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#271
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UK farm profitability to jun 2002
"Torsten Brinch" wrote in message ... On Sun, 29 Dec 2002 00:35:44 GMT, "Gordon Couger" wrote: "Torsten Brinch" wrote in message .. . On Sat, 28 Dec 2002 06:49:52 GMT, "Gordon Couger" wrote: .. Agriculture is the largest single business in the US when you take is as a whole Get real. Taken as a whole, agriculture contributes less than 1 % of the US GDP, and there are very many businesses in US that contribute just as much than that or more. Telephone and telegraph alone contributes more than 2% of the US GDP, just to name one. In 2001 farm production contributed just 0.8 % of the US GDP, incidentally same as for UK. Inclued food processing, storage, hauling, meat packing, wholesale and reatil groceriers and the fuel, macherery, fertilzer and chemical industries. I think the number get a very great deal bigger. Aslo the fabric and clothing indurtries that use cotton, wool and flax. And we all must eat, so farm production can in some fuzzy way be linked to almost 100% of the GDP. Whatever, Gordon. The fact remains, that farm production contributes only 0.8 % of the US GDP. Agriculture is an over head cost to society like sewage, electricty, running water. But they prorduce someting were nothing was before from some substantal precentage of renewable resoruces not pusing paper, cutting hair or other things that the world can live with out and do not contribute to an very large industry that is built with food, feed and fiber production as it base. We can get along fine with out clerks, barbers, and a great many service industries but we can't get along with out food. While the direct sales may only be less than one precent the industry that that is built on food, feed and fiber production one of the largests industrise in the world. The fact that we produce it so inexpensivly is one of the reasons that we have money for other areas of our economey to grow. Commiditis are coming off all time lows when corrected for inflation. If we were getting the same price I got for my crops 40 years ago the figure would be closer to 5% or more of GDP. You can't separerate faming from the rest of agri business. It comes as a set if you break one part it all sufferes. Gordon |
#273
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UK farm profitability to jun 2002
Torsten Brinch wrote in message The agricultural value of land would then seem to have been about the same now as it was in 1996, with a minor peak about 1999, judging from FPDSavills Estate Benchmark survey AHA rent settlements time series: (£/acre, cvt. read from graph) 1996: 47 1997: 52 1998: 65 1999: 68 2000: 65 2001: 62 2002: 58 Such indication of a relatively constant agricultural value of land is a surprising result, when other indicators indicate that farm profitability has dropped like a rock in the same period. what you are forgetting is that rents are not negociated annually, but tend to be reviewed every three years or thereabouts, so you will have a lag. Also rents are competitively negociated rather than fixed by some independant agency. Finally remember that the rent also represents the landlords investment, so if the landlord has put capital into the farm in the form of new building work to meet the latest tranche of regulation, this will be factored into the rent as an increase, regardless of underlying agricultural profitability. A final point is that from a landlords point of view getting the rent up is a long weary process. During FMD and years of total collapse, rather than reduce the rent, some landlords handed back a rebate. This means that the following year the rent was still the same and the landlord wasn't faced with trying to get the rent back up again. Trying to use agricultural rents as a guide to short term agricultural profitability is to put a lot of trust on a poor indicator. -- Jim Webster "The pasture of stupidity is unwholesome to mankind" 'Abd-ar-Rahman b. Muhammad b. Khaldun al-Hadrami' |
#274
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UK farm profitability to jun 2002
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#275
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UK farm profitability to jun 2002
In article , Torsten Brinch
writes The pocket book is modestly priced:-) ISBN 0-9541201-0-8 (2001 edition) But you said the data was taken from John Nix 2002? 32nd edition (2002) September 2001. Copyright 2001. Take your pick! regards -- Tim Lamb |
#276
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UK farm profitability to jun 2002
On Sun, 29 Dec 2002 07:44:21 +0000 (GMT),
