On Mon, 30 Dec 2002 20:36:29 -0000, David P
wrote:

In article ,
says...
On Sun, 29 Dec 2002 16:57:56 -0000, David P
wrote:

In article ,
says...
From what I have seen so far, I am unconvinced, that the AHA rents
track the agricultural value significantly more accurately than land
sales values. The response in either case seems to be biased, slow,
and incomplete, and you point to some of the reasons this is so.

I also omitted to point out that the AHA rent is based on the productive
capacity of the *land*. Most farms will have a dwelling on them.

Sorry, please can you rephrase/expound?

Elementary my dear Watson. A farm comprises, in the main, land and
dwellings. The rent has regard to both the dwelling and the land. The
land value is 'restricted' by having regard to its productive capacity.
There is no such restriction imposed when considering the value of the
dwelling.
Residential values have been rising quite dramatically in the UK.

So, if I understand you, if the agricultural value of the land drops
like a rock, while the residential value rises dramatically, the
combined effect may be that AHA rents stays the same. The increasing
part of AHA rent which represent rent of dwellings would not be
included in the farm account, its increase would therefore not affect
farm income.

To get back to our line of inquiry, might it have had an adverse
effect on UK farm profitability to 2002, that land rents have been
kept at or close to historic high levels, while farm income fortunes
dropped to scraping the bottom?

Yes. If we are talking of tenanted farms/land.
No. If we are talking of freehold farms/land as they have no rent burden
to carry.

What, are we not talking about UK farm profitability in terms of
Net Farm income?

On Monday, in article

"Torsten Brinch" wrote:

On Mon, 30 Dec 2002 20:36:29 -0000, David P
wrote:

Yes. If we are talking of tenanted farms/land.
No. If we are talking of freehold farms/land as they have no rent burden
to carry.

What, are we not talking about UK farm profitability in terms of
Net Farm income?

Remember, you are talking to an estate agent, though far from the worst.

For some of them, my minimum politeness level is the post-refit IJNS
Yamato, with the wave motion cannon fully charged.


--
David G. Bell -- SF Fan, Filker, and Punslinger.

"Let me get this straight. You're the KGB's core AI, but you're afraid
of a copyright infringement lawsuit over your translator semiotics?"
From "Lobsters" by Charles Stross.

In article ,
says...
On Monday, in article

"Torsten Brinch" wrote:

On Mon, 30 Dec 2002 20:36:29 -0000, David P
wrote:

Yes. If we are talking of tenanted farms/land.
No. If we are talking of freehold farms/land as they have no rent burden
to carry.

What, are we not talking about UK farm profitability in terms of
Net Farm income?

Remember, you are talking to an estate agent, though far from the worst.


Rarely have I been damned with fainter praise g
--
David
Visit http://www.farm-direct.co.uk for your local farmgate food supplies.
FAQ's, Glossary, Farming Year and more!

In article ,
says...
On Mon, 30 Dec 2002 20:36:29 -0000, David P
wrote:

In article ,
says...
On Sun, 29 Dec 2002 16:57:56 -0000, David P
wrote:

In article ,
says...
From what I have seen so far, I am unconvinced, that the AHA rents
track the agricultural value significantly more accurately than land
sales values. The response in either case seems to be biased, slow,
and incomplete, and you point to some of the reasons this is so.

I also omitted to point out that the AHA rent is based on the productive
capacity of the *land*. Most farms will have a dwelling on them.

Sorry, please can you rephrase/expound?

Elementary my dear Watson. A farm comprises, in the main, land and
dwellings. The rent has regard to both the dwelling and the land. The
land value is 'restricted' by having regard to its productive capacity.
There is no such restriction imposed when considering the value of the
dwelling.
Residential values have been rising quite dramatically in the UK.

So, if I understand you, if the agricultural value of the land drops
like a rock, while the residential value rises dramatically, the
combined effect may be that AHA rents stays the same.

That is correct.

The increasing
part of AHA rent which represent rent of dwellings would not be
included in the farm account, its increase would therefore not affect
farm income.

I am not an accountant nor a farmer so couldn't possibly comment.

To get back to our line of inquiry, might it have had an adverse
effect on UK farm profitability to 2002, that land rents have been
kept at or close to historic high levels, while farm income fortunes
dropped to scraping the bottom?

Yes. If we are talking of tenanted farms/land.
No. If we are talking of freehold farms/land as they have no rent burden
to carry.

What, are we not talking about UK farm profitability in terms of
Net Farm income?

If I owned a farm outright I would be able to calculate my profitability
quite easily - why would I need to deduct a rent that I don't pay?
--
David
Visit http://www.farm-direct.co.uk for your local farmgate food supplies.
FAQ's, Glossary, Farming Year and more!

On Mon, 30 Dec 2002 22:41:55 -0000, David P
wrote:

In article ,
says...
On Mon, 30 Dec 2002 20:36:29 -0000, David P
wrote:
Yes. If we are talking of tenanted farms/land.
No. If we are talking of freehold farms/land as they have no rent burden
to carry.

