Rent and sfp

[Surgery]

Early days and I have had a chat with a couple of agents re rents and subs etc , can see agents being difficult and pushing you towards elms and mid-high tier but on aha ground surely must come down in line with reduction of sfp as they can’t make you enter anything fbt might be a different storey with new agreements stipulating elms etc so that monies will be part of rent etc.

what do folks think?

 

[Jon]

With the removal of bps eventually, rents will have to reflect this.

Environmental schemes are not direct replacements, so I am waiting for my landlords agents to pluck some unimaginable scheme out of the sky, and claim my rent should double.

 

[GeorgeK]

£1 claimed for an environment scheme will have more associated costs than £1 claimed for BPS. So entering schemes to replace the reduction in BPS will still result in less profit at the end of the year and less left for rent

 

[Ribble]

They can't capture the subsidy in rent if the subsidy regime also creates a cost.

If you're getting £10k subsidy for taking £10k of yield out of production, that subsidy isn't really anything extra available for rent.

Even if the costs were only £8k, theoretically there's 2k left to capture, but it's surely not an easy calculation...

 

[Hindsight]

Price of wheat.

 

[Wombat]

Price of wheat.

Only partially makes up for years like last year.

 

[Formatted]

AHA rents are already below-market rates? Surely they should increase?

 

[Surgery]

AHA rents are already below-market rates? Surely they should increase?

Doesn’t work like that thou as most are born from generations farming ground that landlords didn’t want at the time

 

[DRC]

AHA rents are already below-market rates? Surely they should increase?

Rents based on earning capacity of the farm, not what people tender to get a bit extra

 

[Surgery]

Rents based on earning capacity of the farm, not what people tender to get a bit extra

Building land brigade !

 

[midlandslad]

Has anyone served a notice to review a rent or had a landlord serve one on them?

ELMS is not a replacement for BPS and the “profit” from ELMS will not I expect be the same or anywhere near the BPS profit.

Landlords and their agents are not going to agree to reductions without a bit of a fight as soon as they do that rent will set the level for the rent on the next farm and so on.

FBT rents will not drop until people wake up and use their head when bidding and factor in costs. People bidding over £200 an acre for combinable cropping land must be working on the basis that wheat will be £200 a tonne and therefore would they not be better buying wheat on the futures market and making a profit that way!?

 

[midlandslad]

Building land brigade !

If you have building land money why rent when you can buy?!

 

[Hindsight]

Only partially makes up for years like last year.

True Wombat and my post pointing out price of wheat was not meant to be inflammatory to any tenant posting in this thread but just observational - that the price of wheat is likely to have an impact on rentals - and may (or may not) mask reductions in BPS. Will depend on the tenderer.

 

[GeorgeK]

These wet autumn/winters must be making some of the big arable players reconsider the concept of large convoys rolling across counties in a linear fashion from one field to the next? Short weather windows and variable conditions are calling into question the economies of scale concept on some soil types and have caused some headaches round here last couple of years. I can see people being a lot more discerning about the type of land they are renting out in the future

 

[4course]

These wet autumn/winters must be making some of the big arable players reconsider the concept of large convoys rolling across counties in a linear fashion from one field to the next? Short weather windows and variable conditions are calling into question the economies of scale concept on some soil types and have caused some headaches round here last couple of years. I can see people being a lot more discerning about the type of land they are renting out in the future

looking round and about seems some i.e more than half the crops established by the methods you are suggesting are dire on the heavier moisture retentive soils!!

 

[Ribble]

I wonder if most land agents understand that removal of SFP requires a reduction directly proportional, or if they are mostly in denial.

"The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give."

— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book I, Chapter XI "Of the Rent of Land"

 

[Hindsight]

I wonder if most land agents understand that removal of SFP requires a reduction directly proportional, or if they are mostly in denial.

"The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give."

— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book I, Chapter XI "Of the Rent of Land"

The law of supply and demand is actually an economic theory that was popularized by Adam Smith in 1776. The principles of supply and demand have been shown to be very effective in predicting market behavior. However, there are multiple other factors that affect markets on both a microeconomic and a macroeconomic level

 

[Hindsight]

These wet autumn/winters must be making some of the big arable players reconsider the concept of large convoys rolling across counties in a linear fashion from one field to the next? Short weather windows and variable conditions are calling into question the economies of scale concept on some soil types and have caused some headaches round here last couple of years. I can see people being a lot more discerning about the type of land they are renting out in the future

You make a very valid point George. And I tend to concur. But if we cast our minds back the autumns of 2020 and 2019 were indeed wet with several 100mm rainfall months. But only a few months earlier autumn 2018 and 2015 we were praying for rain. So as ever it is more complex and the issue is our factory does not have a roof or sprinkler system! And we have had to complicate the production system by delaying the activity of sowing because of blackgrass, primarily, beyond when it would be considered good practice.

 

[Jon]

You make a very valid point George. And I tend to concur. But if we cast our minds back the autumns of 2020 and 2019 were indeed wet with several 100mm rainfall months. But only a few months earlier autumn 2018 and 2015 we were praying for rain. So as ever it is more complex and the issue is our factory does not have a roof or sprinkler system! And we have had to complicate the production system by delaying the activity of sowing because of blackgrass, primarily, beyond when it would be considered good practice.

This is my worry.
I have to grow wheat to cover the rent.
Through reduction in chemicals, and increase in black grass I am drilling later.
This opens me up to very risky drilling conditions.
With the sfp being withdrawn any other 'crop' I grow will not be as lucrative as wheat, so the rent will have to reflect this.

 

[glasshouse]

AHA rents are already below-market rates? Surely they should increase?

Bollox