IF you could rent another farm!!

tepapa · Sep 19, 2017

Who the hell would farm 200 acres for £5k extra.?
But you had better take it on boss or you'll get left behind all the other expanding farmers

Bossfarmer · Sep 19, 2017

Steakeater said:
Do you ever make any decisions on your own? This is such a ridiculously grey topic.

can you not just get involved in a discussion rather than get personal?

Henarar · Sep 19, 2017

some land round here I wouldn't give 50 quid an acre for

DRC · Sep 19, 2017

tepapa said:
Who the hell would farm 200 acres for £5k extra.?
But you had better take it on boss or you'll get left behind all the other expanding farmers

I agree with the sentiment, but I bet a lot are.

digger64 · Sep 19, 2017

Bossfarmer said:
I wouldnt be living entirely off the rented 200 acre would i, might only make 5k profit on it after rent

£5000÷200acres= £25 ÷ 3 tonnes = £8.33 drop per ton would mean break even before even thinking about extra fixed costs - hope you value the straw ,your time and never breakdown . Would you put any value on risking the timeliness on your existing business margins ?[/QUOTE]
thats all factored in of course[/QUOTE]
I tend to regard machinery operations as variable costs for crops others dont, I can see that doing more reduces some costs per acre but I wish someone would explain how anything is gained if the benefit is immediately given away in the form of rent and roadwork unless you can knowingly make a deal at the bottom of the price curve guess it's called risk analysis , at that level I don't think a bank would be knowingly very impressed

Derrick Hughes · Sep 19, 2017

Bossfarmer said:
IF you could though? sucklers? sheep? grain?

Depending on where but grain here on good land

Dolomite · Sep 19, 2017

Renting another farm?! Why rent when you can buy.

Then again it's hard enough just getting onto the rental farm ladder never mind taking on another farm or more land. Wouldn't it be more beneficial to help put a young farmer onto the land and keep the local farming community going in that situation.

chickens and wheat · Sep 19, 2017

Will Blackburn said:
Nah renting is dead money.

Thats a bit harsh, We where tenants her for 48 years before getting the chance to buy, I do not consider our rental payments dead money, although I would not like to see the sum total of what we paid over the years.

Pasty · Sep 19, 2017

Henarar said:
some land round here I wouldn't give 50 quid an acre for

Come on, it's not that bad. I even fixed that leaking trough the other day. 49 for cash?

Pasty · Sep 19, 2017

Rob-B said:
Renting another farm?! Why rent when you can buy.

Then again it's hard enough just getting onto the rental farm ladder never mind taking on another farm or more land. Wouldn't it be more beneficial to help put a young farmer onto the land and keep the local farming community going in that situation.

Because if you rent at £50 per acre you are taking that much risk. If your enterprise fails, it is unlikely to cause you long term hardship. If you buy, say 50ac at £10k and have to borrow to do it then you are in debt for £500k. Half a million and you have that stacked against an asset which has a variable value. Asset values can vary and people only hear from the winners and not the guys who went broke. So, let's say there are big changes to APR / Holdover etc. or even to BPS and that land halves in value to a level that was common not so many years ago. You now owe half a million quid against an asset worth £250k. Now let's say that IR rises to 6% over 5 years. Historically not that high. You now have an interest bill of £30k on 50ac of land which is in negative equity to the tune of quarter of a million quid. You now have to make £600/ac just to pay the interest and just pray that the bank don't call it in as then you are bust. End of. Meanwhile, your mate is still paying £50 an ac per year and maybe making a go of that.

Then again, if you have cash in the bank and land comes up, carry on. It's only a good investment if it means something to you or you have an extremely long term view. There is little sensible case for borrowing to buy land.

Spud · Sep 19, 2017

Bossfarmer said:
would you not grass some of it down?

Why would I? You said it was arable ground, I have no use for grass

hindmaist · Sep 19, 2017

I would definitely rent bare land next door to me for £50/acre because it's damned good land and well capable of averaging over 4t/acre of wheat if the management is good.
Whether or not to pay £50/acre for land next door depends on the quality of the land,the markets that can be found for its produce and your ability as a farmer.

Happy at it · Sep 19, 2017

A man letting out cutting land in ni would reckon he'd be doing you a favour at any less than £140. Give any less and you'd never be sure of it the following year.... know ones giving 65 a cut for 3x on poor land.

