Is the contract farming business model finished without sfp? poll

[Bossfarmer]

the last 10-15 years has brought contract farming into mainstream uk farming, before that it wasnt anywhere near as common it seems that this has been largely due to guaranteed sfp for the landowner who can then use this to help pay the contractor/inputs and a certain profit % can be split at the end, without this £90ish per acre guaranteed in the future what will happen to these agreements?

 

[teslacoils]

You presume everything else stays the same, but bps ends. That need not be the case.

 

[nick...]

I can never see how these work successfully.i know the contractor relies on a big percentage of the profit but it’s not really been there last year and this year looking no better.i know of one contracted farm locally that did not grow a thing last year and whole farm was fallow.
nick...

 

[ajd132]

There will always be land owned by people who don’t want to farm it themselves. There is not enough money to go round to put the whole of the U.K. down to wildflowers.
The agreements may change completely. But there will be a mechanism in place for people to provide farming and environmental services to land owners.

 

[teslacoils]

.i know of one contracted farm locally that did not grow a thing last year and whole farm was fallow.
nick...

Again, do you know the details of the contract? It may have a rate set for fallow agreed many years ago designed to keep all land cropped.....contractor might be on £75/AC for doing nothing.

Fallow rates are designed to protect contractor who has invested in kit from a downturn in price where the farmer decides to fallow the lot.

Again, an assumption.

 

[nick...]

Again, do you know the details of the contract? It may have a rate set for fallow agreed many years ago designed to keep all land cropped.....contractor might be on £75/AC for doing nothing.

Fallow rates are designed to protect contractor who has invested in kit from a downturn in price where the farmer decides to fallow the lot.

Again, an assumption.

Yes you are correct I don’t know the details.i cannot recall a fallow rate in the past when we were in such an agreement though
nick...

 

[Goweresque]

I'd say quite the reverse. In order to make sure he gets the ELMS money the landowner needs to be in control of the land, and directing what happens. Ergo I can see that contract farming will be favoured over FBTs.

At the moment the situation financially is pretty similar for FBT or contract - the BPS gets put in the pot either way, as everyone knows what it is, so it either goes in the pot towards rent or towards the landlords charge on the contract agreement. But once that goes the ELMS situation will be far more fluid as to what a tenant might want to do and what payments they might get as a result. So from the landlords perspective its better to have the land in hand and direct the ELMS strategy himself and ensure he's happy with the strategy and returns from it than sign it all over on a FBT and end up with a tenant signing up for all manner of things he's not too happy about.

Plus of course tenants may be unwilling to sign FBTs unless they are longer terms, in order to take advantage of the longer ELMS agreement periods. So shorter term FBTs may end up far lower rents, to take that lack of ELMS money into account. In which case a landlord faces a choice of either a short term FBT at £X/acre, a long term one at £2X/acre, or contract farming it and returning £2X/acre, with all control in his hands. In that scenario I'd say contracting it out is looking quite attractive.

 

[ajd132]

I'd say quite the reverse. In order to make sure he gets the ELMS money the landowner needs to be in control of the land, and directing what happens. Ergo I can see that contract farming will be favoured over FBTs.

At the moment the situation financially is pretty similar for FBT or contract - the BPS gets put in the pot either way, as everyone knows what it is, so it either goes in the pot towards rent or towards the landlords charge on the contract agreement. But once that goes the ELMS situation will be far more fluid as to what a tenant might want to do and what payments they might get as a result. So from the landlords perspective its better to have the land in hand and direct the ELMS strategy himself and ensure he's happy with the strategy and returns from it than sign it all over on a FBT and end up with a tenant signing up for all manner of things he's not too happy about.

Plus of course tenants may be unwilling to sign FBTs unless they are longer terms, in order to take advantage of the longer ELMS agreement periods. So shorter term FBTs may end up far lower rents, to take that lack of ELMS money into account. In which case a landlord faces a choice of either a short term FBT at £X/acre, a long term one at £2X/acre, or contract farming it and returning £2X/acre, with all control in his hands. In that scenario I'd say contracting it out is looking quite attractive.

Basically you need to be farming in a way that both maximised output, and can fully utilise elms money.
Looks like there will be money for direct drilling, cover crops, clean water etc. So if you can farm like that well, with the lower associated costs and input reduction, and claim money for things you are doing anyway It should be favourable (combineables)

 

[turbo]

CFA will be a thing of the past post bps,if you own land but don’t want to farm it you will employ a contractor on a job by job basis,anything that needs a land agent involvement to set up will be gone when the bps has gone!

