Tenant Farmers Association column: So you want to be tenant farmer? Here are some tips
- Credit: Archant
Given the burgeoning number of individuals interested in a career in agriculture, it is hard to believe that, only 20 years ago, convincing even the sons and daughters of existing farmers to take over the family business was nigh on impossible, writes George Dunn, chief executive of the Tenant Farmers Association (TFA).
The TFA is now regularly inundated at agricultural shows and other events with young and enthusiastic individuals looking to set up in business in agriculture. Sadly however there is a vast under-supply of opportunity. So if you want to get into farming through an agricultural tenancy how do you shine above the competition?
The first and probably most important step is to take off any rose tinted spectacles. The route you are about to take is no easy road and will involve dedication, commitment and a strong will to succeed. A tenancy is a major decision for both potential tenant and landlord and applicants must be able to prove to a landlord that they are dedicated to the farming industry. It is also vitally important to understand the nature of the landlord offering the opportunity and the reason why they are letting it. With stiff competition in the marketplace, there will be many landlords who will simply look for the highest rent from the least risky option for a short number of years which will normally be a large owner occupier looking to spread fixed costs by taking on additional land. As a new entrant it is highly unlikely that you will be able to compete with such individuals. Other landlords are looking for a long-term relationship and are willing to assist new entrants. Understanding what drives the landlord will be important to avoid wasting your time and energy.
Make the most of viewing days available for any farm you are interested in, taking time to walk around the farm, assessing the land and buildings as well as getting a good feel for the place. It is important to dress tidily and create good, first impressions. Be polite and ask questions to develop a relationship with the letting agent, try to stand out from the crowd right from the start of the process. Use the opportunity to glean as much information as you can from either the outgoing tenant or neighbouring farmers.
When you are ready to apply, give yourself plenty of time to prepare the business plan and tender documentation, it will take weeks to prepare a well thought out tender and may need to be revisited and altered many times before it is finally submitted. Your tender should be based on the information you have about the farm, most of which will be gathered on the viewing days and from the particulars provided by the agent. If a draft tenancy is available, familiarise yourself with its terms. You will need to decide on an appropriate farm business proposition which you can demonstrate will succeed and suit the farm and is permitted within the terms of the tenancy.
You should always prepare a budget, cash flow and balance sheet, to demonstrate the viability of the business and to show your current assets and how you would finance taking over the farm and any desirable improvements you intend to make. Present the information in a clear and logical way; your figures will have to stand scrutiny and questioning. Your business plan should also address what you see as your future beyond the initial term being offered by the landlord.
It is important to decide on a level of rent that is sustainable. When tendering for a farm it is essential not to over estimate the rental value, it might win you the farm, but leave you a huge financial burden and a failing business. Applying for a tenancy is exciting, but be careful not to be too eager by allowing your heart to rule your head. If you don’t succeed on your first attempt, ask for feedback and keep trying. Lettings are very competitive and they’re not for everyone. Don’t underestimate the hard work and long hours involved in running your own business. Don’t rule out other options such as joint ventures, contract farming and share farming arrangements.