The Tenant Farmers Association has spoken out against the hard-line approach being taken by The Crown Estate on farm rent reviews this year.
“In the past The Crown Estate has taken a commercial approach tempered with a willingness to engage positively with its farm tenants to reach solutions which are sustainable both for the business of the tenant farmer and the return to The Crown Estate" said TFA Chief Executive George Dunn.
"More recently it appears interested only in exacting the highest rent possible whatever the consequences. I fear that its attitude will push many tenant farmers into unsustainable positions".
Last year the TFA applauded The Crown Estate for developing a variable Farm Business Tenancy which was an attempt to deal with the increasing volatility in commodity markets. Indeed the TFA’s endorsement of this approach was highlighted in this year's Crown Estate Report.
"The variable FBT was indeed a good idea as its intention was to base the level of rent, to some extent, on the price received by the tenant farmer for commodities he sold, principally grain. However, even here The Crown Estate is demanding a very high fixed element and an unsustainable proportion of the resultant sale price as the variable element. This is not what the TFA signed up to," said Mr Dunn.
“Clearly The Crown Estate has whetted its appetite on the eye watering rents that have been tendered for land which it has offered recently on the open market. Much of this has been driven by large owner occupiers with an overarching desire to expand their farming operations on the premise of spreading fixed costs. This ethos may be applicable in situations where the additional acres are truly marginal to the core farming operation but it clearly makes no sense when the additional acres run into the hundreds. These tenders take no account of risk and are accepted by agents with no regard to the sustainability of the arrangement,” said Mr Dunn.
“The Crown Estate used to pride itself on its long-term relationships with its tenants and had developed a number of protocols for promoting good landlord tenant relationships. These protocols now appear to be just words and there is a suggestion that the current hard line is being driven behind the scenes by the Treasury which takes in full the profit made by The Crown Estate each year. The Treasury needs to understand that supporting sustainable business that creates jobs and profitability in rural areas is the way to see growth and a path out of recession. Consigning businesses to bankruptcy for the sake of the short-term gain is not in anyone's interests," said Mr Dunn.
