Is the contract farming business model finished without sfp? poll

[ajd132]

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

Probably! I would caveat what I have said with the fact we are making sure we are match fit with zero subs. If they want to give us money for doing what we are already doing then I wouldn’t say no obviously.

 

[glasshouse]

A couple of bad harvests will have the landlords renting it all out again

 

[Flat 10]

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

Why do you need land agents to do a cfa?

 

[ollie989898]

A lot of land owners are getting toward the older end of the scale so might not want the grief/risk to be involved in future I guess?

Let's face it: many are only actively farming because of the tax implications of not doing so. That is a perverse situation. Do away with inheritance tax and find another way to net the tax revenues.

People who are farming for the sheer sake of it are hardly helping the majority of people who are in it for reasons of profit. It's the same for lifestylers doing it. The industry can't hope to ever be taken seriously by government in the present state.

 

[turbo]

Why do you need land agents to do a cfa?

You don’t but they like to make it as complicated as possible so you need them.

 

[warksfarmer]

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?

2 months ago I would of agreed. Today however the Biden administrations view of the U.K. isn’t great so without a Trump type trade deal our industry will plod on.
Any rent or CFA going forward has got to return per acre what ELMS returns otherwise every landowner who’s not wanting to actively farm will just go 100% ELMS.

Why would you rent land out or enter into a risky (from commodity market point of view) CFA when you can guarantee income from ELMS. It’s bad business.

So whatever each farms total ELMS income is less costs divided by the acres of the whole farm gives you a base rent or the lowest return per acre to the landowner in a cfa.

It’s going to be that simple.

 

[ajd132]

You don’t but they like to make it as complicated as possible so you need them.

Agree should be 50:50 and simple

 

[ajd132]

A couple of bad harvests will have the landlords renting it all out again

If rents are reasonably sensible and can be signed up for a good length of time then fine by me. if they are for 3 years and maniacs bid it up then let them do that

 

[lloyd]

Surely if a percentage of the worst farms are put into ELMS
then the remainder of the better land will be highly sought
after by the same farmers wanting to spread their fixed costs .Perhaps FBT rents for better farms might go up if the higher cereal price is sustained over a given time.
Will we see £250 acre plus as the norm on grade2+cereal .

 

[glasshouse]

You don’t but they like to make it as complicated as possible so you need them.

If agents could get away with it they would let all the land on three month fbt, with all the outgoings and ingoings to argue over and earn fat fees .

 

[ollie989898]

2 months ago I would of agreed. Today however the Biden administrations view of the U.K. isn’t great so without a Trump type trade deal our industry will plod on.
Any rent or CFA going forward has got to return per acre what ELMS returns otherwise every landowner who’s not wanting to actively farm will just go 100% ELMS.

Why would you rent land out or enter into a risky (from commodity market point of view) CFA when you can guarantee income from ELMS. It’s bad business.

So whatever each farms total ELMS income is less costs divided by the acres of the whole farm gives you a base rent or the lowest return per acre to the landowner in a cfa.

It’s going to be that simple.

Please, tell me what you expect any kind of trade deal, much less one with the USA, to do for you or the agricultural industry of this country???

I'm becoming more and more convinced that your world view is radically different to my own.

Could you, just for an example, please tell me what commodities you think the UK is going to export to the USA in any great volume that would benefit the UK agricultural industry?

 

[glasshouse]

Surely if a percentage of the worst farms are put into ELMS
then the remainder of the better land will be highly sought
after by the same farmers wanting to spread their fixed costs .Perhaps FBT rents for better farms might go up if the higher cereal price is sustained over a given time.
Will we see £250 acre plus as the norm on grade2+cereal .

Hahaha
Better to lie in bed, it would be cheaper.

 

[ollie989898]

Surely if a percentage of the worst farms are put into ELMS
then the remainder of the better land will be highly sought
after by the same farmers wanting to spread their fixed costs .Perhaps FBT rents for better farms might go up if the higher cereal price is sustained over a given time.
Will we see £250 acre plus as the norm on grade2+cereal .

The value of land is entirely whatever the marketplace believes it is worth. The peculiar business of having to claim money and they pay it to the landowner as well as the rent etc will end though.

 

[lloyd]

Hahaha
Better to lie in bed, it would be cheaper.

You might be right but I can honestly see this happening
if the cereal price holds higher values.

 

[glasshouse]

You might be right but I can honestly see this happening
if the cereal price holds higher values.

Its not going to hold beyond the current shortage, which was always on the cards this yr

 

[lloyd]

The value of land is entirely whatever the marketplace believes it is worth. The peculiar business of having to claim money and they pay it to the landowner as well as the rent etc will end though.

Yes but the subsidy looks like it is being repackaged towards enviromental
services thus potentially reducing land supply for food production.
This country has lots of land hungry agri businesses so I think there will
be a lot of disappointed opportunists who think rents are going to be
cheaper after the Bps.

 

[lloyd]

Its not going to hold beyond the current shortage, which was always on the cards this yr

Too early to say the American corn belt only has to
have a drought and the world price would spike high.

 

[glasshouse]

Too early to say the American corn belt only has to
have a drought and the world price would spike high.

You could get old and grey waiting on that horse to come in

 

[lloyd]

You could get old and grey waiting on that horse to come in

That's what I thought about lamb prices hitting £130 plus .
Glad I was wrong.
We are mostly competing on world prices and they are rising.

 

[Goweresque]

Why would you rent land out or enter into a risky (from commodity market point of view) CFA when you can guarantee income from ELMS. It’s bad business.

Is ELMS going to be a 'file and forget' way of making money? I don't get that impression. It seems to me that ELMS will reward farming in an environmentally friendly way. Not just doing next to nothing and getting a cheque, a la Set-a-Side c.1990. Ergo in order to get ELMS money you are going to have to be actively farming the land. In a less intensive way than before, but still requiring management and practical input. So any landowners who have been using FBTs and CFAs to manage their land up to now will still need their tenants or contractors to access ELMS money. Just buying a big tractor and topper and collecting a cheque every year isn't going to work. I mean I'd be delighted if that was all it took, it would solve a lot of stress and hassle, but I suspect its going to require a lot more active farming input than that.