Business Clinic: What pay rise should I give my arable farm manager?

Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s experts can help.

Here, Mark Charter Head of Estate Management, Carter Jonas advises on farm manager salaries.

See also: Business Clinic: how much should I charge for store cattle summer grazing

Q. I own a 730ha arable farm run in-hand by an excellent farm manager.

He has approached me saying that given recent inflation he would like a larger pay rise than he would normally expect and I imagine other farm staff may say the same thing.

Please can you advise on what sort of salary increase would be appropriate?

A. Your manager won’t be the only staff member to raise this point, and on some of the estates we work with there also seems to be an expectation of a Christmas bonus.

With arable commodity prices relatively high, many farms are in a position to be able to do this, so it is no surprise that people will expect it.

Before I get into the detail of salary increases, it’s worth saying that this is based on the assumption that you have been paying them a fair salary to date, and what is fair is of course dependent on many factors.

In reality, “farm manager” covers a multitude of different jobs. In the South East, where I am based, a farm manager on say 400ha who just manages crops should expect between £40,000 and £45,000, plus housing and a vehicle.

We also have managing directors and estate directors whose responsibilities are much, much broader and might include, with our support, running the business and overseeing residential and commercial lettings, as well as the farming.

These individuals’ salaries would be in excess of £100,000, again with a house and a vehicle.

Of course, there are many cases where the size of the farm and the level of responsibility fall between these two examples, and the salary reflects that.

Also, these are just that – examples. The precise circumstances of your farm manager and your business may indicate that very different figures are more suitable.

I’m noticing that, with salary expectations, there is a bigger gap developing between the two ends of the scale, which is reflective of the changing nature of farm businesses, particularly the larger ones.

In the past, the farm manager would just have been responsible for cropping, and perhaps balancing the books of the farming operation.

Retention is important 

Now, many businesses have diversified so much that there is often scope for the most senior employees to require a much more varied skill set, as well as business acumen.

For the same reasons, a good employee can be extremely valuable, so retaining these individuals becomes even more important.

In terms of salary increase, it’s variable, but last year we were advising rises in the region of 3%. This year, on the face of it, the increase should be more than that – perhaps even up to 6% or 7.5%.

However, it is worth bearing in mind, and reiterating to staff when you’re having these conversations, that the value of the vehicle and house which would typically be included in their packages have increased vastly in the past couple of years.

This means that their overall package has seen a higher increase than just the percentage added to their salary.

An alternative approach, which may be more sustainable for some business, is to offer a slightly lower increase, but to offer a post-harvest or Christmas bonus if performance this year has been very strong.

The current economic circumstances are almost unprecedented. Many arable businesses will make a very decent level of profit from the 2022 harvest.

If things edge back towards “normal” by next year, which with living costs where they are, may well be the case, then there will be more pressure for a pay rise.  

You may also wish to look at incorporating some form of performance-related bonus as part of a longer-term incentive package.

Do you have a question for the panel?

Outline your legal, tax, finance, insurance or farm management question in no more than 350 words and Farmers Weekly will put it to a member of the panel. Please give as much information as possible.

Email your question to FW-Businessclinic@markallengroup.com using the subject line “Business Clinic”.