Jeremy's Blog 11th February: DEFRA Filling in the Policy Jigsaw
This article by Jeremy Moody first appeared in the CAAV e-Briefing of 3rd February 2022.
The pressures and incentives for rural land use change continue to grow. However, the official policy frameworks for this are not yet in place even in England or clear as to operation and scale. Wales’ Sustainable Farming Scheme, Scottish land use policies and Northern Ireland’s framework are further away still. While commercial forestry is established and buoyant, these and similar markets, such as nutrient neutrality, have yet to be properly discovered with perspectives on scale, value, restrictions, penalties and risk.
People should not expect too much from these future avenues or be distracted from looking at the whole of their business to make commercial decisions and chart a course to a world with lower or no area payments. Two-thirds of DEFRA’s environmental money might be for under 5 per cent of the land. Off-site biodiversity agreements might need less land than guessed though needing new land each year. Not all of either excludes farming use.
Regulation as on water and for climate change mitigation add pressure. Yet for some at least, the most important pressure may be from purchasers of produce.
Future prosperity rests on making the most positive decisions with the flexibility that requires. Owner occupiers typically have greater flexibility but concern is focusing on agricultural tenants farming a third of England, half of that on long-term agreements. They are there to farm, using land that belongs to the landlord to whom it will return and so interested in its condition, potential and tax treatment as well as the rent.
Always best a mutual exercise, the valuer’s task of working up answers positive for both is now more challenging and more critical, promoting flexibility of outlook, protecting and creating value and assurance where these could be lost. A tenant farmer may not often see large habitat creation as natural though a landlord might want a tenant’s co-operation in that. When the supply chain looks for the long-term tenant to show progress towards net zero, that may be necessary for the rent. The tree planting needed to shield the new slurry store or shade livestock in future years may be essential to the business.
It being too early to write provisions for schemes not yet drafted, the CAAV model FBT allows parties to state agreed objectives and, as a no surprises policy, bars unilateral trade of carbon or conservation covenants without the assent of the other. Understanding interests will then help define the necessary terms, from management to end of tenancy, or new agreement that would support both parties in viable change. If trees, is the tenant interested in the timber, the grant or their aid to the business? Each motive might have different answers Skills, perspective, judgment and advice will be key tools in helping all adapt to the new world.