("David G. Bell") wrote: On Sunday, in article "Torsten Brinch" wrote: Such indication of a relatively constant agricultural value of land is a surprising result, when other indicators indicate that farm profitability has dropped like a rock in the same period. Now you know why Savills are referred to by some as the "Mayfair Mafia". "Overall investment returns from UK farmland have now out-paced equity returns over the last three, five and ten years. The annualised return to let land investments over the last ten years has been 12.6% per annum. Following three years of negative returns from 1985-87, which still depress the long term results, returns to farmland investments have been consistently positive, despite the adverse conditions for British agriculture. The inflation adjusted ten-year annualised real return to let land investments has been a remarkable 10.1% a year." (quoted from IPD UK Let Land Index 2002) |
#277
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UK farm profitability to jun 2002
In article ,
says... On Sat, 28 Dec 2002 20:12:39 -0000, David P wrote: In article , says... On Fri, 27 Dec 2002 21:37:07 -0000, David P wrote: 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. IME FBT's were much higher than £79/acre. AHA's tended to be slightly lower than the £62 you quote - but not significantly. OK. I take it that you consider the level you give, ~£100/acre as currently a more realistic estimate than the $79 given by the IPD. To be fair, the authors do make clear reservations as regards the representativeness of their FBT sample. 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, I need to be slightly more careful than usual here. It may be said that the rent under an AHA is a more accurate representation of the agricultural value of the land. The rent has to have regard to the productive capacity of the land and its related earning capacity. In this respect I would suggest that it may be the best guide to where the value of purely agricultural land should lie. In the UK though there are many external factors affecting the land values and it is therefore rare to come across a purely agricultural value. Indeed, I am not sure I have *ever* seen a pure ag. value. Yet, if I understand you, the concept of the agricultural value of the and is not really foreign, e.g. as that which the AHA rent must have regard to, and as that which you consider AHA rents to be relatively accurately representing. The agricultural value of land would then seem to have been about the same now as it was in 1996, with a minor peak about 1999, judging from FPDSavills Estate Benchmark survey AHA rent settlements time series: (£/acre, cvt. read from graph) 1996: 47 1997: 52 1998: 65 1999: 68 2000: 65 2001: 62 2002: 58 Such indication of a relatively constant agricultural value of land is a surprising result, when other indicators indicate that farm profitability has dropped like a rock in the same period. I don't find it at all surprising. In the real world it costs the tenant to fight for a reduction in the rent he pays. He will have the costs of an Agent to stand and may also have to bear the whole or part cost of an Arbitration. This likely cost may mean it is not be worth his while pursuing an attempt to reduce the rent paid. Note also that the rent review cycle is 3 yearly - and that 99 - 2000 shows a very significant drop in rent. -- David Visit http://www.farm-direct.co.uk for your local farmgate food supplies. FAQ's, Glossary, Farming Year and more! |
#278
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UK farm profitability to jun 2002
On Sun, 29 Dec 2002 10:29:58 +0000, Tim Lamb
wrote: In article , Torsten Brinch writes The pocket book is modestly priced:-) ISBN 0-9541201-0-8 (2001 edition) But you said the data was taken from John Nix 2002? 32nd edition (2002) September 2001. Copyright 2001. Take your pick! OK, I wanted to make sure what edition is the one with the potential data error. (Perhaps the editor reads this, or you or some other kind soul will alert him.) For the present, I suggest we ignore the '90 data point in the data set you posted, as an outlier, as was my immediate suggestion. This moots your question, what caused the '90 peak in the data, since there is no longer a '90 peak. But that is always the risk, when one makes inquires mainly based on a single data point. Ignoring the '90 data point, the striking feature we are left with is the increase of land values in tune with the McSharry reform. Perhaps we could give that some more attention, what say you? |
#279
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UK farm profitability to jun 2002
On Sun, 29 Dec 2002 11:54:53 -0000, David P
