Tenants borrowing to keep afloat

25 September 2001

‘Tenants borrowing to keep afloat’

By FWi staff

FOUR in every five tenant farmers have had to borrow money to keep their businesses afloat as farm profits and the value of their assets have plummeted, an NFU survey shows.

The survey of 1000 tenant farmers shows the precarious position the sector finds itself in.

It is being used by the union to urge landlords to be sympathetic in the run-up to Michaelmas Day (29 September), when many tenants will re-negotiate rents.

Preliminary results show average farm profits fell by almost 80% in the last 10 years. But only 8% of tenants said their rent had fallen in line with profitability.

The current farm crisis, culminating in foot-and-mouth, has led to a 50% fall in capital assets over the last five years, the survey shows.

The result of the general malaise in the sector is that 81% of tenants have been forced to borrow to keep the business afloat.

All those surveyed identified low farm incomes as the biggest threat to their future.

One-third also said blocks on diversification and environment schemes have hampered efforts to re-build their businesses.

Two-fifths said they could name neighbouring tenants who had left farming.

The NFU called the survey an “alarm call” in the run up to rent negotiations.

It is calling for landlords to take a realistic approach to rent reviews.

It wants greater flexibility in tenancy agreements so farmers can diversify and enter agri-environment schemes.

The union also wants government funded-advice and support for new entrants.

NFU officials will be meeting with landowners, including the National Trust, the Crown and county councils, in the coming weeks to discuss the problems.

Union vice president Michael Paske said the tenant-landowner relationship offers a way to maintain the land and for both to earn a living.

“But in recent years, tenants have found themselves sucked into an ever-decreasing spiral.

“The value of their assets has fallen through the floor and they have had to use their capital to survive and to pay the rent,” he said.

“Many tenants now cannot afford to stay in farming because they have nothing left to borrow against and nothing more to invest.”

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