Higher FBTs and larger first payments to the landowners on CFA's.

[lloyd]

Just looking across the pond this seems to be happening on the back
of strong commodity prices .How long before the high profits reported
on here translate into more aggressive bidding war between agri businesses ?
Granted one Swallow doesn't make a summer but planting has been kind for
most and forward prices for agri commodities remain strong .
Yes input prices have risen sharply but a certain % would have been bought
forward at ok prices.Are landowners due a bonanza that will mitigate the reduction/loss of SFP?
What are peoples thoughts ?

 

[chipchap]

Anybody with any sense will be sitting tight until things settle down.

It could quickly turn into a race to the bottom.

 

[lloyd]

Anybody with any sense will be sitting tight until things settle down.

Yes agree but on buoyant prices sense goes out the window for
quite a few.

 

[teslacoils]

I think it's pretty clear that fbt rates are going up. None of the whining associated with ahas - if there is more demand then it goes up. This year will have been bonanza time, and even with reduced bps and increased fert prices it will be next year assuming normal yields. I'd expect many corporate cfas booked all their N on day one, or 2/3 of it.

 

[lloyd]

I think it's pretty clear that fbt rates are going up. None of the whining associated with ahas - if there is more demand then it goes up. This year will have been bonanza time, and even with reduced bps and increased fert prices it will be next year assuming normal yields. I'd expect many corporate cfas booked all their N on day one, or 2/3 of it.

What sort of % increases do you envisage?

 

[B R C]

It will only go up if there is local demand, I’m not so sure the big boys round here would offer more at the moment why would they just to go from 5000 to 5500 acres for example when the future is clear as mud.

 

[lloyd]

It will only go up if there is local demand, I’m not so sure the big boys round here would offer more at the moment why would they just to go from 5000 to 5500 acres for example when the future is clear as mud.

The big boys around here have no limits .
If they could set up and farm on Mars they would.

 

[David.]

Heard of a local one taken the other day, and it seems there are some very keen and very optimistic lads about. Fair play to them, if they are correct it will be similarly good for the rest of us.
And if they are not; well then, we can nod sagely, and pretend that of course we knew all along that it was utter madness...

 

[yellow belly]

Negotiated lower rent on renewal here

if farmers want to pay way higher then let them and be ready to take it when they have depleted their capital

 

[DRC]

I think it's pretty clear that fbt rates are going up. None of the whining associated with ahas - if there is more demand then it goes up. This year will have been bonanza time, and even with reduced bps and increased fert prices it will be next year assuming normal yields. I'd expect many corporate cfas booked all their N on day one, or 2/3 of it.

What whining would that be ?
Or do you mean being realistic

 

[chipchap]

At the moment if you want more rented ground you have to pay the rate, even if it doesn’t stack up.

If you are wise you might wait until a time when it does stack up.

 

[Mixedupfarmer]

Negotiated lower rent on renewal here

if farmers want to pay way higher then let them and be ready to take it when they have depleted their capital

Aha?

 

[Highashgrange]

Just looking across the pond this seems to be happening on the back
of strong commodity prices .How long before the high profits reported
on here translate into more aggressive bidding war between agri businesses ?
Granted one Swallow doesn't make a summer but planting has been kind for
most and forward prices for agri commodities remain strong .
Yes input prices have risen sharply but a certain % would have been bought
forward at ok prices.Are landowners due a bonanza that will mitigate the reduction/loss of SFP?
What are peoples thoughts ?

Turned down two blocks of land recently. One was 250ac with farmyard and buildings. Asking price was £50,000/year on a 10 year deal. After we said no it went on the market and let within a few days for the asking price. Then we were asked if we were interested in a 150ac CFA at a straight 50:50 deal. Landowner does all inputs, we do all machinery and then profits split 50:50. BPS shared 50:50 as well until it goes. Again we said no.
Now is not the time to add extra costs onto existing businesses.

 

[lloyd]

Turned down two blocks of land recently. One was 250ac with farmyard and buildings. Asking price was £50,000/year on a 10 year deal. After we said no it went on the market and let within a few days for the asking price. Then we were asked if we were interested in a 150ac CFA at a straight 50:50 deal. Landowner does all inputs, we do all machinery and then profits split 50:50. BPS shared 50:50 as well until it goes. Again we said no.
Now is not the time to add extra costs onto existing businesses.

Great insight what was the grade of the land ?
Soil sampling and cropping history before committing might be
much more important now with volatile inputs.

 

[yellow belly]

Aha?

fbt

 

[Mixedupfarmer]

fbt

Well done

 

[farmerm]

Turned down two blocks of land recently. One was 250ac with farmyard and buildings. Asking price was £50,000/year on a 10 year deal. After we said no it went on the market and let within a few days for the asking price. Then we were asked if we were interested in a 150ac CFA at a straight 50:50 deal. Landowner does all inputs, we do all machinery and then profits split 50:50. BPS shared 50:50 as well until it goes. Again we said no.
Now is not the time to add extra costs onto existing businesses.

I do question my sanity in actually farming myself when that sort of rent figure gets banded about!

 

[Highashgrange]

Great insight what was the grade of the land ?
Soil sampling and cropping history before committing might be
much more important now with volatile inputs.

Both blocks been farmed well by family operations. Grade 3/4 soil though in both cases and not suitable for roots or irrigation. Basically cereal land.

 

[Highashgrange]

I do question my sanity in actually farming myself when that sort of rent figure gets banded about!

There justification was that the farmhouse would fetch £18,000/year on its own so we said let it out in its own then . We suggested the farm buildings were turned into industrial and they keep that rent and we’d have the farmland at the value of bps on a sliding scale up until 2027 when we’d review it.

 

[farmerm]

There justification was that the farmhouse would fetch £18,000/year on its own so we said let it out in its own then . We suggested the farm buildings were turned into industrial and they keep that rent and we’d have the farmland at the value of bps on a sliding scale up until 2027 when we’d review it.

Potential future IHT liabilities have to be considered carefully by owners making such arrangements. Let industrial units should still have some protection though business property relief but I think letting the farmhouse separate would remove any APR relief available on it in the event of the title holders death and it would probably not be eligible for business property relief. Depending on what other assets they title owner holds such a move could result in increasing their future IHT liabilities by a few 100,000 for a comparatively modest higher total rent.