Survey reveals hike in dairy rents

New Defra figures have revealed that English arable farms saw a 5% fall in average full agricultural tenancy rents in 2007, while dairy farmers were hit with a 10% increase.

The Farm Rents 2007/08 survey published on Tuesday (16 June) found that cereals and general cropping FAT rents were down to £133/ha and £149/ha respectively, but dairy rents rose to £158/ha. Across all sectors there was an overall decrease of 2.1% on the average price of all FAT agreements, from £132/ha in 2006 to £130/ha in 2007.

But farm business tenancy agreements increased by 0.9% over the same period, with the largest gains in the cereals sector where FBT prices increased 5.2% to £158/ha in 2007. LFA cattle and sheep FBTs were up 5% to £65/ha while dairy rents rose 4.4% to £153/ha.

There was a slight (2.1%) decline in the total area of rented land under FAT agreements and a 3% increase in the amount under FBTs.

The findings came as the Central Association of Agricultural Valuers revealed that activity across the tenanted land sector in England and Wales fell again last year. Its annual Tenanted Farms Survey, which summarises decisions taken about land occupation in the year, recorded details of just 1,237 units in the year-ended 31 October 2008, compared with 2,565 in 2002.

The CAAV’s Jeremy Moody said it was the third consecutive fall and suggested that the introduction of the single payment in 2003 had encouraged farmers and landowners to restructure by business contract (e.g. contract farming agreements) rather than formal letting.

“Since the single payment system came in we have seen activity quieten. Because the single payment pays you to be in occupation of land, it encourages people to stay put. I see very little reason why this should change in the short-term.”

A number of longer-term tenancies set up in 2005 also contributed to the lull in the number and area of new FBTs, he said. The area of previously vacant land that was newly let on FBTs fell to 10,000 acres, a fifth of the pre-2003 level.

The survey also revealed that sales to sitting tenants remained at very low levels. “The level of such sales often appears to be an indicator of the health of farming economies, however increased land prices and a reduced premium on vacant possession mean there’s not so much room for manoeuvre,” Mr Moody said. “Over the last couple of years we’ve seen virtually no difference between tenanted and vacant possession values.”

Other CAAV survey findings:

  • Small increase in tenanted sector area
  • One in seven FBTs on land not previously let
  • 81% of 1986 Act tenancies that ended were re-let as FBTs
  • Average FBT length was three years six months
  • Sales to sitting tenants remain very low
  • 5% of lettings to new entrants
  • One in four 1986 Act tenancies that ended saw a succession
  • Contract farming still a smaller market than FBTs