Leasing out farmland

PLW17

Hi all, looking for some advice here
My father operates a calf to beef system and for a number of reasons he is looking at leasing out the farmland for X amount of years. There’s about 125 acres of quality ground there but over the past few years the yard and ground has deteriorated in condition rapidly due to lack of reinvestment and maintenance. It would take a reasonable amount of investment and work to bring it back to proper production and I have been around with past twelve months due to covid and have tried to improve things on the farm with my father but no worthwhile gains have been made between us on the farm. I have a few years left in my college degree and I had intentions of being able to atleast on a part time capacity work the farm and try develop it up bit by bit as I have a very big interest in agriculture and am pursing my degree in that area. My father is 65 now and has worked hard his whole life and has his share of aches and pains and has seemed to lose interest in agriculture which is understandable and at end of the day it is his decision. Leasing would not be an ideal thing for me to be looking at but ultimately he has very good reasons for doing so if that is what he wants. Just want to get opinions on whole thing and good and bad etc of land leasing as this is something I wouldn’t be an expert on by any means.
Many thanks.

Note: Not trying to come across as an entitled brat as I understand my father must do what he feels is best for him and the farm going forward and I will respect this decision regardless.

Reggie.

PLW17 wrote: »

Hi all, looking for some advice here
My father operates a calf to beef system and for a number of reasons he is looking at leasing out the farmland for X amount of years. There’s about 125 acres of quality ground there but over the past few years the yard and ground has deteriorated in condition rapidly due to lack of reinvestment and maintenance. It would take a reasonable amount of investment and work to bring it back to proper production and I have been around with past twelve months due to covid and have tried to improve things on the farm with my father but no worthwhile gains have been made between us on the farm. I have a few years left in my college degree and I had intentions of being able to atleast on a part time capacity work the farm and try develop it up bit by bit as I have a very big interest in agriculture and am pursing my degree in that area. My father is 65 now and has worked hard his whole life and has his share of aches and pains and has seemed to lose interest in agriculture which is understandable and at end of the day it is his decision. Leasing would not be an ideal thing for me to be looking at but ultimately he has very good reasons for doing so if that is what he wants. Just want to get opinions on whole thing and good and bad etc of land leasing as this is something I wouldn’t be an expert on by any means.
Many thanks.

Note: Not trying to come across as an entitled brat as I understand my father must do what he feels is best for him and the farm going forward and I will respect this decision regardless.

Just be careful who ya rent to is the main thing. Some lads would leave the farm worse off. Also on the flip side its abit cheeky to expect a lad to come in and get the place fixed up for ya. A balance may have to be sought.

A long lease rather than short would attract lads willing to invest. Also if the price wasnt too high it might be more attractive.

Most importantly include your father as he might not be happy to someone working his land

Mooooo

Leases longer than 5 years are tax free to the landowner to various limits and increase the longer the lease is. If you are still in college a 5 or 7 year lease on the farm, perhaps keep a small area for yourselves to farm in the meantime, may suit in that it would be an easier income for your father and if after that time you wish to go farming you can then talk to your father about it.
Leases can include different things if both parties are agreeable, ie maintaining soil indexes etc but if the land hasn't been maintained in that way it will be expensive to bring up so a realistic proposal should be agreed as it must be viable for the tenant also

tanko

Something to keep in mind is the current situation with entitlements and land.
My ag advisor is telling all his clients not to commit to any leases at the moment or you could end up loosing whatever entitlements you have.
Hopefully all this should become clearer later this year, then again it might be kicked down the road for another year or two.

You need to sit down with your father and set out a plan for the future.
The fair deal scheme is something that should be kept in mind also.

And the most important bit, have you any brothers or sisters??:D:D

PLW17

tanko wrote: »

Something to keep in mind is the current situation with entitlements and land.
My ag advisor is telling all his clients not to commit to any leases at the moment or you could end up loosing whatever entitlements you have.
Hopefully all this should become clearer later this year, then again it might be kicked down the road for another year or two.

You need to sit down with your father and set out a plan for the future.
The fair deal scheme is something that should be kept in mind also.

And the most important bit, have you any brothers or sisters??:D:D

Ok didn’t think of that thanks something else to bear in mind with new CAP. Easier said than done but I understand what you mean about planning for future.

Reggie.

PLW17 wrote: »

Ok didn’t think of that thanks something else to bear in mind with new CAP. Easier said than done but I understand what you mean about planning for future.
I have one sister.

