News
12th Mar

2013

Media Release 06 – TFA Thirty-First Annual General Meeting Tuesday, 12 March 2013 – Report From The National Chairman

Tenant Farmers Association

THIRTY-FIRST ANNUAL GENERAL MEETING
TUESDAY, 12 MARCH 2013 

Report from the National Chairman

I am pleased to present my report as National Chairman of the Tenant Farmers Association for 2012. 2012 will be remembered as a remarkable year within the farming industry for all the wrong reasons. A year which started with one of the driest springs on record and finished having had the wettest summer, autumn and winter on record was challenging for all sectors of agriculture and will continue to be challenging into 2013. From a policy perspective it was strange to have attended meetings concerning drought crisis and flood risk all in the same year but clearly the real problems were faced at farm level. If there is a very faint silver lining to the very dark cloud we experienced, it is the realisation amongst policy makers that we cannot take our food security for granted. As an industry, regardless of the policy framework and marketplace, our greatest exposure is to the environment and, in particular, the weather. As was so ably demonstrated through 2012, our greatest vulnerability is our openness to the skies. In 2012, it was the weather which was our downfall. In future years, as in the past, it could be a plant or animal disease which causes the problem. Of course whilst it would have been much better for us not to have gone through the difficulties of 2012 and the ramifications that will have for this year, we are already reminding the Government of the need for a sustainable agricultural and food policy into the long term which takes into consideration the reality that these sorts of environmental shocks will continue to occur to disrupt our supplies of food and profitability.

The weather situation has also made it an interesting and difficult year on the rent review front. Landlords and their agents had high expectations of rent increases at the time they were serving their notices on tenants in the autumn of 2011. Forward prices for most commodities seemed to be strong and the expectation of reasonable profitability in 2012 looked high. The appetites of landlords and their agents were further whetted by the outcome of a number of high profile tender lets for land which saw accepted rents in excess of £200 per acre for a number of blocks of land. On further analysis, it has become clear that these tenders were submitted in the main by large owner-occupiers with an overinflated sense of their ability to spread fixed costs onto marginal acres. It is likely that in the circumstances which prevailed towards the end of the year and will continue into this year, as mentioned before, that a number of these individuals will be feeling more than a little stretched in their ability to make a profit from the land upon which they have agreed to pay such exalted rents. The TFA is on record as saying that these rents are a consequence of a heady mix of scarcity, hubris and the economics of the madhouse. These excessively high tender rents have made matters particularly problematical for those tenant farmers who are wholly or mainly reliant upon Farm Business Tenancies for their existence. Unlike those individuals who are taking land on a marginal basis these tenants have to bear the full load of the fixed costs on the tenanted holding. There is no way in which those individuals would be able to pay anything like the levels of rent that those individuals could pay when they are merely taking on additional acres.

The result of this chasm between expectation and reality has meant that a large number of rent reviews due to have been settled in 2012 remain outstanding. There are many hundreds, if not thousands, of arbitrators appointments both on a private and statutory basis and whilst a number of tenants, with the help of the advice from the TFA, are managing to settle their rents reasonably, there still remains a large number of cases where the distance between the landlord and the tenant is too far to bridge. A number of TFA members have used the TFA’s Farm Business Protector Insurance to great effect in their negotiations with landlords. The ability of tenants to stand firm against the unreasonable demands of their landlords on the basis of having arbitration cover, has been a real advantage in the negotiation process. I would continue to encourage all members of the Association to have this insurance available to them.

On the wider policy front, CAP Reform has been a key theme. Although there has not been much progress through 2012 on a formal basis, there have been many discussions, debates and consultation within which the TFA has played a full part. The TFA’s particular interest is to ensure that whatever is eventually agreed as the new reform package is favourable to the tenanted sector. Our focus has therefore been on issues such as the definition of active farmer, the allocation and ownership of entitlements and practical considerations surrounding the greening of Pillar 1.

