News
3rd Oct

2018

Tenant Farmers Association Agriculture Bill – Briefing for Second Reading – 10 October 2018

Tenant Farmers Association Agriculture Bill – Briefing for Second Reading

10 October 2018

1. Introduction

1.1 The Tenant Farmers Association (TFA) is the only organisation dedicated to representing the interests of the tenanted sector of agriculture in England and Wales. Its membership comprises farms of all types and sizes but active, family farms predominate. As such, we represent the interests of those within the agricultural industry who do not own the land on which they are operating their farm businesses.

1.2 The tenanted sector of agriculture is responsible for farming at least one third of the agricultural area of England and Wales and approaching half of that is now under Farm Business Tenancies (FBTs). Sector by sector, the proportion of farmed tenanted land is slightly higher in the livestock and dairy sectors and slightly lower in the arable sector. In addition, the TFA is aware of a significant amount of informal letting arrangements where rent changes hands based on little more than a hand shake. Adding this together with the formally recorded tenanted sector could bring the total amount of land farmed by non-owners under some form of tenancy agreement to around 40% of the total agricultural area of England and Wales. It is therefore a very significant constituency of interest in its own account.

1.3 The TFA recognises the opportunity afforded the UK withdrawal from the European Union to put in place bespoke policies for food, farming and the countryside in the four countries of the United Kingdom and we recognise that this is a time of change, not just for agriculture but for the whole nation. The TFA welcomes the introduction of this important piece of legislation at this time.

2. Context

2.1 Notwithstanding the opportunities that arise in relation to our exit from the European Union, there are also challenges. Parliament is having to consider the Agriculture Bill in the context of the following unknown future scenarios:
• The shape of the final withdrawal agreement between the UK and the European Union.
• The future trading arrangements between the UK and the European Union and our position within the WTO in the event of “no deal” having been reached under our current negotiations in respect of Article 50 of the Lisbon Treaty on the European Union.
• The Government’s response to the Migration Advisory Committee in relation to access to labour requirements both in terms of seasonal and semi-permanent labour in direct agricultural activity and in processing capacity.

2.2 These unknown elements will have a significant impact on the profitability, resilience and sustainability of domestic agriculture. It must be recognised that whatever policy framework is put in place by any new legislation, there must be sufficient flexibility to respond appropriately when there is greater certainty in these areas.

3. General Comments on the Bill

3.1 It is appreciated that, in the main, this Bill provides a framework for implementation of existing and future Government policy. Much of the detailed work of implementation is to be set out in regulations, many of which are to be drawn up under the Affirmative Resolution procedure. We would like to hear from Government both that it intends to make full use of the powers that it will be reserving to itself in bringing this legislation into force and that it will be making available sufficient Parliamentary time to allow for the large number of regulations to be confirmed.

4. Part 1 – New Financial Assistance Powers

4.1 The TFA welcomes the scope of the new financial assistance powers. It is particularly pleasing to see the powers to provide financial assistance for productivity – Section 1(2).

4.2 The TFA believes that the list of purposes set out in Section 1(1) – broadly speaking those which are considered public goods – is incomplete. The TFA would like to see the following added to this section:
• protecting or improving the health and well-being of citizens.
• protecting or improving the management of upland landscapes and biodiversity through grazing livestock systems.

4.3 It is disappointing that the Bill does not provide a mechanism for setting a budget for these financial assistance powers. The Government has provided an assurance of maintaining the current budget until 2022 but we believe that this Bill should contain provisions to allow for multiannual budgets (five-year budgets) to be agreed thereafter. Also, given the size of the task ahead, we would seek a Government assurance that it will not look to diminish the current budget into the long term.

4.4 Within the context of Devolution, the TFA would wish to see a commitment to the principle that the four countries of the United Kingdom are provided with at least the same level of funding as they received previously to deliver agricultural and rural development policies and that this funding must be earmarked for the delivery of the objectives set out within the Bill.