Dont encourage him ffs

Water John

Real problem ATM with the attached entitlements. It looks like these will become the property ( for a better word) of the person leasing the land.
Some sort of shared farming structure might be optimum. I suggest to make contact with the Land Mobility Service which is operated by Macra na Feirme.

Tax free lease is enticing, but in most cases it's just 20% but losing the entitlements would be much more and be permanent. It's a time to be sure of the direction.
Just pitching another income stream is the Organic Scheme is reopening.
You have 50 Ha. For the first two years ye'd get €11K/yr and €8,500/yr subsequently. Just keep low stock numbers and if necessary partially straw bed for the winter.
So add all the present payments and this possible income stream. Your father will also be getting his pension next year.

In the present circumstances I'd be reluctant to use a traditional lease option.
Just throwing out ideas.

Reggie.

Water John wrote: »

Real problem ATM with the attached entitlements. It looks like these will become the property ( for a better word) of the person leasing the land.
Some sort of shared farming structure might be optimum. I suggest to make contact with the Land Mobility Service which is operated by Macra na Feirme.

Tax free lease is enticing, but in most cases it's just 20% but losing the entitlements would be much more and be permanent. It's a time to be sure of the direction.
Just pitching another income stream is the Organic Scheme is reopening.
You have 50 Ha. For the first two years ye'd get €11K/yr and €8,500/yr subsequently. Just keep low stock numbers and if necessary partially straw bed for the winter.
So add all the present payments and this possible income stream. Your father will also be getting his pension next year.

In the present circumstances I'd be reluctant to use a traditional lease option.
Just throwing out ideas.

So if a farmer leases out land he might lose his entitlements for good?

Water John

Yes, the drive seems to be that these go to the 'active farmer'. Not sure where the present leases being written will end up as solrs are frantically writing in clauses.

Reggie.

Water John wrote: »

Yes, the drive seems to be that these go to the 'active farmer'. Not sure where the present leases being written will end up as solrs are frantically writing in clauses.

Would that not cause farmers not to lease land then if they could never get the entitlements back

Water John

That's a dilemma, but it's the EU will be making the rules. It will be an upheavel and I can't see the farm orgs taking the 'armchair farmers' side as they see it.
Looks like each land plot will have a biodiversity action plan. Lots of pen pusher jobs on the way in 2023. Maybe the OP might be qualified by then and have a job with the farm on the side.

Reggie.

Water John wrote: »

That's a dilemma, but it's the EU will be making the rules. It will be an upheavel and I can't see the farm orgs taking the 'armchair farmers' side as they see it.
Looks like each land plot will have a biodiversity action plan. Lots of pen pusher jobs on the way in 2023. Maybe the OP might be qualified by then and have a job with the farm on the side.

Where are you getting the info off?

Water John

Diff articles. Mostly IFJ but also Michael Brady in Farming Indo has written on it.
The Farming Indo of 2nd Feb has a good bit written by Ciaran Moran if you can get your hands on it.
Not sure how it will be settled but I'd be careful until the new CAP Scheme is decided. I'm sure there may be some Joint Venture and various partnership arrangements, even if one side is inputting, little labour.

Reggie.

Water John wrote: »

Diff articles. Mostly IFJ but also Michael Brady in Farming Indo has written on it.
The Farming Indo of 2nd Feb has a good bit written by Ciaran Moran if you can get your hands on it.
Not sure how it will be settled but I'd be careful until the new CAP Scheme is decided. I'm sure there may be some Joint Venture and various partnership arrangements, even if one side is inputting, little labour.

Could the auld agreements still be in effect where the lease agreements state that the leasee has to pay the leaser a certain amount of the SFP

jaymla627

Water John wrote: »

Yes, the drive seems to be that these go to the 'active farmer'. Not sure where the present leases being written will end up as solrs are frantically writing in clauses.

Cant see any clause that a solicitor puts in been legally binding if it circumvents EU law re entitlements going to the person actively farming the land

Water John

jaymla627 wrote: »

Cant see any clause that a solicitor puts in been legally binding if it circumvents EU law re entitlements going to the person actively farming the land

Brady uses the line that 'the legal profession is busy composing audacious clauses to ensure the payments come back at the end of the present CAP'.

I see the only way around it is, not having a lease. It would have to be some other legal arrangement.

jaymla627

Water John wrote: »

Brady uses the line that 'the legal profession is busy composing audacious clauses to ensure the payments come back at the end of the present CAP'.