wrote: In article , says... On Sat, 28 Dec 2002 20:12:39 -0000, David P wrote: I need to be slightly more careful than usual here. It may be said that the rent under an AHA is a more accurate representation of the agricultural value of the land. The rent has to have regard to the productive capacity of the land and its related earning capacity. In this respect I would suggest that it may be the best guide to where the value of purely agricultural land should lie. .. .. FPDSavills Estate Benchmark survey AHA rent settlements time series: (£/acre, cvt. read from graph) 1996: 47 1997: 52 1998: 65 1999: 68 2000: 65 2001: 62 2002: 58 Such indication of a relatively constant agricultural value of land is a surprising result, when other indicators indicate that farm profitability has dropped like a rock in the same period. I don't find it at all surprising. In the real world it costs the tenant to fight for a reduction in the rent he pays. He will have the costs of an Agent to stand and may also have to bear the whole or part cost of an Arbitration. This likely cost may mean it is not be worth his while pursuing an attempt to reduce the rent paid. Note also that the rent review cycle is 3 yearly - and that 99 - 2000 shows a very significant drop in rent. I am not sure you meant to write 2000 there. The drop from the peak in 1999 to 2002 is certainly significant, a 14 % drop relative to the peak rent in 1999. However, this came assumedly as a response to a 50 % drop of income from farming from 1996 to 1999. 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 would like your opinion on why FBT rents appear to be tracking the agricultural value of land even more poorly than AHA rents. They would, if I understand the arrangement. come closer to open market values and be more frequently subject to renegotiations. |
#280
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UK farm profitability to jun 2002
Torsten Brinch wrote in message ... On Sun, 29 Dec 2002 10:29:58 +0000, Tim Lamb wrote: In article , Torsten Brinch writes The pocket book is modestly priced:-) ISBN 0-9541201-0-8 (2001 edition) But you said the data was taken from John Nix 2002? 32nd edition (2002) September 2001. Copyright 2001. Take your pick! OK, I wanted to make sure what edition is the one with the potential data error. (Perhaps the editor reads this, or you or some other kind soul will alert him.) For the present, I suggest we ignore the '90 data point in the data set you posted, as an outlier, as was my immediate suggestion. This moots your question, what caused the '90 peak in the data, since there is no longer a '90 peak. But that is always the risk, when one makes inquires mainly based on a single data point. Ignoring the '90 data point, the striking feature we are left with is the increase of land values in tune with the McSharry reform. Perhaps we could give that some more attention, what say you? ignoring data that does not fit you preconceptions has a long and ignoble history, massaging the figures to fit is a traditional political pastime. It would be far more sensible to wonder whether land prices and rents, on a small heavily populated island, actually bear much relationship to agricultural profitability. Indeed the only reason for chosing these indirect measures of profitability is that the direct measures don't give you the answer that you want. -- Jim Webster "The pasture of stupidity is unwholesome to mankind" 'Abd-ar-Rahman b. Muhammad b. Khaldun al-Hadrami' |
#281
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UK farm profitability to jun 2002
Torsten Brinch wrote in message ... On Sun, 29 Dec 2002 07:44:21 +0000 (GMT), ("David G. Bell") wrote: On Sunday, in article "Torsten Brinch" wrote: Such indication of a relatively constant agricultural value of land is a surprising result, when other indicators indicate that farm profitability has dropped like a rock in the same period. Now you know why Savills are referred to by some as the "Mayfair Mafia". "Overall investment returns from UK farmland have now out-paced equity returns over the last three, five and ten years. The annualised return to let land investments over the last ten years has been 12.6% per annum. Following three years of negative returns from 1985-87, which still depress the long term results, returns to farmland investments have been consistently positive, despite the adverse conditions for British agriculture. The inflation adjusted ten-year annualised real return to let land investments has been a remarkable 10.1% a year." (quoted from IPD UK Let Land Index 2002) which shows that let land investments show no real relationship to farm profitability. -- Jim Webster "The pasture of stupidity is unwholesome to mankind" 'Abd-ar-Rahman b. Muhammad b. Khaldun al-Hadrami' |
#282
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UK farm profitability to jun 2002
"Gordon Couger" wrote in message news:TCwP9.487472$WL3.127241@rwcrnsc54... We can get along fine with out clerks, barbers, and a great many service industries but we can't get along with out food. While the direct sales may only be less than one precent the industry that that is built on food, feed and fiber production one of the largests industrise in the world. You can't separerate faming from the rest of agri business. It comes as a set if you break one part it all sufferes. Exactly the way I see it! M |
#283
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UK farm profitability to jun 2002