What, are we not talking about UK farm profitability in terms of
Net Farm income?

If I owned a farm outright I would be able to calculate my profitability
quite easily - why would I need to deduct a rent that I don't pay?

David, are we not talking about UK farm profitability in terms of
Net Farm income?

In article , David P
writes
What, are we not talking about UK farm profitability in terms of
Net Farm income?

If I owned a farm outright I would be able to calculate my profitability
quite easily - why would I need to deduct a rent that I don't pay?

I am not an accountant but I understand that published figures for
profitability often include a *rent equivalent*. This is presumably to
make comparisons easier.

regards

--
Tim Lamb

On Tue, 31 Dec 2002 10:17:34 +0000, Tim Lamb
wrote:

In article , David P
writes
What, are we not talking about UK farm profitability in terms of
Net Farm income?

If I owned a farm outright I would be able to calculate my profitability
quite easily - why would I need to deduct a rent that I don't pay?

I am not an accountant but I understand that published figures for
profitability often include a *rent equivalent*.

Net Farm income figures, per definition, come with the rental value of
owner occupied land deducted.

******
On Tue, 3 Dec 2002 08:55:13 +0000, Tim Lamb
wrote:
In article , Oz
writes

Ave net farm income (that is BEFORE drawings and investment) is 15-20
UKP/ac, and has fallen 300 UKP/Ha since 1995.
******

In article ,
says...
In article , David P
writes
What, are we not talking about UK farm profitability in terms of
Net Farm income?

If I owned a farm outright I would be able to calculate my profitability
quite easily - why would I need to deduct a rent that I don't pay?

I am not an accountant but I understand that published figures for
profitability often include a *rent equivalent*. This is presumably to
make comparisons easier.

Oh I quite agree that to compare across freehold and tenanted adjustments
have to be made to the figures. To compare like with like in many
different areas adjustments have to be made.
--
David
Visit http://www.farm-direct.co.uk for your local farmgate food supplies.
FAQ's, Glossary, Farming Year and more!

In article ,
says...
On Mon, 30 Dec 2002 22:41:55 -0000, David P
wrote:


If I owned a farm outright I would be able to calculate my profitability
quite easily - why would I need to deduct a rent that I don't pay?

David, are we not talking about UK farm profitability in terms of
Net Farm income?

It is at this point that I will say that my view of profitability is
different to yours. I can see what you are looking at but I remain
holding my position that the profit of a freehold farm does not deduct a
rent.

It may be that my approach can be explained by David G Bell's explanation
of my job g.
--
David
Visit http://www.farm-direct.co.uk for your local farmgate food supplies.
FAQ's, Glossary, Farming Year and more!

On Tue, 31 Dec 2002 14:12:34 -0000, David P
wrote:

In article ,
says...
On Mon, 30 Dec 2002 22:41:55 -0000, David P
wrote:


If I owned a farm outright I would be able to calculate my profitability
quite easily - why would I need to deduct a rent that I don't pay?

David, are we not talking about UK farm profitability in terms of
Net Farm income?

It is at this point that I will say that my view of profitability is
different to yours.

View? I am referring to observables, e.g. that noone has posted to
this thread any measure of UK farm profitability except it was
calculated as Net Farm Income.

On Tue, 31 Dec 2002 10:17:34 +0000, Tim Lamb
wrote:

In article , David P
writes
What, are we not talking about UK farm profitability in terms of
Net Farm income?

If I owned a farm outright I would be able to calculate my profitability
quite easily - why would I need to deduct a rent that I don't pay?

I am not an accountant but I understand that published figures for
profitability often include a *rent equivalent*. This is presumably to
make comparisons easier.

Yes, and those figures would be Net Farm Income figures, those we have
been speaking from -- IMO quite appropriately for the thread, since
that measure exactly allows us to look at UK farm profitability
aggregated across tenure types.

(Since this is being cross-posted to uk.business.agriculture, it
should perhaps have been stressed from the start, that 'Net Farm
Income' does not represent the income a farmer ends up with to meet
his living expenses -- the Net Farm Income measure is not meant for,
and should certainly not be used to compare the income of farmers
with the personal earnings in other sectors of society.)

Torsten Brinch wrote in message
...
On Fri, 27 Dec 2002 20:47:47 -0000, "Michael Saunby"
wrote:


If you are not here to talk about UK farm profitability, find another
thread.


if we are talking about UK farm profitability what the hell is Torsten
so keen on GDP for, as it is a figure utterly irrelevant to
profitability.
Looks like Michael has got through his guard :-))


--
Jim Webster

"The pasture of stupidity is unwholesome to mankind"

'Abd-ar-Rahman b. Muhammad b. Khaldun al-Hadrami'

On Fri, 27 Dec 2002 21:37:07 -0000, David P
wrote:

In article ,
says...
The land value increases are relevant to this thread only to the
extent they have affected farm profitability, e.g. to which extent
land value increases may have increased the cost of renting land in
the farmers accounts, and thereby contributed to the low UK farm
profitability up to 2002.