I see the only way around it is, not having a lease. It would have to be some other legal arrangement.

If the new cap like you alluded to is basically a juiced up reps type scheme, with lower stocking rates and restrictions, land owners will simply have to either farm the place themselves to draw down the payments our forget about any sfp and get a high rental price they aren't going to have it both ways

Reggie.

Water John wrote: »

Brady uses the line that 'the legal profession is busy composing audacious clauses to ensure the payments come back at the end of the present CAP'.

I see the only way around it is, not having a lease. It would have to be some other legal arrangement.

A partnership for a number of years rather than leasing possibly

Water John

jaymla627 wrote: »

If the new cap like you alluded to is basically a juiced up reps type scheme, with lower stocking rates and restrictions, land owners will simply have to either farm the place themselves to draw down the payments our forget about any sfp and get a high rental price they aren't going to have it both ways

You mightn't be far off the mark. I think it was Bass Reeves gave the figures but without nitrogen derogation, 32 Ha would carry 50 dairy cows and followers.

Don't know how long people will be left to their own devices outside the system.

Water John

Reggie. wrote: »

A partnership for a number of years rather than leasing possibly

Questions then arise like, it their only one Herd Number? Think there must be some legal model that would cover the issues. It's an area I would like more answers to. Hopefully the OP sees its a very opaque area ATM but ideas of how to move it on are being discussed.

Siamsa Sessions

Talk to your father more. If he wants to lease it out, ask him who he wants to lease it to?

Are there dairy or tillage farmers in your area who will pay north of €300/acre? Or would it be closer to €150/acre coz your land is remote and has no easy access, or needs roadways/lime/etc.? Get yourself and your father into a local auctioneer and talk about options.

What do you want to do yourself? Do you plan on farming (part-time or full-time) when you finish college? 125 acres of quality land, as you call it, has the potential to give you a full-time job. Are you interested in milking cows? Do you like sucklers? What are the sheds and slurry storage like? Can you or your father lease out half the place for 5 years and farm the rest yourself until 2026?

There's a million other questions. But start with yourself and your father - what do you want to do?

Sheep breeder

What one local farmer done when leasing two years ago was to keep 1.5 Ha of land to keep the herd number active and applied for BPS and the guy leasing cuts silage off the 1.5Ha for free.
The other thing about leasing is to be committed to giving up farming, a friend took a 5 year lease on a farm and the owner broke his heart about having to use his contractor, when to move the cattle and what fields to cut silage, which vet to use and charged for the pump for the water the cattle and the minute he arrived in the yard one of the family was out to know what he was going to do.

Reggie.

Sheep breeder wrote: »

What one local farmer done when leasing two years ago was to keep 1.5 Ha of land to keep the herd number active and applied for BPS and the guy leasing cuts silage off the 1.5Ha for free.
The other thing about leasing is to be committed to giving up farming, a friend took a 5 year lease on a farm and the owner broke his heart about having to use his contractor, when to move the cattle and what fields to cut silage, which vet to use and charged for the pump for the water the cattle and the minute he arrived in the yard one of the family was out to know what he was going to do.

That would break ya

Mooooo

Reggie. wrote: »

A partnership for a number of years rather than leasing possibly

That creates issues with borrowing etc as well so unlikely many would go that road

Reggie.

Mooooo wrote: »

That creates issues with borrowing etc as well so unlikely many would go that road

Looks like things might get awkward then

wrangler

Sheep breeder wrote: »

What one local farmer done when leasing two years ago was to keep 1.5 Ha of land to keep the herd number active and applied for BPS and the guy leasing cuts silage off the 1.5Ha for free.
The other thing about leasing is to be committed to giving up farming, a friend took a 5 year lease on a farm and the owner broke his heart about having to use his contractor, when to move the cattle and what fields to cut silage, which vet to use and charged for the pump for the water the cattle and the minute he arrived in the yard one of the family was out to know what he was going to do.

I rarely see our tenants, Once you sign the lease you have to forget about it

Water John

OP would certainly need good impartial advice. No use getting the opinion of someone who might have skin in the game. For example, an auctioneer's purpose is to turn a dollar.

mickdw

I inherited farm land from uncle there last year.
Its currently rented out but due for renewal soon.
How would i go about looking into who owns the entitlements etc. It has been rented constantly for 20 plus years with the tenant changing about 10 years ago.
Uncle only recently inherited it himself and wouldnt have farmed it ever.