Michelle Fulton wrote in message .com... "Gordon Couger" wrote in message news:TCwP9.487472$WL3.127241@rwcrnsc54... We can get along fine with out clerks, barbers, and a great many service industries but we can't get along with out food. While the direct sales may only be less than one precent the industry that that is built on food, feed and fiber production one of the largests industrise in the world. You can't separerate faming from the rest of agri business. It comes as a set if you break one part it all sufferes. Exactly the way I see it! ah but that isn't a european perspective. In Europe at the moment the chattering classes seem to have a problem with agriculture, our current UK government does seem to have a strong dislike for the whole sordid business. There is some discussion as to why they have this attitude, a lot of it is probably a hang up from the old class war politics, some of it might be that it is an industry they cannot control because they cannot afford to police it , and reality always steps in anyway. Who knows -- Jim Webster "The pasture of stupidity is unwholesome to mankind" 'Abd-ar-Rahman b. Muhammad b. Khaldun al-Hadrami' M |
#284
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UK farm profitability to jun 2002
"Jim Webster" wrote in message ... ah but that isn't a european perspective. In Europe at the moment the chattering classes seem to have a problem with agriculture, our current UK government does seem to have a strong dislike for the whole sordid business. I suspect that they see it as a very difficult topic. Subsidese, world trade , environment and health make it a very thorny set of issues. So many interest groups that it is impossible to resolve and plenty of blame if anything goes wrong. There is some discussion as to why they have this attitude, a lot of it is probably a hang up from the old class war politics, some of it might be that it is an industry they cannot control because they cannot afford to police it , and reality always steps in anyway. I am not sure it is class war, I think a lot of working class folk in coal mining, motor industry etc are resentful that farming has been treated differently. At the end people see a pleasant environment and compare with their inner city conditions. Consider that a villiage near to London has the very rich and farmers living in it. Farmers live where the very rich choose to live. The rest is ignorance, many people do not know much about food production so their views are stereotypical. Most buy food and holidays in the same manner. The living standards of British farmers or Spanish hotel maids are probably of little thought to them. When you go out and buy that GPS bolt on goody for your tractor do you worry that most of the cost is born by the American taxpayer in maintaining the sattelites or that Chinese near - slave labour is exploited in it manufacture. I suspect you give it little thought and get on with your own difficulties and responsibilities. The rest of us tend to be the same, pop into Tescos and not think of how it all came to be there. |
#285
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UK farm profitability to jun 2002
In article ,
says... On Sun, 29 Dec 2002 11:54:53 -0000, David P wrote: In article , says... On Sat, 28 Dec 2002 20:12:39 -0000, David P wrote: I need to be slightly more careful than usual here. It may be said that the rent under an AHA is a more accurate representation of the agricultural value of the land. The rent has to have regard to the productive capacity of the land and its related earning capacity. In this respect I would suggest that it may be the best guide to where the value of purely agricultural land should lie. .. .. FPDSavills Estate Benchmark survey AHA rent settlements time series: (£/acre, cvt. read from graph) 1996: 47 1997: 52 1998: 65 1999: 68 2000: 65 2001: 62 2002: 58 Such indication of a relatively constant agricultural value of land is a surprising result, when other indicators indicate that farm profitability has dropped like a rock in the same period. I don't find it at all surprising. In the real world it costs the tenant to fight for a reduction in the rent he pays. He will have the costs of an Agent to stand and may also have to bear the whole or part cost of an Arbitration. This likely cost may mean it is not be worth his while pursuing an attempt to reduce the rent paid. Note also that the rent review cycle is 3 yearly - and that 99 - 2000 shows a very significant drop in rent. I am not sure you meant to write 2000 there. Yep - typo, should have been 2002 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. I would like your opinion on why FBT rents appear to be tracking the agricultural value of land even more poorly than AHA rents. They would, if I understand the arrangement. come closer to open market values and be more frequently subject to renegotiations. 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. 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. -- David Visit http://www.farm-direct.co.uk for your local farmgate food supplies. FAQ's, Glossary, Farming Year and more! |
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