THE advent of the Single Farm Payment and declining producer returns could force landowners to cut farm rents.

Land agent David Thompson of Tillington Road, Hereford, said the agriculture climate was putting pressure on farm rents with the likelihood of either a standstill or a possible reduction of £10 to £20 per acre, depending on the circumstances.

Farm rents, he said, represented the barometer of the industry and directly related to productivity and related-earning capacity.

"There is no doubt that the advent of the Single Farm Payment and declining producer returns - with the switch from producing food as a commodity to access subsidies to connect to markets - is placing pressure on farm rents," said Mr Thompson.

On a brighter note, Mr Thompson remarked in his review of the year that despite the confusion and treatment of potatoes under the new Single Farm Payment scheme, good-quality packer or baking quality land was being keenly sought at £400/£500 per acre.

On finance, Mr Thompson considered borrowing levels were still too high. Should the economy slow in 2005, oil prices would be a key issue and with other increasing costs of production pressure would be placed on farm margins.

"The need for farm diversification continues with many innovative schemes developing from arts and crafts to ladies underwear mail order businesses."

Mr Thompson said the timing and lack of information regarding the Mid-Term Review had made farm business and cropping plans difficult, if not impossible, for 2005.

He advised farmers to ensure all land was registered and claimed for in 2005 for the Single Farm Payment/Agri-Environment Schemes.

Keep it simple, he advised. Landowners and farmers should talk to each other and ensure only one person applied on each hectare of land.

Farmers should consider the cash-flow implications of the delayed payment for 2005. They should look for opportunities to expand or diversify and talk to the bank manager.