On the active farmer issue, the TFA has been concerned for some time about the increasing ability for landlords to claim payments under Pillar 2 for agri-environment schemes and the fear that this could extend into Pillar 1 Schemes for direct payments. The TFA therefore is looking for clarity around the issue of the potential applicant for support under Pillar 1 and Pillar 2 so that it is only those individuals who are in occupation of land, taking the entrepreneurial risk and in day to day management control who are eligible. This issue has been brought in to sharper focus recently with the increased attention on matters relating to dual use of land where one party claims the SPS and another the agri-environment scheme payments. It is very likely that before too long this type of arrangement will no longer be allowed within Europe and it is therefore important to ensure that it is the tenant farmer who is the eligible applicant for both schemes.

On the entitlement issues, the TFA’s concern has been to ensure that if there is a need to reallocate entitlements that tenants are not disadvantaged. Happily within England, we appear to be moving towards a system whereby existing entitlements can be rolled forward although there will still be a problem for those individuals who have clauses in tenancy agreements requiring them to pass entitlements to their landlords at the end of their tenancies. Because the roll forward applies only to those Member States who have reached regional average payments, there will also continue to be a problem for Wales if farmers there are unable to roll forward their entitlements. We will need to continue to watch the situation in Wales extremely closely to ensure that tenants are not disadvantaged by landlords stepping in to claim entitlements in their place.

The greening proposals made by the European Commission have been universally criticised and there is a live discussion about how those proposals could be amended to make more practical sense. The TFA will be engaging in those discussions to ensure that tenants are not disadvantaged.

I am pleased to say that the TFA, NFU and CLA have joined forces in an attempt to ensure that DEFRA does not disadvantage British and in particular English producers in the split of payments between Pillar 1 and Pillar 2. It is likely that the UK allocation of Pillar 2 money will be significantly lower than at present and therefore DEFRA may consider moving up to the 15% allowed out of Pillar 1 into Pillar 2 to the disadvantage of our members. With the proposals on Greening of Pillar 1 we do not believe that there is the same priority for environmental payments under Pillar 2 and we are together arguing that DEFRA needs to recognise this new position.

Despite the lack of formal progress through 2012, we have already seen a growing tendency for landlords either to hold land back from the letting market in order to place themselves in the most advantageous position when the new CAP is implemented or to let tenancies with draconian clauses which seek to capitalise on any benefit obtained by the tenant from the new regime. The TFA is actively advising its members to be wary of such clauses which most often arise when new tenancy agreements have been drawn up but can also be raised when rent reviews are being agreed, successions are taking place or at surrender and re-grant opportunities.

Inevitably, bovine TB has continued to cast its dark shadow across the livestock and dairy industries. We had hoped that progress would have been made on beginning the process of dealing with the reservoir of disease in wildlife but sadly this was put on hold at the last minute due to new data which indicated that the populations of badgers in the areas within which the pilot culls were due to take place were much higher than previously thought. However, despite the lack of progress on the badger front, the Government still pressed ahead with changes to the regulatory framework particularly in relation to sole occupancy authorities and linked holdings. Whilst the TFA believes it is right that individuals should not be able to move cattle from high risk to low risk areas using linked holdings or sole occupancy authorities, it must be possible for individuals within a tight geographical distance to move animals between blocks of land under different ownerships and at the same level of TB risk. Without this, management issues will become an increasing problem.

We do hope that the pilot culls will take place in 2013 as promised by the Government and that we will begin the process, which will take many years, of eradicating this terrible disease.

The dairy sector was also hit badly in the spring and the summer with a round of price reductions which led to the establishment of the SOS Dairy Coalition of which the TFA plays a key role. I would like to pay tribute to the work that Richard Elliott has done in representing the TFA on the coalition. The coalition worked hard to force both processors and retailers to reinstate some if not all of the price reductions incurred through the spring and summer and has also worked hard to establish a Code of Practice which it is now requiring processors and retailers to implement. Sadly the cost increases within the dairy industry throughout the year has caused margins within the industry to tighten despite the reinstatement of many of the price reductions. We are also yet to see the major processors implement to any adequate extent the Code of Practice negotiated between industry and processor representatives. The campaign will therefore intensify through the spring and summer of this year until we see further improvement in prices and conditions for dairy farmers.

