Subsidy reminder for the 100,000 "farmers" claiming single farm payments.

Mary_Hartnell

Hi DS let us compare notes.
I have a great grandfather who was the owner of a 140 acre pasture farm in the West Country. That farm supported a family of one boy and two girls and 5 farm hands and an apprentice.
Your father owns (?) a similar bigger 175 acre farm, gets a £10K subsidy, but still finds it hard to make a living?
I think the market is trying to tell him something?

If the farm is worth say £5 – 8K per acre, what would it fetch as a farm business tenancy?
To keep the number sensible, and this is what tends to happen, the land lord tends to grab the subsidy and the value of that subsidy gets capitalised into the value of the land.
So your father as a land owner should be charging your father as a farmer at least £10K in rent. So how much profit is the business now making, were it paying rent?

Let us consider the capital tied up in the land. Not enough to be rented out as capital in a London casino operation – such as being a “name” at a Lloyds insurance syndicate?

However if the land is worth 5 – 8K per acre, that is £875,000 – £1,400,000 of inherited (?) wealth. Plus the value of the farm house, possibly another £300,000 –> the sky is the limit.
Looking at this capital, we know that the return tends to converge towards a real 2%, so that would mean a rental value of £17K, even calculating at the lower acre value.
In major cities where there is still a lot of commercial activity, getting a 5% - 10% gross yield is not unreasonable for a buy to let landlord, who is not trying to gear up his portfolio with high levels of mortgage.

Devon_Sailor wrote: »

Well, your very simplistic division to come out with the figure of £35k each is pretty much a good starting point for mahoosive factual inaccuracy, and shows that you have little understanding of the topic about which you have chosen to pass judgement.

I agree, the figure is more like £12K if you believe there are 300,000 farmers in the UK,
I might be wrong , perhaps you can tell me how many “farmers” were doing a “June Return” back in the days of headage payments?
OH there are quite a few guys making a living growing vegetables in a filed of poly-tunnels – I would call them farmers (“growers”), but someone just collecting the subsidy payment and letting the land out for DIY livery, is not a farmer in my book.
I live on such a farm.

Devon_Sailor wrote: »

May i be so bold to ask what job you do for a living?

Recently retired teacher, still collecting a very small rent on some of great grandfather’s land.

Devon_Sailor wrote: »

It does a great injustice to the tens of thousands of farmers who struggle working an average of 65-80 hours a week, often on their own, in some of the toughest economic conditions and markets in world industry. With your flippant comment you present them in an instant as high earnring Euro money fat cats. The VAST majority of farmers earn significantly below the minimum wage on a per-hour basis. They are the second most likely people in the country to suffer death or serious injury through industrial accident, and have the highest suicide rate out of any occupation in the country.

And the majority of such farmers have gone out of business since say 1965.
Usually they struggle on into retirement but none of the children want to follow father into squalor.
I have watched a dairy farmer, who had a typical farm back in the days of churns (remember those?) slowly going down the pan, tending to make the right decision at the wrong time and the wrong decision at the right time. Basically, he could have kept going by inheriting more farm to add to his 150 odd acres, when his father died. But these days his two sisters expected to get a fair share of the capital . So he has lived by slowly selling the farm. It will be a bit a of close run thing; will he run out of assets before he dies? Has that been a wasted life?
Mind you I also know of a similar farmer, who managed to sell the home paddock as building land and ended up in a very different place financially.

Devon_Sailor wrote: »

I do not disagree that the subsidy reforms designed by Europe are a complet dogs breakfast - taking away the link from per animal head (a pretty sensible way of doing things) to a per acre farmed formula, was stupid. It means that anyone with half an acre of "pony paddock" can claim to be "farming" and thus claim the money. Granted, per acre it is not a lot (indeed, for actual, real farmers, it tends to work out at a worse rate than the old per head system).

We switched to the present system because the the warehouses were full of butter and milk powder, which was then used to bankrupt similar farmers in Africa by dumping it on their market in the guise of “aid”. It also meant that farmers had to struggle to raise every sickly lamb, through the winter nights, just to get the subsidy. In Australia they simply collected up last night’s lambs that did not make it and fed then to the dogs.

Devon_Sailor wrote: »

Like most things, there are extremes. There are indeed a handful of major landowners with tens of thousands of acres under cultivation or stewardship that are being paid very big sums of money, but it is only a handful. The vast majority of farms are still small to medium sized, and receive nowhere near this.

I see the new system, starting in 3 years time, should cap this situation, however I see no signs of the Brussels bureaucrats aiming to cut the total subsidy spend

Devon_Sailor wrote: »

The reason that the overall claimed figure is so high is because every man and his dog with a small plot of land can claim to be a farmer (and are often advised to do so by accountants) - so you get the green belt stockbrokers and bankers with acres of rolling garden sticking a horse in a corner of a bit of it and claiming Euro money!

Well we agree on that. The new regulations in theory will require the claimant to demonstrate some modest farming income. I wonder if I will see a field on “my” farm going back to a contractor growing wheat, just to continue to qualify for the subsidy?

Devon_Sailor wrote: »

UK farming has the highest welfare and regulatory standards in the world; why do you think British meats cost more than the cheap Brazilian or Argentinean stuff you get in supermarkets?

Probably because it is raised on huge ranches and the beasts might well be fed genetically enhanced feed.
[My son did a gap year, part of which involved a week long apprenticeship and found himself driving a 100,000 tractor on 12 hour shifts, it often took him 20 minutes just to drive to where he was meant to be working that day. You know how many teenage boys are fascinated by high powered sports cars – well he returned able to pass comment every time a modern tractor went past.]

Devon_Sailor wrote: »

If you do not assist in the massively increased production costs to support this level of animal welfare standards (as demanded, quite rightly, by UK consumers), it would be very difficult to compete on a like for like basis.

Which would you prefer in your burger or Sunday roast? Intensively and force farmed beef pumped full of steroids and growth hormones from Brazil, or traditionally raised, humanely reared UK produce?

I am not sure that is a true choice, if the premium is high enough for “organic” food then that is the way it will be raised. What I do know is that organic standards will mean a whole lot more of us will need to become vegetarians, if the world is to feed its 7,000,000,000 (and said to be growing to 10,000,000,000) population.
I suppose pigs and chicken is the first step, they are the meat, which creates less CH4.

Devon_Sailor wrote: »

For example my father's farm is about 175 acres. He received about £10,000. He is 57, been running it single handed since he was 17, and doesn’t look like he will be able to retire at any sort of normal age. There are many men in our area who are 75+ and still having to eak out a living off the land.

Any scope for diversification or getting closer to the end consumer and thus add more value to the produce?
What does mum do?
Who is taking over, when dad is eventually forced to give up?
Did dad discuss the idea of emigrating back in the 1990’s – I think I would have recommended Tasmania. It is the size of Ireland, though the climate varies greatly from West (wet) to East (drier and warmer in summer suitable for wine in the North).. Land similar to the West Country would have been available for £500 per acre; but the pound has gone down the drain since then and the Ausie dollar has boomed to the point where the wine industry is suffering – unable to compete with S.Africa, Chile etc.

Devon_Sailor wrote: »

All i ask therefore, is that before putting up simple figures, you at least scratch the surface of reality before commenting.

Too much? I think, and hope not.

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