AHA Rents, DFRA “Farming is Changing” and "No Deal" Brexit

[Austin7]

Does this 50% of profit rule include non farm enterprises? I know a few people who use some of the buildings for alternative enterprises, just wondering how they would fare in a rent review.

I can only tell you what was found by the Arbitrator at our last review. Our landlords successfully claimed 50% of the shooting and fishing rents we were not allowed any cost offsets even though we had stocked the reservoir with the carp. They even claimed that we should charge any horse riders on the tenanted land but we successfully resisted this. So the answer is 50% of all profit. However before questions get asked make sure any sub letting is authorised under the tenancy. You could lose more than 50% of the profit if you are not careful.

 

[Steevo]

However the current Agriculture Bill dies when Boris prorogues Parliament.

Sure?



What happens to legislation and motions in Parliament?
Once Parliament is prorogued, most parliamentary business comes to an end and any unfinished business falls. However, since the 1998–99 parliamentary session, it has been possible to carry over some government bills into the next session. This prevents the need to re-introduce bills from scratch in the next session, saving parliamentary time.

The decision to carry over bills is taken by the government and must be approved by MPs. In practice, agreement is reached through the ‘usual channels’ (representatives of the main parties) before MPs are asked to carry over bills. Bills carried over to the next session continue from the same stage reached in the preceding session. There are currently 17 government bills in Parliament – many of which are eligible to be carried over.

 

[Austin7]

Sure?



What happens to legislation and motions in Parliament?
Once Parliament is prorogued, most parliamentary business comes to an end and any unfinished business falls. However, since the 1998–99 parliamentary session, it has been possible to carry over some government bills into the next session. This prevents the need to re-introduce bills from scratch in the next session, saving parliamentary time.

The decision to carry over bills is taken by the government and must be approved by MPs. In practice, agreement is reached through the ‘usual channels’ (representatives of the main parties) before MPs are asked to carry over bills. Bills carried over to the next session continue from the same stage reached in the preceding session. There are currently 17 government bills in Parliament – many of which are eligible to be carried over.

You make a good point. I get told off for being too long winded hence my simplistic statement. In order to survive my understand is that each bill has to be passed by a carry over motion in this case between 3rd and 9th September. Given the controversial nature of the bills and the other matters on hand it is unlikely. Another issue is that bills that have not received Royal Assent within twelve months of their original introduction lapse so another vote is required. Finally the Agriculture Act was laid in Parliament in the context of Brexit deal a No Deal Brexit poses different challenges. I attach the Briefing paper on carry-over Bills.

 

[Goweresque]

Taking the DEFRA statement at face value ELMS income would equal ELMS costs plus farming income foregone.

And the farming income foregone has an element of profit in it.

As it stands BPS is not a subsidy for producing food, explicitly not, as that is forbidden under WTO rules. Its a payment for keeping the land in GAEC, and also now contains the specific Greening element too, so already is a payment for environmental goods. So if BPS is currently used to calculate the productive capacity of the holding, why would ELMS money be any different?

 

[Austin7]

And the farming income foregone has an element of profit in it.

As it stands BPS is not a subsidy for producing food, explicitly not, as that is forbidden under WTO rules. Its a payment for keeping the land in GAEC, and also now contains the specific Greening element too, so already is a payment for environmental goods. So if BPS is currently used to calculate the productive capacity of the holding, why would ELMS money be any different?

WTO trade distorting Agricultural support, known as Amber Box, runs at 19 billion dollars for the USA and 8 billion dollars for the EU. So certainly not forbidden. The current UK Agriculture Bill envisages zero subsidy in the Amber Box.