Of course the dairy sector has not been unique in experiencing a cost price squeeze. Pigs, sheep, poultry meat and egg producers have all seen downward pressure on prices and upward pressure on costs. Most producers are operating within difficult trading relationships with their processors and retailers which leave them as price takers in the market place and therefore liable for any change in the whim of those wishing to purchase their products.

It is this imbalance in the farmer/processor/retailer relationship that has caused the TFA over the past 16 years to be campaigning for the establishment of an ombudsman to oversee those relationships and to ensure fairness in the supply chain. It has been gratifying to see many other organisations come on board with the campaign over time and eventually to see the Government producing legislation last year to bring an adjudicator for the groceries code supply chain into existence. The TFA has welcomed the recent appointment of Christine Tacon to the role and it is now important that she has adequate powers to deal with situations that arise. The Government has already caved in to pressure to agree to allow the ombudsman to fine retailers who are contravening a code of practice. We also need for the ombudsman to have powers of investigation which allow them to parachute in to any major retail operation to investigate supply chain issues. This aspect is currently missing from the adjudicator’s role and needs to be included if the adjudicator is going to be able to operate effectively to ensure fairness in the supply chain.

Confidence in the processing and retail sector has been knocked by the recent horsemeat scandal. It is a disgrace that processors and retailers have been able to get away with substituting horsemeat for beef particularly as the regulations on farmers for traceability are applied so rigorously. The horsemeat scandal should teach us that we cannot rely only on the market place to ensure that these large enterprises conform to regulatory compliance.

As part of the Government’s agenda for raising economic growth, it has sought to ensure a more flexible planning system is in place. The TFA, as a consequence, has been involved to make the case that the rights of tenant farmers should continue to be protected where their landlords seek to develop agricultural land for other purposes and as a result are able to resume land using incontestable notices to quit. Our actions directly with the Secretary of State have sought to ensure that despite the increased flexibility afforded to developers within the planning system, the rights on the tenant farmer have been protected and particularly those which allow the impact on the personal circumstances of the tenant farmer to be a material consideration in the planning process. We need to ensure that the same applies within the Government’s plans for changing the use classes order and whilst the TFA has made its representations, we await the final outcome of the Government’s consultation.

Through its role on the Tenancy Reform Industry Group, the TFA has been taking forward a number of the recommendations of Richard MacDonald’s Better Regulation Taskforce Report. We have got to the stage where we have agreed a new regulatory framework for repairs which respects the balance between landlords and tenants but ensures that they are updated to the modern context. We have also negotiated arrangements to allow for the use of independent expert determination for disputes under tenancy legislation apart from those connected with notices to quit which will continue to need to be dealt with by arbitration. We have sought to simplify and improve the end of tenancy valuation procedures to bring them up-to-date particularly by removing specific values set out in legislation and allowing arbitrators to set compensations where it cannot otherwise be agreed on the basis of fair value. Despite the detailed work that TRIG has done in these areas it is disappointing that the Government has failed so far to enact them. We are pressing the Government to do so at the earliest opportunity.

Together with its engagement on these specific issues, the TFA has maintained its broad range of engagement with a wide spectrum of stakeholders to ensure that the issues of concern to the tenanted sector are at the forefront of the minds of policy makers and practitioners within the agricultural world. We have continued our engagement with the sector specific farming organisations through which we had useful sessions with the Agricultural and Horticultural Development Board and with DEFRA on CAP Reform. We are planning a further meeting on animal health and welfare issues in due course.

