Stubble to stubble rates

Renaultman

Member
Arable Farmer
Location
Darlington
Found it:)

I would quite like to expand but i am often coming up against contract farmers who seem to want to farm half the world and will pay stupidly high rents to do it. In my view if the rent doesn't stack up on its own its too dear.. end of. I'd rather they make a loss than me!

So lets take our (very lucky!) farmer who owns a 1000ac with no borrowing and insert some basic figures. I will call him Bob and I will assume a uniform (very optimistic!) profit level and that economies of scale are already achieved at the 1000ac level so there will not be any real cost benefits of increasing in size.

So,

Things are going well for Bob and he makes £200/ac profit after all fixed/variable costs on average across his 1000ac giving him a total profit of £200,000 a year.

1000ac next door comes up for rent at £120/ac, he'd be a fool not to take it!, so Bob does and spreads the rent of £120,000/yr across his 2000ac. Works out at £60/ac and assuming that everything is still going great and he makes a profit of £140/ac across both units and earns a very tidy £280,000 a year. His percentage profit has dipped and he is doing more work, but hey lets not worry about such things his turnover's gone up and he has more land than any of his neighbours!

Through kissing some land agent's behind he then gets his big chance, 2500ac almost half the local estate! Its £200/ac with no sfp. Bob's pleased, he would have gone to £300/ac, the lands worth £12,500/ac after all and his Grace deserves to make money as much as the next guy (Bob doesn't realise that his Grace's family got the land many years ago for killing one of the King's rivals so it didn't really cost them anything). He will now have 4,500ac! So Bob dives right in on a 15 year lease!

Bob now has 4500 ac, more land than anyone in the county. He has a total rent now of £620,000/yr or £137/ac. So what?!? £137 is less than a tonne of wheat so it doesn't matter.

Conditions remain the same in year three, so he makes a profit now of £63/ac across all 4500ac, a tidy profit of!!... £283,500... hhmm. Bob is only making £3,500 more than last year on 125% more turnover.. But so what! Bob now has 4,500ac and he just bought 2 Lexion 770's... and built a new £500,000 grain store, he's now got a website and gives talks to fellow farmers.. he's the envy of all his neighbours... And he's on Mr Claas's xmas card list! He gets to shoot with his Grace! (even if it is just the keepers day) His Grace loves Bob, (he calls him his 'tame farmer') he has never had so much spare cash and doesn't have to deal with those pesky tenants anymore! If Bob keeps in with him he might get the rest of the estate, Bob will definitely go to £300/ac to get all that land, Bob'll have 7000ac soon!

Year 4 comes along, its a wet one, the crops were sown in poor conditions and come harvest he is struggling to cut 4500ac.. even with his two Lexion 770's! in his head he would have been done combining in less than 15 days cutting (even with all those small fields and road miles required) but they won't cut much when its raining or their bogged or got a power washer up their spouts to wash the mud out.

The wheat price has also dropped, and that combined with slug pellets costs and breakdowns means that his notional profit before rent comes back to £100/ac, and at the end of the year he goes from a £63/ac or £283,500 profit in year 3 to a loss of -£37/ac and a total loss of -£166,500 in year 4.... and thats before taking into account the Lexion 580 that he had to buy to get the wheat cut before it sprouted... but thats not too important it only cost £180,000!?!.. All that for about 4 times the work he used to do!! He decides to pass on the rest of the estate.

The cereal market then gets more volatile for the next few years (unfortunately Bob has to sell forwards every year to keep the bank manager happy so he can't be fussy about prices) and other costs go through the roof, he's still got 13 years of his lease to go and wishes he had never seen the 2,500ac. When he eventually gets out of the lease he now owes the bank so much that they tell him if he ever tries taking on more land they will call in the loans and shut him down. His Grace gets some new tenants, hopefully they wont mind the derelict steadings.. Progress eh!

Found here on post 5 https://thefarmingforum.co.uk/index.php?threads/£250-acre-rent-question.99754/#post-2007566 by @le bon paysan
I've given this a lot of thought, and have met a lot of Bobs, of varying scales, I suppose I was a bit of a small scale trucking Bob. I find, riding around as a wage slave that a lot of folk can make a very good living out of a little bit of land, a good work ethic and not being afraid to get their hands dirty, certainly an eye opener.
 

JCfarmer

Member
Mixed Farmer
Location
warks
Trouble with Bob is he was inefficient in the first place farming a 1000 acres probably because it was a 1000 acres of owned and paid for land! Then luck would have it he has the opportunity to rent another 1000 for £120 acre but probably not for long when the neighbour finds out he's paying £200 a bit further down the road for more!
Bob should have obviously stuck with the 2000 acres which would have been manageable with out too much extra investment(eg 1 combine, some grain going into a store etc).
Economies of scale only work to a point, more often than not 'realistic combining capacity' is the tipping point and often the most expensive machine to purchase or run, the rest follows.
Thats my 2 pennies worth anway.
 

MrNoo

Member
Arable Farmer
Location
Cirencester
This is next door, in head and not been sprayed off, not sure what the agreement is re contract or such, not exactly a good advert but then I dont know the whole story, just winds me up having to look at it every day, not the only field either!!
0.jpg
 

MrNoo

Member
Arable Farmer
Location
Cirencester
What is it? Blackgrass in rape?
Yes, it's some pretty stiff ground, not realy suited to Spring cropping, used to farm it 30 odd years ago on an FBT.
The last lot tried to grow WB in the same field and took it to harvest, it looked pretty much the same as in the picture. Take years to sort out and I have a friend who wants to contract farm it, told him he's mad.
 

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Red Tractor drops launch of green farming scheme amid anger from farmers

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As reported in Independent


quote: “Red Tractor has confirmed it is dropping plans to launch its green farming assurance standard in April“

read the TFF thread here: https://thefarmingforum.co.uk/index.php?threads/gfc-was-to-go-ahead-now-not-going-ahead.405234/
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