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?

I would like your opinion on why FBT rents appear to be tracking the
agricultural value of land even more poorly than AHA rents...

The reviews in FBT's can be very wide. The rents may be increased on say
5yrly cycles or whatever other cycle is agreed upon from the outset.
Similarly they may be based, at review, on some totally artificial
mechanism that was, again, agreed at the outset.

It is my experience that the early FBT new lets were showing higher
levels than the more recent FBT new lets.

[That is correct. From the data I have seen, it can well be argued
that the FBT rents in the most recent year appear to track the
agricultural value of land no worse than AHA rents.]

The is also the 'marginal cost' argument to consider. The adjoing farms
may be on the point of running at less than the two men they currently
have [say i.5 men]. It can be difficult to employ just the 0.5 when he
is needed. Hence, to retain the second full man they take on extra land
over which they can spread the costs of their present labour/machinery.

Thank you for your comments to the FBT question.

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?