As increasing farm incomes in some sectors look set to trigger a wave of rent reviews, the CLA, the rural economy experts, says that boom and bust policies do nobody any good and that the answer lies in sensible, balanced, negotiation between landlord and tenant.
CLA president, Henry Aubrey-Fletcher, will tell a delegation of leading chartered surveyors at Rudding Park near Harrogate, today (Friday February 29th) that the best way to achieve maximum profitability for both parties is through negotiation and expert advice.
Speaking at 'Northern Briefing 2008', the CLA President will say: "Modern farming requires investment by both tenant and owner and the cycle of reducing rents and falling investment does neither party any good in the long run.
"We need to move the focus away from rent increases in isolation and look instead at how we can make tenant farmers more profitable. Profitable tenants are able to pay higher rents, which enables investment in the holding – a win-win situation."
Increases in grain and milk prices have helped push up farm incomes by around nine per cent last year according to figures from Defra. However, research by the CLA found that, taking into account all non-farming activity and support payments, the core business of farming actually lost £1193 million during 2007.
"We are reasonably confident that prospects are good in the medium term for arable producers and that specialist beef producers - whose export markets have now re-opened - also have a fair outlook. On the other hand, dairy farmers have seen their recent price increases eroded by feed and energy costs and, where labour is employed, may have gone backwards.
"Manufacturing beef and sheep production is at best, challenging, in the face of increased imports and the overhang of movement restrictions. Pig and poultry production is facing increases in feed and energy costs and the sector looks set to shrink."
Outside of traditional farming activity, the CLA President recommended a "reality check" when entering into a rent review.
"If a farm has diversified significantly into another business sector or if a farmer has only a part-time holding, the residential value of the property and the latent rental value of the asset in the 'real world' need to be taken into account," he said.