The Tenant Farmers’ Association (TFA) has written to Defra Secretary Michael Gove to urge him to introduce a £100,000 cap on farm payments during the Brexit transition period.
TFA chief executive George Dunn sent the letter after Mr Gove made clear during a hearing of the Environment, Food and Rural Affairs Select Committee last week that he was minded to cut all farm payments by a ‘small’ amount.
He told MPs on the committee he originally favoured the £100,000 cap policy, but had changed his mind because of the responses to the ‘Health and Harmony’ consultation paper.
All the major farming groups except the TFA supported a more equitable reduction of payments.
In the TFA’s letter, seen by Farmers Guardian, Mr Dunn said there was ‘no doubt the current system is fuelling unsustainable tender rents’.
“For farm tenants occupying land subject to Farm Business Tenancies, there is evidence to suggest the availability of direct payments is causing an inflationary impact on farm rental values, particularly in situations where existing farmers are bidding on additional acres with the expectation of being in receipt of direct payments into the future”, the letter reads.
“Applying the proposed ceiling of £100,000 would immediately take the pressure off levels of rents payable on FBTs, as it will reduce the incentive for existing owner occupiers to acquire additional land to expand their operations and take advantage of the direct payments available with entitlements acquired in the marketplace.
“This, in turn, would have big advantages to all FBT tenants by dampening comparable evidence across the board.”
Mr Dunn concluded by saying there was ‘nothing smart about paying too much rent’.
“It is simply a cost to a business and potentially to every other tenanted business through the use of the rent as a comparable”, he added.
“We need to take the steam out of the rental market, and placing a ceiling on direct payments through the Brexit transition period would assist with that.”