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Jeremy's Blog 28th May 2021: Tenancy Regulations and SFI

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 27th May 2021.

With new tenancy regulations published on Tuesday, this part of the Agriculture Act is now complete for England. Welsh regulations are expected as the newly elected Senedd gets to work. These Regulations set out the Act’s tenancy changes that most directly bear on England’s Agricultural Transition Plan’s two goals: a competitive agriculture and environmental improvement.

Three years notice is given for 1986 Act successions that:

  • the gate will be widened with the end of the Commercial Unit test with all its complexities and risk for applicants building good businesses but
  • the bar of the Suitability test raised. With expectations of good business and environmental management, would the applicant be shortlisted for this tenancy?

While now facing substantial pressures for change, most 1986 Act tenancy agreements were written in different circumstances several decades ago. A procedure, encouraging initial practical discussion between landlord and tenant, is put in place from 21st June for a tenant to refer a landlord’s refusal of consent or to vary a term in the agreement to arbitration where this is:

  • for access to the new schemes being developed under the Agriculture Act
  • to meet a statutory duty.

This can be seen as a backstop as parties work together to maximise the opportunities of a holding.

With all this year’s competing options for farmers to consider, the CAAV’s webinar with DEFRA on the SFI Pilot drew out the understanding that entering the Pilot could be the most flexible option. With more detail now expected in early June, the Pilot offers eight standards and the assurance that further standards offered in later SFI schemes (and payment rates) would be available to those in the Pilot. SFI 2022 would not give access to the standards in the Pilot. With signs that SFI 2022 standards could be met on land in Countryside Stewardship, that would significantly broaden what the Pilot could do in contrast to SFI 2022 and be potentially compatible with a Countryside Stewardship 2022 application.

With one farmer witness at this week’s EFRA Committee concerned that Australian farmers are good at producing what the market wants, the unifying theme is the need to produce what the buyer wants, whether in farm produce or in the supply of environmental goods and services. If we do not, the market will buy elsewhere and, with the Environment Bill back in the Commons this week, we may see more regulations on land management.

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