However we deal here with rent reviews and ELMS. At our last rent review we ended up in Arbitration which on our side we conducted ourselves. Our Landlords proceeded without regard to cost, multiple Agents, solicitors and a QC. We won, they then spent two months trying to overturn the Arbitrators Determination without success. We ended up with a 20,000 word Arbitrators report that has been through the legal wringer. If I take that report and remove the Single Farm Payment and add in ELMS and take off equal ELMS costs on a DEFRA no subsidy basis then the farm pre rent surplus is cut in half. On our farm we have perhaps 20 acres out of a thousand where we could claim margin forgone and there was no previous income, an insignificant sum. Being paid for public goods will work but not alone when we are up against the tariff free entry of American production backed by $19 billion of trade distorting US Farm Bill subsidy. It is certainly fatal if we still keep paying the current level of farm rents.

 

[DRC]

WTO trade distorting Agricultural support, known as Amber Box, runs at 19 billion dollars for the USA and 8 billion dollars for the EU. So certainly not forbidden. The current UK Agriculture Bill envisages zero subsidy in the Amber Box.

However we deal here with rent reviews and ELMS. At our last rent review we ended up in Arbitration which on our side we conducted ourselves. Our Landlords proceeded without regard to cost, multiple Agents, solicitors and a QC. We won, they then spent two months trying to overturn the Arbitrators Determination without success. We ended up with a 20,000 word Arbitrators report that has been through the legal wringer. If I take that report and remove the Single Farm Payment and add in ELMS and take off equal ELMS costs on a DEFRA no subsidy basis then the farm pre rent surplus is cut in half. On our farm we have perhaps 20 acres out of a thousand where we could claim margin forgone and there was no previous income, an insignificant sum. Being paid for public goods will work but not alone when we are up against the tariff free entry of American production backed by $19 billion of trade distorting US Farm Bill subsidy. It is certainly fatal if we still keep paying the current level of farm rents.

Are you a member of the TFA, as your report could be very useful to them and us other AHA tenants.

 

[Billboy1]

WTO trade distorting Agricultural support, known as Amber Box, runs at 19 billion dollars for the USA and 8 billion dollars for the EU. So certainly not forbidden. The current UK Agriculture Bill envisages zero subsidy in the Amber Box.

However we deal here with rent reviews and ELMS. At our last rent review we ended up in Arbitration which on our side we conducted ourselves. Our Landlords proceeded without regard to cost, multiple Agents, solicitors and a QC. We won, they then spent two months trying to overturn the Arbitrators Determination without success. We ended up with a 20,000 word Arbitrators report that has been through the legal wringer. If I take that report and remove the Single Farm Payment and add in ELMS and take off equal ELMS costs on a DEFRA no subsidy basis then the farm pre rent surplus is cut in half. On our farm we have perhaps 20 acres out of a thousand where we could claim margin forgone and there was no previous income, an insignificant sum. Being paid for public goods will work but not alone when we are up against the tariff free entry of American production backed by $19 billion of trade distorting US Farm Bill subsidy. It is certainly fatal if we still keep paying the current level of farm rents.

Well done! I’m anticipating problems with review when it happens.
As usual they’ve gone quiet about it but as some point in the future I might be serving

 

[som farmer]

we are currently under notice of rent review, may 1st 2020, was under agents pressure to settle early on, and i have no intention of even talking rents until Brexit (or not) However, a block of land has been sold locally, and agents are asking £200 acre no sfp, having lost land through an estate being sold, we have been looking, and every body seems to want £200 acre, as that is what the digester lads will pay, well I do hear some stories , that actually getting the £200 acre out of them isn't quite so easy ! If we pay £200 acre for ground, without sfp, I think we would be working for the fun of it ! and have decided no, even if you put the sfp into it, so £120 acre, still takes some sticking with a very unknown future, when you look at the beef industry, oversupplied, looking ahead, 1000's of extra calves will be going into the sector, as dairy farmers are forced to rear calves to finish, by their milk buyers, add the gov's stated aim of importing cheap food......…...The sheep job is now really a numbers game,and if they were to lose the eu market, i'm not to sure that's a good bet either ! That leaves dairy and arable, well barley at £120 and wheat at £130 there isn't to much to spare there either. Dairy, well the the milk buyers have got that down to a fine line, of little profit ! So the sfp would seem to be the 'profit' on many farms, I realise the above is a general view of the industry, but for many it's not far from the truth, however unpalatable.
So that brings us back to rents and landlords/agents, when will they decide to charge a sensible rent, or are they sticking to their guns, and saying digesters, quoting high rents achieved on other land etc, or will they begin to talk sensibly. Interestingly our ll agents are suggesting double the rent, more interesting is the fact that, having had a moan about dairy, and time to sell them, we have been offered £170 and £150 acre, no sfp by 2 farmers, which we obviously can't do ! tempting though it was !
so what is a fair rent for land, ignoring the house, which will be distorting ?