I don't have rental figures

Income from let land, % on capital value
(Source IPD Let land index July 2002)
Putting the two together..

1993 3,791 5.4 204.71
1994 4,229 4.7 198.76
1995 4,788 5.2 248.98
1996 6,058 4.2 254.36
1997 6,448 3.9 251.47
1998 6,134 3.9 239.26
1999 6,655 3.9 259.55
2000 7,103 4.1 291.22
2001 7,357 3.9 286.92

Something is clearly wrong there. I guess the yields that you are
quoting are yields on values subject to tenancy whereas I have quoted VP
[no tenancy] values.

"The income return from let land has remained relatively stable at
between 3 and 5% for the past decade. As rents on farms let under
traditional (Agricultural Holdings Act) tenancies started to fall in
the late 1990s due to the slump in farm incomes, their replacement
with higher Farm Business Tenancy rents and income from diversified
activities on farms and estates has helped maintain and even increase
income. Residential rents have increased and land owners have
diversified into commercial lettings of redundant farm buildings.
It is rent from these ‘non-core’ assets that has maintained the
long-term modest growth in overall income."

Rents are certainly *not* in excess of £100/acre
under AHA's. Rents under FBT's do have a tendency to hover around that
level but those rents are not related to the productive capacity of the
land.

There is only a small number of FBTs in the IPD sample, they
reported average rents of £79 per acre, while rents on traditional
leases were £62 per acre. Seasonal grazing rents averaged £57 per acre
in 2001.

Umm - are we actually going anywhere with this or have we simply
digressed into an interesting exchange of figures?

Dunno. It seems selfevident to me, that high price of farmland must be
adverse to farm profitability, but we may well be just looking at one
head of a multi headed monster. It should be possible to quantify the
total effect and asses its significance. E.g. if it can be estimated
to amount to £5 per increase in rent per acre , that should be enough
to influence the profitability of the total operation significantly
when we are talking current net incomes per acre as low as those we
saw in the first post to this thread.

On Friday, in article

"Torsten Brinch" wrote:

On Fri, 27 Dec 2002 09:11:09 GMT, "Gordon Couger"
wrote:

The only winning statagy I see for the farmer is lowering the cost of
production.

I think the experience in UK over the last several years is that
efforts to lower the cost by cutting down on ag. inputs have largely
been neutralized by increasing prices, particularly on fuel and
fertilizer. Cutting labor costs looks to have been more successful.

There's so much that we could do which runs counter to the buyer
expectations of increased quality at a lower price...

Blessed assurance, Red Tractor sign,
Oh what a promise of profit is thine.
Grow to perfection, follow their rules,
What do they pay us, why are we fools?

This is my story, this is my song,
Working for nothing, all the day long.
Working for nothing, all the day long.

Perfect submission, all for the best,
Tesco and Asda are happy and blest;
Plenty of produce, pay half the price.
Good for the buyer, for us not so nice.


(Oh, what the hell, x-posted to rec.music.filk)

(Note to non-agricultural readers: the Little Red Tractor is a symbol
for British-grown agricultural products, grown under various assurance
schemes which, it was claimed, would lead to higher farm-gate prices.
These claims have less than universally proven.)


--
David G. Bell -- SF Fan, Filker, and Punslinger.

"Let me get this straight. You're the KGB's core AI, but you're afraid
of a copyright infringement lawsuit over your translator semiotics?"
From "Lobsters" by Charles Stross.

On Thu, 02 Jan 2003 12:04:13 +0100, Torsten Brinch
wrote:

On Tue, 31 Dec 2002 10:17:34 +0000, Tim Lamb
wrote:

I am not an accountant but I understand that published figures for
profitability often include a *rent equivalent*. This is presumably to
make comparisons easier.

Yes, and those figures would be Net Farm Income figures, those we have
been speaking from -- IMO quite appropriately for the thread, since
that measure exactly allows us to look at UK farm profitability
aggregated across tenure types.

(Since this is being cross-posted to uk.business.agriculture, it
should perhaps have been stressed from the start, that 'Net Farm
Income' does not represent the income a farmer ends up with to meet
his living expenses -- the Net Farm Income measure is not meant for,
and should certainly not be used to compare the income of farmers
with the personal earnings in other sectors of society.)

In case there are Saxons hiding in confusion, a few figures to
illustrate the commonly used measures for farm income. If the focus
is how much or little farmers earn for a living -- compared to other
people in society, we should be looking at Cash Income (CI).

UK farm profitability, all farm types,
nominal terms indexed, 100=avg(959697)

94 95 96 97 98 99 00 01
NFI 78 90 117 92 43 31 23 26
ONI 77 90 117 93 45 32 26 27
FFI 86 88 117 95 48 35 31 43
CI 79 87 107 105 82 71 66 63

Avg. farm incomes 2001, all types all sizes
NFI £9,886
ONI £10,926
FFI £18,928
CI £31,462

(NFI=Net Farm Income, ONI=Occupiers Net Income
FFI=Family Farm Income, CI=Cash Income)