THE Tenant Farmers Association (TFA) says farm rents are beginning to fall, but need to drop further.

An analysis of rent settlements on Agricultural Holdings Act tenancies in the year to April 2016 – and referred to the TFA’s Rent Databank – found a downward movement across most sectors.

Evidence also points to reductions in Farm Business Tenancy (FBT) reviews.

Katy Fox, TFA adviser, said in each case rents in the dairy sector had seen the largest fall, reflecting the current difficulties in that sector.

But FBT rents in the arable sector had seen the strongest downward movement over the past three years with decreases of 15 per cent on average for rent settlements reviewed in the year to April 2016.

She said: "There has been strong resistance from landlords to any rent reductions and the cost of going to arbitration has also had a dampening effect on rent review activities originating from tenants.

"However, where tenants are arguing their case reductions are being achieved and there is no reason, if current market conditions prevail, that these reductions should not become more frequent and deeper.

"Commodity prices have dropped substantially since three years ago and volatility in output and input prices should be taken into account when settling rents. Too often we are seeing this information being ignored by landlords who instead rely on comparable rents. It is vital that all relevant factors are looked at.

“In cases where a rent was properly reviewed three years ago and the character of the holding along with terms of the tenancy have not changed, given comparable rents are static or falling, the only change has been the major drop in commodity prices which has resulted in the related earning capacity of holdings being greatly reduced. Tenants with these circumstances can present a strong case to argue for rent reductions and should be doing so."