 

[dairyrow]

I personally wouldnt go too crazy. A big piece of hill ground not far from us didnt even get any bids. And it has been farmed well by the owner. It come down to how good the ground is. Grass yield to how much crops you can get off it. LL already took a piece of hill off us. Which seams to have gone to the shoot. But will be very interesting if they can plant trees on common ground on the top. I think £50 enough for bare ground and if it hasnt got good lays soil fertility poor. Is it worth anything at all?

 

[chipchap]

Leave it all alone, unless buying adjoining land and you can’t!

 

[Austin7]

Are you a member of the TFA, as your report could be very useful to them and us other AHA tenants.

All Farms are different so the detail of our Arbitration may not fit your farm. The crunch issue for us was the status of the interest charge on the Landlords improvements. The landlord set the review process going by demanding £88 per acre plus £15 per acre for the improvements. The arbitrator decided that a willing and prudent tenant would pay £80 per acre in total including the improvements. To arrive at the £80 we were enormously helped by published information supplied by a Local Accountant http://hardcastle-burton.co.uk/wp-content/uploads/2019/03/Harvest-Survey-2018-1.pdf. Agents come up with fancy numbers but nothing beats the real thing from an independent source. We took plenty of photographs of the difficult areas on the farm. This was back in 2012 today we would fly it with a drone. We had a soil survey which showed we had 16 different soil types. We maintained a detailed tenants improvement schedule, it is too easy to forget what work you have done. We are grateful for the support we had from neighbouring AHA tenants who opened up the detail of their comparables. Indeed wherever we went AHA tenants were all prepared to give us time. If you get as far as a threatened Arbitration you will be visited by an "independent" expert to asses the farm. Make sure you know where he goes and importantly where he has not been as it is great sport questioning an "expert" who has never actually set foot on the farm just seen it from the seat of a car. Remember at Arbitration the looser pays so you need to make the right offer to protect yourself. However it is all very well threatening a No Deal unless you are overconfident idiots like us better to get a deal. Arbitration is not for the faint hearted.

 

[Bossfarmer]

we are currently under notice of rent review, may 1st 2020, was under agents pressure to settle early on, and i have no intention of even talking rents until Brexit (or not) However, a block of land has been sold locally, and agents are asking £200 acre no sfp, having lost land through an estate being sold, we have been looking, and every body seems to want £200 acre, as that is what the digester lads will pay, well I do hear some stories , that actually getting the £200 acre out of them isn't quite so easy ! If we pay £200 acre for ground, without sfp, I think we would be working for the fun of it ! and have decided no, even if you put the sfp into it, so £120 acre, still takes some sticking with a very unknown future, when you look at the beef industry, oversupplied, looking ahead, 1000's of extra calves will be going into the sector, as dairy farmers are forced to rear calves to finish, by their milk buyers, add the gov's stated aim of importing cheap food......…...The sheep job is now really a numbers game,and if they were to lose the eu market, i'm not to sure that's a good bet either ! That leaves dairy and arable, well barley at £120 and wheat at £130 there isn't to much to spare there either. Dairy, well the the milk buyers have got that down to a fine line, of little profit ! So the sfp would seem to be the 'profit' on many farms, I realise the above is a general view of the industry, but for many it's not far from the truth, however unpalatable.
So that brings us back to rents and landlords/agents, when will they decide to charge a sensible rent, or are they sticking to their guns, and saying digesters, quoting high rents achieved on other land etc, or will they begin to talk sensibly. Interestingly our ll agents are suggesting double the rent, more interesting is the fact that, having had a moan about dairy, and time to sell them, we have been offered £170 and £150 acre, no sfp by 2 farmers, which we obviously can't do ! tempting though it was !
so what is a fair rent for land, ignoring the house, which will be distorting ?

why would dairy farmers be forced to finish calves?