Water John

With legal ownership, your solr should be able to find out, or ag consultant. Someone's drawing it, more than likely.

Donald Trump

A lot of this stuff about "active farmer" just backfires anyway.

Good bit of land here rented in that isn't actually rented in because the owner wants to be still an "active farmer".

"Silage" has been "bought off" one farmer continuously for about 20 years. I'd say the owner doesn't set foot in the place from Jan to Dec. Still draws down his payments on it though

It's very difficult to get land with the maps as it is.

Water John

Two things to watch are, allowed stocking rates and biodiversity plan and actions for each plot. Stocking rates will be tied to fertiliser receipts. Not sure how much will come in 2023.

drive it

Sheep breeder wrote: »

What one local farmer done when leasing two years ago was to keep 1.5 Ha of land to keep the herd number active and applied for BPS and the guy leasing cuts silage off the 1.5Ha for free.
The other thing about leasing is to be committed to giving up farming, a friend took a 5 year lease on a farm and the owner broke his heart about having to use his contractor, when to move the cattle and what fields to cut silage, which vet to use and charged for the pump for the water the cattle and the minute he arrived in the yard one of the family was out to know what he was going to do.

Sounds too familiar to me ,had similar problems in a place I leased , all sound until the man died then the wife topped fields with 7-8 inches of grass in them and it was in glas before the time was up 2 years in a row and I lost out on 3 years of it with penaltys and wouldn't let animals in to certain fields . Only thing is the entitlements were put into my name in 2014 and I'm out this year so I don't know what will happen to them

Water John

Drive it, are you thinking, you'll be holding onto them?

drive it

Water John wrote: »

Drive it, are you thinking, you'll be holding onto them?

Don't know , he was going to loose them and we put them in my name lost some of them to the reserve so if they were to go back I'd have to sell them to them and they'd loose more to it I am told another 20%. They haven't came looking for them yet

minerleague

drive it wrote: »

Don't know , he was going to loose them and we put them in my name lost some of them to the reserve so if they were to go back I'd have to sell them to them and they'd loose more to it I am told another 20%. They haven't came looking for them yet

Technically their yours to take to naked land, did you pay for them at the time? Maybe make an offer to keep now in your name

wrangler

drive it wrote: »

Don't know , he was going to loose them and we put them in my name lost some of them to the reserve so if they were to go back I'd have to sell them to them and they'd loose more to it I am told another 20%. They haven't came looking for them yet

I wouldn't think you'll have any problem keeping them, lots of farmers like them had to forfeit them in the last CAP reform, I don't expect to keep mine after the next reform.
They shouldn't have had to lose 20% at the time either if they transferred them to an existing tenant. There was a concession for that then as well as some tax concessions..... if you transferred to your tenant

drive it

minerleague wrote: »

Technically their yours to take to naked land, did you pay for them at the time? Maybe make an offer to keep now in your name

I like to think there mine after all the hassle and loss of 3 years of glas . No money parted hands only on paper

drive it

wrangler wrote: »

I wouldn't think you'll have any problem keeping them, lots of farmers like them had to forfeit them in the last CAP reform, I don't expect to keep mine after the next reform.
They shouldn't have had to lose 20% at the time either if they transferred them to an existing tenant. There was a concession for that then as well as some tax concessions..... if you transferred to your tenant

I had them leased for 2 years before they were put in my name as he wasn't farming or going to farm again and he was going to loose them i offered to buy them but he said we'll put them in my name in case he ever went back at . No money parted hands only on paper lost 20% then so lost about 2 and if they go back to them I am told I'll have to sell them and lose just over 1.6 He died since and they are on about farming it themselves

wrangler

drive it wrote: »

I had them leased for 2 years before they were put in my name as he wasn't farming or going to farm again and he was going to loose them i offered to buy them but he said we'll put them in my name in case he ever went back at . No money parted hands only on paper lost 20% then so lost about 2 and if they go back to them I am told I'll have to sell them and lose just over 1.6 He died since and they are on about farming it themselves

There was war that time with the retirement scheme recipients as they weren't allowed to farm any land to qualify for the pension and then along came CAP reform saying that if you were Farming one hectare you could keep all your entitlements.

Water John

wrangler wrote: »

There was war that time with the retirement scheme recipients as they weren't allowed to farm any land to qualify for the pension and then along came CAP reform saying that if you were Farming one hectare you could keep all your entitlements.