4.5 In the context of this legislation being an Agriculture Bill, the TFA believes it is necessary to restrict the financial assistance powers such that they are available only in respect of individuals who are operating units which are predominantly agricultural in nature. We would propose that the Bill adopts the definition of agriculture as set out within section 96 (1) of the Agricultural Holdings Act 1986 as follows:
“agriculture” includes horticulture, fruit growing, seed growing, dairy farming and livestock breeding and keeping, the use of land as grazing land, meadow land, osier land, market gardens and nursery grounds, and the use of land for woodlands where that use is ancillary to the farming of land for other agricultural purposes, and “agricultural” shall be construed accordingly

4.6 There also needs to be a clear limitation of who can be considered a beneficiary by having a definition of “active farmer” or “active land manager” in this part of the Bill. The Government should be required to agree to bring forward an amendment which will ensure that financial assistance can only be paid to active farmers defined as individuals being in occupation of the land they are farming, taking the entrepreneurial risk for the decisions made in relation to the management of the farm and in day to day management control.

5. Part 2: financial support after exiting the EU

5.1 The TFA welcomes the seven-year transition starting in 2022. Within the accompanying policy statement for the Bill the Government has provided the intended way in which it will reduce direct payments in the first year of transition. We would like to see clarity about the way in which the remaining years of the transition period will be handled and, in particular, an assurance that smaller recipients will be protected for a longer period of time in comparison to larger recipients to help with farm business adjustment.

5.2 The TFA supports the concept of delinking payments and the provisions for providing a lump sum payment in lieu of future direct payments (Section 7). The TFA believes that this will be of significant assistance to progress in restructuring within the industry allowing individuals to use both de-linked payments and consolidated payments to retire from the industry or invest in their businesses or to invest in other economic activities either on their holdings or off their holdings. However, it will be essential that recipients of these payments must meet the active farmer test at the time they make the application for these payments to be made.

5.3 The TFA welcomes the flexibility available to the Government to extend the transition period if required. The TFA believes that the Bill should also reserve the necessary powers to ensure that DEFRA does not lose any money recouped from direct payments if, for whatever reason, the new financial assistance schemes proposed are not available to the extent necessary to make full use
of the available funding. The TFA believes that any surplus funding identified on an annual basis should be reallocated through direct payments until sufficient schemes are available.

6. Part 3: Collection and Sharing of Data

6.1 The TFA welcomes this part of the Bill as it will provide the potential for a greater degree of information to be available about the operation of supply chains that will lead to more informed negotiation between farmers, processors, retailers and food service outlets. This has important links to the provisions set out in Part 6 of the Bill dealing with provisions to ensure fairness within the supply chain.

7. Part 4: Exceptional Market Conditions

7.1 The TFA welcomes the provisions within the Bill to allow for financial and other assistance to be made available to the farming industry at times of exceptional market conditions. The TFA would wish to be assured that this will cover natural phenomena such as drought, flood and disease as well as economic phenomena that may impact upon markets.

7.2 The TFA would also wish to have an assurance from the Government that this part of the legislation will cover not only situations of “acute” hardship or difficulty but that it will also be able to be invoked if “chronic” or long-lasting difficulties are apparent. This might involve things like endemic disease or structural changes in agricultural markets which may require farmers to undergo significant adjustment.

8. Part 5: Marketing Standards and Carcass Classification

8.1 The TFA welcomes the inclusion within the Bill of powers for the Government to set marketing standards for agricultural products. It will be important to ensure that these are used to protect the high standards of production evident on UK farms in respect food safety, animal welfare and environmental management. It will be important to see this joined up with the Government’s policy on international trade such that these same standards apply to agricultural products imported into the UK from abroad. There will need to be a reference across with the Trade Bill currently proceeding through its stages in Parliament.