 

[som farmer]

why would dairy farmers be forced to finish calves?

arla Tesco are stopping the shooting of worthless calves at birth, and their stated aim is that these calves should be reared to finish, and will take steps to make sure they are, when that happens, all the other buyers will follow the same route. circa an estimated 240,000 calves are shot at birth, the majority being dairy bull calves, of very limited value. Can you honestly say, as a beef producer, could/want to rear these calves ? could you rear, and make a profit ? Can you see a market for these calves ? if no one will take the calves, and your milk contract states they have to be reared, what can you do? sexed semen will help, but cannot be the sole answer, you will just replace the 240,000 caves shot, with a lot of 2/3/4 th quality beef calves, and the beef market is over supplied, and with the expectation of cheap beef imports, ones options are somewhat limited.

 

[steveR]

arla Tesco are stopping the shooting of worthless calves at birth, and their stated aim is that these calves should be reared to finish, and will take steps to make sure they are, when that happens, all the other buyers will follow the same route. circa an estimated 240,000 calves are shot at birth, the majority being dairy bull calves, of very limited value. Can you honestly say, as a beef producer, could/want to rear these calves ? could you rear, and make a profit ? Can you see a market for these calves ? if no one will take the calves, and your milk contract states they have to be reared, what can you do? sexed semen will help, but cannot be the sole answer, you will just replace the 240,000 caves shot, with a lot of 2/3/4 th quality beef calves, and the beef market is over supplied, and with the expectation of cheap beef imports, ones options are somewhat limited.

Is this the same sort of warning as seen on some calves in Market (and the Passports) stating that the animal must not be exported or whatever...? What legal standing does it have, if any? Personally, I am very dubious that much could be done as the calf is sold and any agreement the producer had with his milk buyer is between him and them... Nowt to do with me!

As a beef producer, the last thing we need is 3rd rate dairy animals on the market... I also agree on the economics of rearing such stock... Let Tesco sort out the Finishers and offer them a Contract to buy back "finished" cattle!!

 

[som farmer]

Is this the same sort of warning as seen on some calves in Market (and the Passports) stating that the animal must not be exported or whatever...? What legal standing does it have, if any? Personally, I am very dubious that much could be done as the calf is sold and any agreement the producer had with his milk buyer is between him and them... Nowt to do with me!

As a beef producer, the last thing we need is 3rd rate dairy animals on the market... I also agree on the economics of rearing such stock... Let Tesco sort out the Finishers and offer them a Contract to buy back "finished" cattle!!

the argument goes ' we should not be shooting uneconomic calves at birth', fine, quite agree, but if we don't.....there's no answer to that. Supermarket view, our customers don't like it, therefore they have to be reared, 8 weeks is being suggested, but if they are shot then, they will keep raising the age. It's definitely not thought out, and just a publicity stunt, with the result not being thought through. we are on a manafacturing contract, and our buyer is now talking that way, because his customers are asking him what their policy is, In the present climate, it is a hard thing to justify, but what do you do with them ? you don't want them, I don't want them, but if your milk buyer says they have to be reared, as in their contract, what do you do ?
calves not for export, supermkt's playing lip service to their customers, start of the above really, it's a 'natural' progression. I don't expect a scheme, simply because a lot of these cattle will be cr#p. and what do you use them for ? all I can see is a reduction in beef prices overall, and a lot of very poor carcasses on the market (cheap}

 

