This has been coupled this year with pretty depressing prices.
Livestock farmers will be looking ahead to the winter months concerned about the lack of available hay, straw, and silage caused by an equally poor haul of grass and fodder crops which is already being used to make up the shortfall of available grass over the usual grazing season.
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Additionally, there has been the ramping down of Basic Payment Scheme receipts and the non-availability of the Sustainable Farming Incentive, the supposed central plank of the Department for Environment, Food and Rural Affairs (DEFRA) agri-environment policy.
All of this will make the revenue side of this year’s farm accounts pretty grim reading.
Discussions around from kitchen tables will inevitably focus on where money can be saved to attempt some shortening of the distance between receipts and outgoings.
For tenant farmers, a significant cost that can and should be addressed is rent.
Landlords, and also more importantly their agents, cannot be blind to the major financial difficulties facing farm businesses at the current time and should fully expect to be in receipt of communications and formal notices from tenant farmers seeking to instigate reviews of their levels of rent.
Tenants, as a breed, are normally reluctant to be the ones to formally initiate a rent review despite the fact that their landlords will do so routinely when they sense an opportunity to secure an increase.
This year must be different.
Tenant farmers on old-style Agricultural Holdings Act 1986 agreements should be focusing on putting together budgetary evidence which they can present to their landlords to justify their legitimate call for rents to fall.
Rents reviewed under those tenancies are to be informed by the productive capacity of the holding and its related earning capacity.
Not surprisingly, there are some budgets which have been prepared by landlords’ agents which can only be described as fantasy accounting with yields and prices both from bygone eras which are not the current experience of most producers.
Those renting land on newer style Farm Business Tenancies need to rely more on comparable evidence of rents passing to justify their position.
The difficulty here is that there is a huge divergence between what is talked about as being rents in the marketplace against what levels of rent are actually being agreed.
Everyone hears about the local farmer willing to pay well over the odds on any land that becomes available with landlords and agents often trumpeting that they have achieved rents in excess of £200 per acre for standard arable land.
However, the figures produced by DEFRA on average FBT rents on arable land suggest that they are more like a more reasonable £100 per acre.
That means that there are plenty of people in the marketplace willing to do deals at considerably lower levels than the rents that often get talked about in the pub.
These are as much part of the marketplace as those headline levels and need to be factored into rent review negotiations.
Stepping out of your comfort zone is never an easy experience but the rent review mechanisms are built into agricultural tenancy legislation for a reason.
They provide opportunities for both landlords and tenants to adjust rent levels in accordance with the conditions of the marketplace.
While everyone’s situation will be different, and advice must be taken before any notices are served, in most cases instigating a rent review will be a prudent action on the part of a tenant farmer this year.