 

[ajd132]

the way I see it a contractor will need to be able to farm to maximise output whilst also making as much use of elms as possible within the farming system. It’s looking like direct drilling, cover cropping, water quality, carbon are all going to be important and rewarded. If you have been farming like this and have learnt to make the system work you have the services to offer you should be in a good place.
the key is being Able to keep output in a no till situation up whilst also getting the cherry on top in the for of elms. No till can work anywhere and it is down to the management, the system is not an issue.

 

[lloyd]

CFA will be a thing of the past post bps,if you own land but don’t want to farm it you will employ a contractor on a job by job basis,anything that needs a land agent involvement to set up will be gone when the bps has gone!

CFAs have got away with quite a bit over the years
in regard of the landowner being considered as a proper
farmer to take advantage of IHT relief .
With the government needing to pay off some of its colossal
borrowing who knows what will happen in the next few years.

 

[Bill the Bass]

Too many unknowns to say, but if you are a large landowner and can claim a significant amount of money through ELM (larger than the profit share of a CFA) without farming (as we know it at present) then why faff on with a contractor/farmer?

Currently to claim BPS you need to be an active farmer, this doesn’t look to be the case way ELM is going as far as we can see.

 

[teslacoils]

CFA will be a thing of the past post bps,if you own land but don’t want to farm it you will employ a contractor on a job by job basis,anything that needs a land agent involvement to set up will be gone when the bps has gone!

Unsure. If you are paying someone on a job by job, rather than a fixed rate for managing it, you won't be high up the pecking order for getting stuff done.

Yeah, you can always get someone else in, but it's just better having a chat and getting someone set up to do the lot.

 

[yellow belly]

Too many unknowns to say, but if you are a large landowner and can claim a significant amount of money through ELM (larger than the profit share of a CFA) without farming (as we know it at present) then why faff on with a contractor/farmer?

Currently to claim BPS you need to be an active farmer, this doesn’t look to be the case way ELM is going as far as we can see.

Land owners will still need to manage the land if they just leave it they will devalue their asset and cost several thousand £ per acre if they want to sell
take out the tax benefits of land ownership the farmer buyer will want land that has been looked after

look back to the 1930s if we become country with a permenat grain import need well farmed land will be the most valuable

 

[turbo]

Unsure. If you are paying someone on a job by job, rather than a fixed rate for managing it, you won't be high up the pecking order for getting stuff done.

Yeah, you can always get someone else in, but it's just better having a chat and getting someone set up to do the lot.

It will be a formal agreement between the two parties but non of the profit sharing which normally involves land agents fees,there just isn’t going to be enough money left in the trough for all the snouts to feed

 

[Smith31]

Large scale contracting for non farming, city dwelling landowners is a by product of subs.

The truth of the matter is that subs have been holding back agricutural development for decades. They promote inefficiency by rewarding some farmers for producing below the cop, this has a negative impact on farmers who wish to operate a sustainable business model.

Good forward thinking tenant farmers are unable to invest and progress because the owners have no incentive to sell or promote investment, they receive subs regardless.

In reality, subs prevent younger forward thinking blood from entering the industry, the industry has stagnated as a result. Farming is nothing more then a rich boys club at present.

Now that the Crown are to recieve £4 billion in ground rents for off shore wind farms (for 10 years alone) resulting in them becoming less reliant on land subs, we will see major changes in the near future.

 

[teslacoils]

It will be a formal agreement between the two parties but non of the profit sharing which normally involves land agents fees,there just isn’t going to be enough money left in the trough for all the snouts to feed

I'm pro anything that avoids fees to agents.

 

[e3120]

Basically you need to be farming in a way that both maximised output, and can fully utilise elms money.
Looks like there will be money for direct drilling, cover crops, clean water etc. So if you can farm like that well, with the lower associated costs and input reduction, and claim money for things you are doing anyway It should be favourable (combineables)

This doesn't sound very fair, but what else was to be expected in a country where the acres & influencers are more arable? Temporary grass isn't disturbed at all for 5 years, and has year-round cover, but will likely get nowt. Low input isn't very attractive, as that is reducing output, which the arable options you mention shouldn't.

As regards dd working in all situations, I will hold judgement until the much better man than me, who has moved (relatively) north onto proper soils, has demonstrated success.

 

[ajd132]

This doesn't sound very fair, but what else was to be expected in a country where the acres & influencers are more arable? Temporary grass isn't disturbed at all for 5 years, and has year-round cover, but will likely get nowt. Low input isn't very attractive, as that is reducing output, which the arable options you mention shouldn't.

As regards dd working in all situations, I will hold judgement until the much better man than me, who has moved (relatively) north onto proper soils, has demonstrated success.

I was only talking from an arable perspective. There will be other options for different sectors.

 

[e3120]

I was only talking from an arable perspective. There will be other options for different sectors.

No doubt, but finite nature of the pot will have divisive results.