The cost of renting farms in Scotland continues to rise at a time when farm profitability is falling, leaving more than half of tenant farmers working for less than the minimum wage, it is claimed.

The average cost of renting agricultural land has risen three per cent since last year, new figures from Scotland's Chief Statistician show.

Average rent for land was £39 per hectare in 2014/15 compared to £38 per hectare the previous year. The increase was seen in both the poorer-quality Less Favoured Area (LFA) land, which was up three per cent from £25 to £26 per hectare, and in the better quality land which rose by five per cent from £124 to £130 per hectare.

Since most rents are reviewed only every three years it implies that where there have been increases, they have been, on average, well above three per cent. Rent increases have been above inflation since 2008.

The new figures were highest in Fife and the Lothians, with three quarters paying over £75 per hectare. They were lowest in Shetland and the Western Isles where half of rents were less than £3 per hectare. This was even after crofts were excluded from the analysis, and is explained by their remoteness and poor quality of land.

However Orkney showed higher rents demonstrating that location alone does not drive prices, with Orkney's strong cattle and cereal sectors being reflected in more costly land..

The Scottish Tenant Farmers Association (STFA) chairman Christopher Nicholson said the rent increase figures underlined how the system wasn’t working for many farmers.

“Only last month the Scottish Government published Farm Business Income figures for 2014-15 showing a 26 per cent fall on the previous year to the lowest level since 2009, with the last four years showing the most severe decline since the mid 1990’s.

“While half of Scotland’s farmers are now working for less than the minimum wage, over the same period farm rents paid to landlords continue to increase at above the rate of inflation. This is yet again clear evidence that the current flawed open market rent test is failing the sector, and measures in the Land Reform Bill to allow fair rents linked to farm profitability are long overdue.”

Gemma Thomson, NFU Scotland’s Legal and Technical Policy Manager was of a similar view:: “Given the huge pressure on farm businesses at this time, it is difficult to envisage any circumstances that would support an increase in rents.

“There remains a disconnect between farm rents and farm profitability and we recognise that all sectors of the agricultural industry re going through a torrid time with commodity prices at an historic low. “

But David Johnstone, chairman of the landowners' organisation Scottish Land & Estates, had a different perspective. He said: “ There has been a small percentage increase in farm rents over this period, an increase which is lower than previous years. It is clear, however, that the overwhelming majority of rent reviews are being agreed amicably between the landlord and tenant and we believe the joint guidance will help to cement this position in the future.

“The statistics also demonstrate that there continues to be strong demand for agricultural land and the majority of rents continue to be good value. This shows the importance of having a thriving tenanted sector in Scotland - but it is this sector which may well have been undermined by the Land Reform Bill.”