After spending two days at the Royal Highland Show speaking to landlords, tenants and land agents from across Scotland, I came away convinced of one thing. The tenant farming sector will not be revived through more legislation.
That might sound like an odd conclusion given how much of the conversation around tenant farming centres on law and policy. But after years of legislative change, it is becoming increasingly clear that the barriers to letting land run much deeper than the legislation itself.
The issues in the tenant farming sector are well known. We have debated and discussed them for enough years now. We have become used to hearing industry figures, with considerably more experience than me, describing the sector as being in terminal decline or in palliative care as we watch the area of tenanted ground in Scotland slowly diminish.
The harsh reality is that new entrants to agriculture struggle to access land through the tenanted sector. The complex legislative framework we have created often favours the established tenant or established farmer. Grass lets are an acceptable risk to the established farmer, but a new entrant cannot and should not be expected to carry that risk. They need long term agreements to build a business. Farming is a long-term operation and needs the stability that long term agreements offer.
“The issues in the tenant farming sector are well known. We have debated and discussed them for enough years now.”
While yearly agreements no doubt have their place, there is less incentive to really invest in the land, the soil, the infrastructure. It’s all about maximising the yearly returns without the same motivation to look after the ground as you would in a longer agreement. It’s just business! The question we have to ask is does this really suit either the landowner or tenant in the long term?
What struck me most wasn’t another debate about legislation. Throughout the Show, the theme of confidence kept resurfacing. We heard it during the panel discussion we hosted on the future of the tenant farming sector, where speakers and audience members alike returned to the question of confidence. Then, in conversation after conversation around the showground, I heard exactly the same concern expressed in different ways.
The first landlord I spoke to told me in a very matter of fact way that he rented out his land on grass lets as he could not let on longer term tenancies as the Scottish Government would “steal his land”. This was advice he had received from his lawyer.
Later, a land agent told me that there were problems with carbon agreements as it wasn’t possible to rent out land for periods of 40 – 90 years in line with these agreements.
Finally, during a conversation with a tenant, I was asked when the absolute right to buy for 1991 Act tenants was coming into force.
These three interactions highlighted to me a problem within the industry. Too many decisions are now being shaped by assumptions about what legislation might come next, rather than by the legislation that exists today.
The question of an absolute right to buy ought to be the easiest to address, there is no indication at all that this is on the cards.
Fear of future legislative changes may be harder to address but we can’t let that get in the way of making decisions on the best information available now. Despite the uncertainty, I’ve also spoken to landowners who are letting land, entering into long term agreements and opening up opportunities for businesses to grow and develop. These are a sign that some landowners are balancing the risk and rewards within the existing framework, and it is important to highlight these examples and support this when we see it.
The question is how we build more of this confidence, recognising this is essential if landowners are going to commit to longer-term lets and if tenants are going to invest in their businesses. When confidence disappears, opportunities disappear with it.
I believe more than anything the sector needs a period of stability. Decades of legislative change have created a system that is increasingly complex, expensive and difficult to navigate. Measures intended to stimulate the letting market have, in some cases, had the unintended consequence of undermining confidence and created mistrust in the government and genuine fear over what might come next. The increased complexity has meant that specialist lawyers are required with costs that, when compared with the average income of farmers and many of the smaller estates, makes working within the system uneconomical and unappealing. This is the very real impact of continued legislative changes.
That is why I believe we need to change the conversation.
Rather than asking what the next piece of legislation should be, we need to better define all the barriers to letting land and then use all tools we have at our disposal to address them one by one. The tax system and the agricultural support framework being two of the key levers. We need to make long term leases economically desirable for both parties involved with an acceptable level of associated risk for the return. Stability in the sector and transparency on government plans for the sector would begin to restore confidence.
In these unsettled times when food security is rightly moving towards the top of the political agenda, Scotland cannot afford a tenant farming sector that continues to shrink year after year. We have spent years changing the law in the hope that it would revive the sector. We need to focus less on what the next legislation might be and more on practical steps that we can take now to build an economic model that works and grow the confidence that allows landowners to let, tenants to invest and new entrants to build a future.
