18 June 1999

Rise in let land, but TFA wants FBT rule review

By Catherine Paice

TENANT Farmers Association officials will be calling on the government to fulfil its pre-election promise to review farm business tenancy legislation next year.

This is despite encouraging figures in the Central Association of Agricultural Valuers annual survey, which shows that FBTs are leading to a significant net inflow of land to the tenanted sector.

The trend is in marked contrast to activity in the sector before the 1995 Agricultural Tenancies Act. "Take any three-year period in the years before reform, and you would have been looking at a net annual loss of 8000ha (20,000 acres)," CAAV secretary and adviser, Jeremy Moody, told the valuers AGM last week.

In the year before reform, only 1500ha (3700 acres) of new land were let. But the next three years saw over 68,000ha (169,000 acres) coming to the sector.

"We have picked up a net inflow of over 40,470ha (100,000 acres) in the past three years," said Mr Moody. "What it shows is that we have taken up farm business tenancies. It has been a valuable tool in opening up the sector. This is a reversal of a historic tide and it is most welcome."

The lengths of tenancy being negotiated also show confidence in the new system, said Mr Moody. Holdings with a house, buildings and land are being let for periods averaging over 11 years.

Bare land lettings bring the overall average down to just under four years. While potential tenants would consider this a cause for concern, Mr Moody points out that it is much longer than the maximum two years offered by the old Gladstone v Bower tenancy.

"Landowners, farmers and their advisers are gaining confidence in using the legislation that will be essential with the downturn in farming economics," he said. "The Agricultural Tenancies Act offers flexibility at a time when farming most needs it."

But the TFA remains to be convinced. "We welcome the increase in the amount of tenanted land," the associations George Dunn told farmers weekly. "But our experience shows that an awful lot of the tenancies have gone to existing farmers rather than to new, young farmers who we hoped would benefit.

"Some of the rents they are paying are way over the top and causing problems for those trying to farm in stand-alone tenancies."

Mr Dunn said that although the TFA welcomed FBTs as a good business structure, many of the new tenancies were simply a "formalisation" of old, informal arrangements, such as grazing agreements. "We still need a review of the legislation to look behind these figures." &#42

Wal-Mart plan a double-edged sword, claim

A DOUBLE-EDGED sword is how some in the industry are viewing this weeks planned £6.7bn takeover of the UKs third largest supermarket, Asda, by ultra-competitive US retailer, Wal-Mart.

Food analysts have already talked of a "revolution in food retailing", with the US giant having a well-deserved reputation for under-cutting the competition. The concern is that cheaper products at the retail end can only mean lower prices at the producer end.

"There will not be much pressure on UK food prices in the early stages," predicts Clive Black of Charterhouse Securities. "Wal-Mart will focus on toys, clothes and electricals, where it already has established purchasing power. But in three to four years time the likes of Unilever, Danone and Nestlé will come under real pressure, and this will be passed on to farmers."

Andrew Fearne of Wye Colleges food industry management group agrees that Wal-Mart will seek to extend Asdas existing culture of value-driven retailing. "I can see nothing of good for farmers from this," he said.

But a spokeswoman for Asda said the company would continue to support British producers. "We will have the same management team in place and so will have the same policy. We are totally behind British agriculture."

Last December, Asda launched a £400m, three-year plan to buy British, extending its "British only" policy to a wide range of products, backed up with "cost plus" contracts. &#42

HGCA levy increase

HOME Grown Cereals Authority levy rates for cereal growers and processors will increase by 5% from July 1, bringing them back to the level of two seasons ago.

Producers will have to pay 40p/t (plus 7p VAT) on all grain sold to a dealer or to intervention.

Processors will be charged a standard rate of 8.25p/t (plus 1.44p VAT), with a reduced rate of 4p/t (plus 0.7p VAT) on grain sold to a feed compounder.

The HGCA has welcomed the increase, which will raise almost £8m, as essential to maintain its R&D and market information services at a time of farm recession.

Oilseed growers and grain merchants face no increase in their contributions. &#42


&#8226 2889 new FBTs covering 79,064ha (195,366 acres).

&#8226 One in five tenancies on land previously let.

&#8226 595 previously vacant units let.

&#8226 Almost 700 old full tenancies (25% increase on 1997) ended

&#8226 83% of the old tenancies that ended were re-let as FBTs.

Up to 800 people attended one of the biggest machinery sales for years in the Cotswolds, when equipment from 2300 acres of arable land was disposed of at Cockrup Farm, after the termination of a farming contract. "An indication of the good trade done was that farmers prevailed over dealers with the highest bids," said Mark Hill of auctioneer Moor Allen and Innocent. This Simba 6.26m double press made £9000.