A financial scandal is brewing in my local village.
Someone has agreed an hourly fee with her new cleaner. Outraged neighbours are up in arms. The fee is inflated and it will set an unwelcome precedent for the village. The accused says it is her business and no one else will decide what value she places on her cleaner.
The incident has an uncanny parallel with current sentiments on farmland rents. In recent years, numerous examples of headline Farm Business Tenancy rents, those that are greatly in excess of expectation, have been blamed for contributing to the rise of baseline farm rents.
The topic of rents has always been prickly. Historically, Agricultural Holding Act tenancies have been 50-60% the price of an FBT. But agents are trying to massage AHA (traditional succession tenancies) and FBTs (usually one to five years in length) closer in value. But there is a more sinister consequence of high “headline rents” than money.
Farm rents are a clandestine subject. Etiquette is such that one doesn’t divulge the rent that one pays for land. But rest assured when “above market” rents are paid, everyone knows someone who has it on good authority what the exact price paid was. I suspect the rumoured price per acre is often wildly inaccurate, but don’t let that get in the way of good farming gossip.
In recent years, institutional landowners are re-establishing AHA tenancies as FBTs whenever possible. When this land is resubmitted for tender, the competition has been fierce and in some cases uncomfortable.
It is not uncommon for farmers to find themselves in the unenviable position of wanting to bid for land on an FBT which has been put out to tender by their own AHA landlord. Hobson’s choice. Tender successfully and risk not only compromising negotiations of your own AHA rent, but also raising your neighbours’ rent, if you share the same landlord, in the process. Don’t tender and your rent may go up for the same reason.
But the issue of short-termism that surrounds FBTs is not just one of money and neighbourly relationships. It is breeding a culture that drives a coach and horses through the first commandment of farming. Thou should pass on one’s land to the next generation in a better condition than it was received. Stories of “quarry farming” are rife; the premise being that you pay a high land rent, and in return you scavenge the soil for every available nutrient on offer, leaving nothing behind.
Organic matter depletion is a major concern for UK farming. Shorter-term FBTs will perpetuate this and give no incentive to the incoming tenant to invest in the soil’s heart. Historically, farmers would pay “key money” in year one to sure up a longer term and cheaper tenancy in the future. In return, the farmer would invest in the health of the soil. Key money is still being paid with no assurance of a longer term tenancy and the health of the soil all but forgotten.
Everyone remembers headline rents, especially the landlord’s agent. Rent agreements need to respect the importance of stewardship and care of the soil. I remain unconvinced that agents stress the importance of anything but price when reporting back to the landowner. Tenancies should encourage the farmer to treat the soil like a marriage, not like a one-night stand.
Unsustainable rents are exactly that. They will quickly lead to the degradation and erosion of farm businesses and soils alike.
Ian Pigott farms 700ha in Hertfordshire. The farm is a LEAF demonstration unit, with 130ha of organic arable. Ian is also the founder of Open Farm Sunday.
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