9. Part 6: Producer Organisations and Fairness in the Supply Chain

9.1 The TFA is delighted that the Government is proposing to reserve significant powers to regulate the operation of supply chains and, in particular, relationships between farmers and first purchasers. The TFA believes that this is a vitally important role for Government in the face of significant market failure within agriculture and food supply chains. However, it is concerning that the Government does not see this forming part of an expanded role for the Groceries Code Adjudicator. It has been proposed that the appropriate
regulator here would be the Rural Payments Agency (RPA). The TFA does not believe that the RPA has sufficient expertise in this area. If the appropriate regulatory functions are not to be given to the Groceries Code Adjudicator, then we would wish to be assured that a more appropriate body than the RPA is proposed.
10. Agricultural Tenancies

10.1 The TFA is disappointed that the Government failed to address much needed changes to the legislative framework for agricultural tenancies within the Bill. The Agriculture Bill is the obvious place to include the recommendations for legislative change presented to Government last autumn by the Tenancy Reform Industry Group (TRIG). So far, the Government has suggested a further consultation on these possible changes however, the TFA would ask MPs to seek a commitment from the Government to bring forward amendments to the Bill or to provide a firm commitment to a specific Agricultural Tenancies Bill before the summer of next year

10.2 The TFA’s disappointment is compounded by the fact that DEFRA specifically asked for the advice and recommendations of TRIG on what changes would be needed to assist the tenanted sector of agriculture in the post-Brexit, economic environment. To ask for recommendations and then to do nothing with them is illogical.

10.3 The full recommendations from TRIG for legislative change can be accessed in two reports available by clicking here and clicking here. However, in summary, TRIG proposed change in the following areas:
• Allowing landlords and tenants to override restrictions in tenancy agreements using a test of reasonableness where to do so would assist the full and efficient farming of the holding.
• Allowing tenants to counter notices to remedy which are not notices requiring work to be done.
• Reforming the game damage procedures to make them easier to use.
• Providing that rent review disputes can be determined by third-party determination rather than by arbitration and looking at a wider application for third-party determination.
• Providing a larger reform of dispute resolution to encourage more third-party determination.
• Providing a statutory mechanism for AHA tenancies to be converted to fixed term assignable tenancies at an open market rent subject to the landlord preventing this by buying out the tenant’s interest.
• A package of measures on succession which would:
o Repeal of the Commercial Unit test.
o Allowing an extra succession option to an expanded list of “close relatives” or modernising the definition of close relatives.
o Replacing the suitability test with a business competence test.
• Introduce new statutory provisions for new FBTs with an initial term of a minimum of 10 years and no Landlord’s break clauses referable solely to a future point or points in time to allow the FBT to be terminated by notice served on the tenant by the landlord for:
o non-payment of rent (as an alternative to but not a replacement for forfeiture)
o breaches by the tenant of the contractual terms or conditions of the agreement
o the death of the tenant
o allow the landlord to remove land from the holding where planning consent has been granted for non-agricultural use
• Introduce new statutory provisions to allow an existing landlord and tenant under the AHA greater freedom to make changes to the holding in circumstances where there is agreement between the parties on re-location or re-organisation and where the parties agree that the new/altered agreement is to remain within the AHA and where the provisions of ATA 4.1(g) would otherwise remove the new/amended tenancy from the AHA.
• Introduce formal examination in public or similar independent panel assessment and approval for local authority proposals for their rural estate strategy
• Incorporate ACES Good Practice Guidance into DHCLG Local Authority Assets Disposal Guidance
• Extending Case A Notices to Quit to coincide with new State Pension Age.

11. Conclusion

11.1 The TFA would welcome support from all Members of Parliament in respect of the matters set out above.

11.2 Further information about any of the points raised within this brief is available from the following TFA contacts:
TFA Chief Executive, George Dunn on (0118) 930 6130 or (07721) 998961 or by email george@tfa.org.uk
TFA Farm Policy Adviser, Lynette Steel on (0118) 930 6130 or (07584) 220121 or by email advice2@tfa.org.uk

01 October 2018
GWD/0513

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