We were sad to lose Jim Paice as a DEFRA Minister in September. Although we did not always agree we were at least pleased that we had a Minister within Defra who understood from first hand experience the needs of the agricultural industry and was prepared to stand up for it within Government. With the new raft of Ministers, we have sought to engage with them in order to bring them up to speed on the issues of concern to tenant farmers, although this does mean that we have had to return to first principles once again. Sadly there appears to be a great divide between the aspirations of our new Secretary of State, Owen Paterson and the farming industry which will come to a head through CAP reform negotiations.

Our engagement with major institutional landlords such as the Crown Estate, Church Commissioners, Duchy of Lancaster and Duchy of Cornwall continues to pay good dividends. At our regular meetings we are able to discuss matters of mutual concern and both parties gain a greater understanding of the other so that when individual issues arise these can be tackled on a more effective basis. With many of the institutions experiencing changes in their management, the TFA will need to work hard to establish good working relationships with the new personalities as quickly as possible.

Our ongoing engagement with the RPA on Single Payment Scheme issues and with Natural England on agri-environment schemes ensures that we can play a leading role in the development of policy and practice which takes account of the specific issues and concerns of the tenanted sector. These engagements are going to become even more important as we move into a new era of the CAP following the next reform. The announcement of the new computer system for both single payment scheme and agri-environment payments has left us feeling somewhat uneasy given past experience. However I would pay tribute to the Chief Executive of the RPA, Mark Grimshaw, who has certainly improved performance of the RPA and I’m pleased to say is leading on the implementation of the new computer system.

I was very pleased to have been invited to represent the Tenant Farmers Association at the service at St Pauls Cathedral in June to celebrate the Queen’s Diamond Jubilee. Representatives from all walks of life were present at the service and it was good that the tenanted sector of agriculture had its place.

Continuing the theme of high level meetings, I was very pleased to represent the tenanted sector at a special seminar arranged by the Prime Minister, David Cameron at 10 Downing Street in September focusing on the challenges being faced by those attempting to enter into the agricultural industry and progress through it.

A huge achievement for the Association was the launch in 2012 of a dedicated Welsh arm of the Association under the banner ‘TFA Cymru’. TFA Cymru’s first Chairman, Dennis Matheson, has done much to enhance the image of the TFA within Wales and in Welsh Government circles. There is a long way to go to raise the membership base in Wales but this important first step provides an important platform to build and develop services for the tenanted sector within Wales.

We continue to seek effective engagement with our members through our programme of meetings, events and shows. Sadly the show profile through 2012 was greatly curtailed by the poor weather but we hope that 2013 will see an improvement. I have been very pleased that members have taken up the invitation that the TFA should hold local meetings in their areas to supplement the regular round of members meetings arranged by TFA Head Office. We have seen successful meetings in the North East, East Midlands and East and we are hoping to see further successes in 2013 in the South East, the Isle of Wight and in Wessex. We are very keen to meet the demands of our members and would welcome further suggestions from our members for local meetings.

As I draw my comments to a conclusion, I wish first to pay tribute to our hardworking and dedicated team of staff at TFA Head Office. The staff ensures that the Association moves forward like a well-oiled machine and provides a first class service to members on a day by day, week by week basis.

My thanks, too, to the members of the Executive Committee particularly those who are also Chairs and Vice-Chairs of their local committees and to the members of the Appointments and Governance Board who work hard behind the scenes to ensure that the strategic direction of the Association is correct.

My personal thanks to my family for allowing me the time to carry out my duties as TFA National Chairman. Without their support at home, my job would be made all the more difficult.

Finally, my thanks to the wider membership of the Association for their continuing support for the work that we are doing. I very much hope that I will see as many of you as I can throughout the coming year as I enter my third and final year as TFA National Chairman.

 

Jeremy Walker
12 March 2013

Notes for Editors:

For further information contact:
George Dunn, TFA Chief Executive on 0118 930 6130
Jeremy Walker, TFA National Chairman on 01823 412353 or 07773345213
Larissa Harmsworth, TFA Marketing Executive on 0118 930 6130

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