Publication - Report

Testing the rent review system: report

Published: 26 Jan 2018

Report on secondary legislation needed to bring reforms to landlords and tenants agreeing agricultural rents in a cooperative process.

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Contents
Testing the rent review system: report
Appendix 4: Models 1 & 2 Analysis

1 page PDF

73.6 kB

Appendix 4: Models 1 & 2 Analysis

Summary of Sample Farms

Farm

Main Land Class

Characteristics

Fixed Equipment

Improvements

A

3.1

Surrounded by arable and dairy farms, quite flat land, light sandy soils, 10 acres susceptible to subsidence, no fencing but all cropable, drainage is good.

GP shed, Traditional building, lean-to, Dutch barn, Potato shed.

General – adequate for an arable farm

Grain drying equipment and 20 acres of field drainage.

B

5.2

Surrounded by livestock farms, steep slopes, stoney land, LFA, access track through middle of farm, good boundary fences, water via ditches.

U-shaped traditional steading, 3 x small lean-to buildings, Byre, 50% of dung midden, 2 x feed stores.

General – adequate for a low maintenance livestock farm.

Internal fencing is 70% tenant's, 12 x water troughs, 12 gates, sliding door, concrete ramp, roof beams, one gutter, internal feed bins.

C

3.1

Surrounded by mixed arable/livestock units, very productive land, NVZ area, no fences or water troughs.

Traditional U-shaped steading, storage buildings, Dutch barn, Cattle Court.

General – adequate for an arable farm with grain storage offsite.

Grain Stores and grain handling facilities.

D

3.2

Surrounded by mixed arable/livestock units, fields quite flat, small and awkward shaped, soil is quite heavy, LFA, fields accessible from the road, drainage issues in some fields with rashes evident.

Cattle Court, Silage pit, byre, store.

General – adequate for an extensive cattle/sheep farm.

General – adequate for a small livestock farm.

Drier bins, concrete floor, removal of loft.

E

3.1

Surrounded by livestock farms, wet area so arable would not suit, generally very flat and difficult to drain, LFA & NVZ, good access through farm, fencing mainly owned by the tenant.

Traditional L-shaped steading, storage building, workshop, GP shed and small outbuildings.

General – adequate for a low maintenance livestock farm.

60 acres drainage. Electric and water supplies renewed, fencing and drainage. Significant dairy buildings and fittings.

F

2/3.1

Surrounded by mixed arable/livestock units, fields fairly flat, loamy soil, fields all accessible from farm track, NVZ.

Mixture of traditional buildings and Dutch barns.

General – adequate for a mixed arable, livestock farm with grain storage offsite.

10km fencing, large grain store, internal gates and handling facilities within LL buildings.

G

3.2

Surrounded by livestock farms, generally quite flat with steeper areas where land is poorer (5.2), LFA, NVZ, buildings are at the centre of farm with fields accessible, SRDP funded most of fencing.

U-shaped traditional buildings with infill cattle court, Dutch barn & lean-to.

General – adequate for an upland livestock farm.

Fencing, new trees (grant funded), GP shed.

H

3.2

Surrounded by arable units, near built up area, fields are generally flat, stoney land with gas pipeline running through, small farm, easily accessible.

2 x traditional steadings, Dutch barn, kennels, workshop.

General – adequate for a forage farm.

Doors and gates on buildings.

I

3.1

Surrounded by livestock farms, generally quite flat with steeper areas where land is poorer (5.2), LFA, rabbit problem, buildings are at the centre of farm with fields accessible.

Mixture of traditional buildings, calf stores, cattle courts, and storage buildings.

General – adequate for a livestock unit or dairy.

Water troughs, some drainage, dyke repairs, water troughs, fencing, new parlour, hen shed, slurry storage.

J

6.2

Surrounded by livestock farms, steep, peaty hill farm, LFA, road right through farm maintained by Landlord.

Traditional buildings, handling facilities (50/50), GP shed (50/50), Dutch barn.

General – Adequate for a hill sheep farm.

Sprayed bracken (90% grant funded), grant funded grass seed mix, GP shed.

Models 1 & 2

FARM

SYSTEM

COMPARABLES

(£/ac)

MODEL 1

SAC

(£/ac)

MODEL 1

FBS

(£/ac)

MODEL 2

(£/ac)

A

General Cropping with Pots

32 – 67

77 – 126

(101)

95 – 117

(104)

114 – 123

(118)

B

Upland Cattle + Sheep

43 - 59

57 – 62

(60)

66 – 80

(73)

49 – 61

(55)

C

Cereal Non LFA, no Pots

80 - 120

43 – 86

(60)

33 – 56

(44)

D

Lowland Cattle & Sheep

42 - 71

56 – 60

(58)

64 – 79

(71)

21 – 50

(38)

E

Upland Cattle

35 - 59

0 – 2.4

72 - 85

58 – 64

(66)

F

Mixed, Non- LFA, Beef Finishing

77 – 121

27 – 92

37 – 60

G

Lowland Cattle & Sheep LFA

38 – 77

35 – 64

54 – 56

H

Lowland Sheep Non- LFA

39 – 52

0

0

I

Dairy

39 – 73

0 - 58

26 – 86

J

Hill Sheep

4 – 25

0 – 6

3.6 – 4.2

One of the aims of the project was to find a means of applying an objective method for calculating productive capacity so that transparency and consistency left little room for debate. Models 1 and 2 attempted to do this through using available datasets to calculate the productive capacity of a holding through gross margin analysis or standard farm types.

The challenge of assessing productivity capacity is highlighted by a comparison of the outcomes from an upland cattle farm using SAC Farm Management Handbook figures and also using the FBS data for the same (both adaptations of model 1). The SAC data revealed a rent, based on a 50% share of the net farm income of between £0 and £2.40/acre whilst the FBS data revealed rents of £72 to £85 per acre for the same period. Both of these processes are essentially adaptations of a full budget using published data sets in an attempt to remove subjectivity and therefore the regions for debate. However with the ability for published data to yield such varying results and the fact that by the time it is published it is often already out of date makes such a model unworkable in practice. In the Models 1 & 2 table on the previous page, the SAC gross margin data was half that in the FBS data. Such variances and inflexibility could not be recommended as a means to avoid dispute.

Looking at the variability of the enterprise data there were significant differences. The SAC data showed average Spring Barley gross margin at £210 compared with £168 per acre in the FBS data set. Comparisons of livestock enterprise FBS and SAC survey data was not possible due to the differences with enterprise descriptions. We considered a variation on Model 1 which utilised contractor rates to inform the budget on fixed costs. The thought being that contractor costs would represent machinery and labour costs required. This was not unanimously supported within the Team and was dropped as a model mainly because it was felt that the contractor's rates would value into the budget significant marriage value savings and would not represent what a tenant would do.

Using the whole farm data in model 2 for the same period the rent average was between £58 and £64 per acre. The whole farm data also came from the same FBS data source but reported differently in the Cost Centre Analysis Tables. Although not a hugely unrealistic result it was felt that pushing farms into a specific farm type was unrealistic in practice and would undoubtedly lead to debate. Output figures varied significantly between the survey data used and it was not easy to reconcile these differences. Access to the base data which made up the output figures was not available for the whole farm data. As a result this model was only tested for 4 of the 10 sample farms before being deemed unworkable.


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