[Bossfarmer]

the argument goes ' we should not be shooting uneconomic calves at birth', fine, quite agree, but if we don't.....there's no answer to that. Supermarket view, our customers don't like it, therefore they have to be reared, 8 weeks is being suggested, but if they are shot then, they will keep raising the age. It's definitely not thought out, and just a publicity stunt, with the result not being thought through. we are on a manafacturing contract, and our buyer is now talking that way, because his customers are asking him what their policy is, In the present climate, it is a hard thing to justify, but what do you do with them ? you don't want them, I don't want them, but if your milk buyer says they have to be reared, as in their contract, what do you do ?
calves not for export, supermkt's playing lip service to their customers, start of the above really, it's a 'natural' progression. I don't expect a scheme, simply because a lot of these cattle will be cr#p. and what do you use them for ? all I can see is a reduction in beef prices overall, and a lot of very poor carcasses on the market (cheap}

surely all dairies will just switch to sexed semen

 

[som farmer]

surely all dairies will just switch to sexed semen

all you will do with sexed, is replace the worthless calves that are currently shot, with some 3/4/5 grade beef calves, granted some will be fine, but some won't, but it is the potential 1,000's of extra calves that have to be reared, can the market cope with those ? and (if) Brexit ever happens, and the uk is open to more imported beef, how will the uk market cope ?

 

[gone up the hill]

Is this the same sort of warning as seen on some calves in Market (and the Passports) stating that the animal must not be exported or whatever...? What legal standing does it have, if any? Personally, I am very dubious that much could be done as the calf is sold and any agreement the producer had with his milk buyer is between him and them... Nowt to do with me!

As a beef producer, the last thing we need is 3rd rate dairy animals on the market... I also agree on the economics of rearing such stock... Let Tesco sort out the Finishers and offer them a Contract to buy back "finished" cattle!!

Thread in the dairy section about this issue!

Basically the outcome of that thread was that beef farmers would HAVE to pay the dairy farmers good money for these calves and if the figures didn't stack up for rearing them then the beef farmer would have to cut costs to nothing if that is what its takes to make the figures stack up!

Dairy farmers on the thread claimed what happens to these calves is the beef farmers problem even thou the calves were worthless and not worth rearing in the first place!

No profit in rearing the good dairy bred calves currently let alone the NZ mongrels that are worthless all the way thru the chain!

Most dairy farmers have their head in the sand when it comes to what they will be able to do with these worthless calves come 2020!

Someone posted that the figures for an extensive outdoor system for these NZ mongrel cattle until they were prime cattle at around 20 months, worked out that if everything went to plan and nothing went wrong he would make £1800 net profit for keeping 90 beef cattle for 20 months.............


I asked on the thread how many dairy farmers would keep 90 cows for 18 months to only make £1800 net profit across the board for all of them and none replied other than a couple who said I was a trouble maker!....


Talk about denial!

 

[glasshouse]

If you don't want to pay the rent, give up the tenancy, and let someone else have a go.

Ffs

 

[som farmer]

Thread in the dairy section about this issue!

Basically the outcome of that thread was that beef farmers would HAVE to pay the dairy farmers good money for these calves and if the figures didn't stack up for rearing them then the beef farmer would have to cut costs to nothing if that is what its takes to make the figures stack up!

Dairy farmers on the thread claimed what happens to these calves is the beef farmers problem even thou the calves were worthless and not worth rearing in the first place!

No profit in rearing the good dairy bred calves currently let alone the NZ mongrels that are worthless all the way thru the chain!

Most dairy farmers have their head in the sand when it comes to what they will be able to do with these worthless calves come 2020!

Someone posted that the figures for an extensive outdoor system for these NZ mongrel cattle until they were prime cattle at around 20 months, worked out that if everything went to plan and nothing went wrong he would make £1800 net profit for keeping 90 beef cattle for 20 months.............


I asked on the thread how many dairy farmers would keep 90 cows for 18 months to only make £1800 net profit across the board for all of them and none replied other than a couple who said I was a trouble maker!....


Talk about denial!

what do you think it will take, to get dairy farmers to realise ? I took a fair bit of flak for posting that thread, and I am not sure it did any good !