This post is by Baroness Rock who led the recent review of the tenanted farming sector.
Almost nine million hectares of land in England is considered farmable and 64 per cent of this is either wholly or partly tenanted. Tenant farmers and the tenanted sector are a significant group and, therefore, need to be given appropriate consideration when it comes to the future of farming in England.
If we are serious about food production, tree planting, reversing biodiversity loss and meeting any number of our statutory environmental targets, then we need to make sure the tenanted sector is able to play its role. Furthermore, the viability of tenanted businesses will be threatened if they are unable to access funds to support them in carrying out longer term environmental actions alongside food production.
Detail about new support is lacking
The farming sector is seeing less certainty in basic payments through the agricultural transition plan, but it is not seeing the detail of the new schemes meant to support new ways of farming and improving environmental outcomes. Without these details, farmers face a cliff edge in their business planning and cashflow. In the face of uncertainty, they will move towards certainty; in this case intensive production to ensure their businesses remain viable.
The Rock Review, which I led and published in October, made a number of recommendations to Defra on how it can improve the policy design of new schemes so tenant farmers can access public funding. The review also found several structural issues that Defra should address, so tenanted businesses can more easily access private schemes for natural capital, to maintain food production and to deliver environmental outcomes, such as net zero, over the longer term.
A central theme of the review is collaboration. The landlord-agent-tenant relationship needs to be a virtuous one so that schemes, productivity investments and long term planning can all be done in tandem, balancing the long term estate view of the landlord with the short term business needs of the tenant.
Schemes need to work for short tenancies
New schemes from Defra need to be simple, accessible and flexible for tenant farmers to do what is right for their land and their businesses. Where tenant farmers have older Agricultural Holdings Act (AHA) tenancies, they are more likely to be able to take on longer commitments to deliver public agreements, but the persistently short length of Farm Business Tenancies (FBT) and the fact that there are now, and will continue to be, more FBTs than AHAs means that schemes will need to work for short tenancies. If they work for tenant farmers, they will work for other types of land management such as owner occupiers, but the reverse is not the case.
In the short term, schemes need to be improved and designed for tenants. But, over the longer term, there is an opportunity to adjust the structure and shift to longer tenancies. All businesses benefit from certainty and stability and, in the current uncertain policy climate, one way to help a tenant farmer to make plans is to give them more certainty around their tenancy. One lever the review looks at to encourage longer tenancies is tax. Adjustments to things like Stamp Duty Land Tax and thresholds for receiving Agricultural Property Relief could be incentives to lengthen tenancies and the planning horizons of tenant farmers. With this longer security and certainty they could plan their businesses to outlast short term volatility, and make longer term investments in productivity.
In addition to schemes and tax, we looked at, and made recommendations on, new entrants, productivity schemes, tree planting and net zero, natural capital and how Defra can embed the tenanted farming sector better in its own processes.
As the schemes and policies are being developed now, this review was carried out with a sense of urgency. We hope Defra responds with the same sense of urgency to provide tenant farmers with the certainty they need.