses from sales and land being taken back in-hand, resulting in a small net increase of 1,588 acres in the area of let land. This compares with an average annual gain of 35,000 acres between 1996 and 2003 and annual losses before tenancy reform of 60-90,000 acres,” says Mr Moody.

“In reality, the trend continues of a virtual standstill since 2003, when the first indications of the impact of CAP reform were becoming apparent and particularly since 2006 once entitlements to the Single Payment Scheme had been allocated.”

The main source of lettings was from private landowners, not institutions or public sector bodies, and new entrants accounted for 23% of lettings where the land went to a new occupier, he adds. New entrants tended to obtain longer tenancies than existing tenants, with a third taking on a term of more than five years against just 8% among existing tenants

“The more opportunities we can create, the more opportunities there will be for new entrants to access land and farms.”

 

 

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About The Author

John Swire - Deputy editor of Agronomist and Arable Farmer as well as responsibility for the Agronomist and Arable Farmer and Farm Business websites. After 17 years milking cows on the family farm John started writing about agriculture in 1998 and has since written for a variety of publications and has developed a wide circle of contacts within the industry. When not working John is a season ticket holder at Stoke City and also of late has become a fitness freak, listing cycling, swimming and walking as his exercises of choice.