Hard to know how it will pan out, but the uncertainty is a pain for everyone.

drive it

wrangler wrote: »

There was war that time with the retirement scheme recipients as they weren't allowed to farm any land to qualify for the pension and then along came CAP reform saying that if you were Farming one hectare you could keep all your entitlements.

He wasn't in it and all the land was rented to me so would they have any hold over them or would they be "legally" mine or who would be the best to find out

wrangler

drive it wrote: »

He wasn't in it and all the land was rented to me so would they have any hold over them or would they be "legally" mine or who would be the best to find out

I doubt even the department of ag knows yet what's going to happen in 2023. i know people that wrote it into their lease that the entitlements were to come back to them, but my bets are on the person farming the land getting the entitlements and rightly so

Water John

I think similar Wrangler, the payments, BISS being the new word will go to whoever is farming the land. Think some legal brains will come up with a solution that will involve both parties but meaning a missing out on the tax free lease payment. The property owner could function as a landscape and biodiversity manager in the arrangement.

Donald Trump

wrangler wrote: »

I doubt even the department of ag knows yet what's going to happen in 2023. i know people that wrote it into their lease that the entitlements were to come back to them, but my bets are on the person farming the land getting the entitlements and rightly so

But I don't know how you solve the issue I mentioned.


Well over 50 or 60 acres taken here every year without maps being handed over for them (figuratively speaking). One of the owners signs slurry export forms at least.

wrangler

Water John wrote: »

I think similar Wrangler, the payments, BISS being the new word will go to whoever is farming the land. Think some legal brains will come up with a solution that will involve both parties but meaning a missing out on the tax free lease payment. The property owner could function as a landscape and biodiversity manager in the arrangement.

Existing leases will have to stay in force, once you lease land you have very little influence on what way it's managed

Water John

Yes, I'm looking at post 2023.

Hard Knocks

Donald Trump wrote: »

But I don't know how you solve the issue I mentioned.


Well over 50 or 60 acres taken here every year without maps being handed over for them (figuratively speaking). One of the owners signs slurry export forms at least.

Agree the current setup isn’t right
You’re either farming or your not

wrangler

Donald Trump wrote: »

But I don't know how you solve the issue I mentioned.


Well over 50 or 60 acres taken here every year without maps being handed over for them (figuratively speaking). One of the owners signs slurry export forms at least.

If tenants keep agreeing to it there's nothing any one can do, with a little bit of planning it works fine. You'd have to sign slurry forms to keep the tenants nitrates right.
Tillage is the same, the landowner has to let their name be put down for some of the inputs at the local merchants as if they were sowing the crop

Donald Trump

wrangler wrote: »

If tenants keep agreeing to it there's nothing any one can do, with a little bit of planning it works fine. You'd have to sign slurry forms to keep the tenants nitrates right.
Tillage is the same, the landowner has to let their name be put down for some of the inputs at the local merchants as if they were sowing the crop

Well my main point is that when lads think they might lose future entitlements, they will revert to that under-the-table wink-wink nudge-nudge stuff. When land is scarce they will find takers.



My father even had one fella who he has taken a bit off every year for the last few years suggest to do a 5 year lease (for the tax free purposes) but he'd still be hanging onto the maps............


He has been taking another decent sized block off a fella for over 20 years and never any maps! Although he hasn't been taking the whole amount off him - it increased over that time. You man stopped his own side of things after the decoupling and reseeded what he had been working himself.

wrangler

Donald Trump wrote: »

Well my main point is that when lads think they might lose future entitlements, they will revert to that under-the-table wink-wink nudge-nudge stuff. When land is scarce they will find takers.



My father even had one fella who he has taken a bit off every year for the last few years suggest to do a 5 year lease (for the tax free purposes) but he'd still be hanging onto the maps............


He has been taking another decent sized block off a fella for over 20 years and never any maps! Although he hasn't been taking the whole amount off him - it increased over that time. You man stopped his own side of things after the decoupling and reseeded what he had been working himself.

It's easy enough done, especially if it's just silage out and slurry in or tillage.
People think that the rules of cross compliance are tight but really they're very loose and sure you've only a 5% chance of being inspected

Donald Trump

wrangler wrote: »

It's easy enough done, especially if it's just silage out and slurry in or tillage.
People think that the rules of cross compliance are tight but really they're very loose and sure you've only a 5% chance of being inspected

I know it's easy done. Just pointing out that it means that the active farmers aren't getting the benefit! I don't think that there is any way around it though unless they were going back to something linked to production