So yeah I think I'd take you on at £50 for the year..

Bill the Bass · Sep 19, 2017

Pasty said:
Because if you rent at £50 per acre you are taking that much risk. If your enterprise fails, it is unlikely to cause you long term hardship. If you buy, say 50ac at £10k and have to borrow to do it then you are in debt for £500k. Half a million and you have that stacked against an asset which has a variable value. Asset values can vary and people only hear from the winners and not the guys who went broke. So, let's say there are big changes to APR / Holdover etc. or even to BPS and that land halves in value to a level that was common not so many years ago. You now owe half a million quid against an asset worth £250k. Now let's say that IR rises to 6% over 5 years. Historically not that high. You now have an interest bill of £30k on 50ac of land which is in negative equity to the tune of quarter of a million quid. You now have to make £600/ac just to pay the interest and just pray that the bank don't call it in as then you are bust. End of. Meanwhile, your mate is still paying £50 an ac per year and maybe making a go of that.

Then again, if you have cash in the bank and land comes up, carry on. It's only a good investment if it means something to you or you have an extremely long term view. There is little sensible case for borrowing to buy land.

Good points. Whilst I can't honestly see land dropping in value that much across the board (in living memory it hasn't really ever dropped just stagnated) it is frightening to sit back and see just what minor changes could happen to leave people in trouble.

Derrick Hughes · Sep 19, 2017

I would think marginal land could drop, cant see good dry land dropping much, if anything it will go up , the upkeep on marginal land will be to high for the return you can expect

Whitewalker · Sep 19, 2017

Pasty said:
Because if you rent at £50 per acre you are taking that much risk. If your enterprise fails, it is unlikely to cause you long term hardship. If you buy, say 50ac at £10k and have to borrow to do it then you are in debt for £500k. Half a million and you have that stacked against an asset which has a variable value. Asset values can vary and people only hear from the winners and not the guys who went broke. So, let's say there are big changes to APR / Holdover etc. or even to BPS and that land halves in value to a level that was common not so many years ago. You now owe half a million quid against an asset worth £250k. Now let's say that IR rises to 6% over 5 years. Historically not that high. You now have an interest bill of £30k on 50ac of land which is in negative equity to the tune of quarter of a million quid. You now have to make £600/ac just to pay the interest and just pray that the bank don't call it in as then you are bust. End of. Meanwhile, your mate is still paying £50 an ac per year and maybe making a go of that.

Then again, if you have cash in the bank and land comes up, carry on. It's only a good investment if it means something to you or you have an extremely long term view. There is little sensible case for borrowing to buy land.

I agree @Pasty to buyland to farm it out of debt a never never . More to life. However look at any smart business people with cash to splash long term investment land is as good a bet as any . One other note land rent is a cost against profits but land purchase is taxable. I have gradually given up most rented land rather farm less of my own . @Bossfarmer
Look at it like this. 200 acres you put all the work in take all the risk and give me the first 10k of your profit you keep the rest . Who's better off do you think

Pasty · Sep 19, 2017

Whitewalker said:
I agree @Pasty to buyland to farm it out of debt a never never . More to life. However look at any smart business people with cash to splash long term investment land is as good a bet as any . One other note land rent is a cost against profits but land purchase is taxable. I have gradually given up most rented land rather farm less of my own . @Bossfarmer
Look at it like this. 200 acres you put all the work in take all the risk and give me the first 10k of your profit you keep the rest . Who's better off do you think

Agree. It's a good alternative to cash but a hell of a risk to borrow against unless you have plenty of asset base to cover it when it goes wrong. I guess many farmers are in that position. Fortune favours the brave and all.

Will Blackburn · Sep 19, 2017

chickens and wheat said:

Thats a bit harsh, We where tenants her for 48 years before getting the chance to buy, I do not consider our rental payments dead money, although I would not like to see the sum total of what we paid over the years.

Click to expand...

I'm an enthusiastic tenant, quite happy paying rent. No landlord is making a great return at today's land values.

Henarar · Sep 19, 2017

Pasty said:
Come on, it's not that bad. I even fixed that leaking trough the other day. 49 for cash?

now that cash would be saving you 20% so we will split the dif £44.50

Pasty · Sep 19, 2017

Henarar said:
now that cash would be saving you 20% so we will split the dif £44.50

£42.30 and you have a deal. You won't be getting one over me matey.

IF you could rent another farm!!

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