DEFRA’s recent efforts have been focused on issues such as flooding - essential in times of climate change. Yet, they should not neglect agriculture.
They appear afraid to upset the large landowners, processors and retailers who are currently controlling the food and farming industry. I believe there has been a lack of listening, support and leadership by DEFRA in helping agriculture move forward as it could.
After all, farming is a long-term business - a fact often overlooked by those taking decisions affecting the industry.
When I drive to Carter Bar and look at the green and productive area of the Rede Valley - formed by the old experimental husbandry farm - it is possible to see what can be done by investing in farming infrastructure.
Such investments - in building sheds, erecting fences, draining fields, reseeding, planting shelter-belts, breeding sheep and beef cattle, and training staff - realise their benefits not during the current financial year, but over decades.
Yet the effect of DEFRA’s policies is that farming is becoming increasingly short-term.
The number of succession tenancies is dwindling rapidly, through retirement without succession, or through being persuaded out of existing tenancy agreements.
As land becomes available, some is taken in hand or run in partnerships by large landowners. House prices can generate such profit that steadings and the outskirts of villages are developed for housing.
Some land is being amalgamated into larger holdings for rent, so there are less farms available to rent. The majority of tenancies are now five year FBTs. Most land is still being actively farmed - though not all as farming environmental schemes can be more profitable than farming livestock.
In times of economic uncertainty, the price and value of land increases as more investors go beyond their stockmarket portfolios to invest in property and land; like gold, land is something physical that cannot evaporate in an instant as shares can.
The value of land bears no relationship to its production value. High land values lead to increases in rents, as agents try hard to get an economic return based on perceived land values. Many short-term farm tenancies have ended in disaster as current arable returns cannot support these high rents.
Farm Business Tenancies were supposed to free up the farm rental market, to allow new and young entrants into farming, yet they have not been the great step forward for British agriculture that many anticipated.
As Norham farmer Dougie Watkin says: “The effect of Farm Business Tenancies is the exact opposite of what people wanted.
“They were supposed to allow a turnover of tenancies that would help new entrants start farming but they are having the opposite effect and are actually stopping young people getting into farming.
“There was something to be said for the old county council smallholding schemes in which lifetime tenancies were used.”
When farms come up for let on a five year FBT, a young farmer has little chance of renting to start off his or her business.
Established farmers looking for extra land may be seen as lower risk (to both landowner and bank), and will be able to afford more rent as they need not incur the fixed costs a new entrant would need to cover.
Finance for stock and machinery will be difficult for new entrants to secure on a five-year basis when a more realistic farm business model would operate over 20 years.
A short-term approach has negative consequences for the future of farming for the following reasons:
- It will not be worth tenants investing in improving the land’s productivity through drainage and grassland management, causing a shift to short-term productivity gains through instant solutions such as extra fertiliser or additional feed - a high cost and high risk strategy when good market returns are not guaranteed
- It will not be worth tenants investing in fences, sheds, trees, stone walls and other farming infrastructure - the landscape and environment will deteriorate.
- Diversification, previously hailed as the saviour of the farm business, is an unrealistic proposition for short-term tenants. Investing in doing up a farmhouse to be able to run a B&B or in buildings/kit to develop an ice-cream business is not possible if the farmer has no guarantee of tenure beyond five years. Hence, local rural jobs will suffer.
- It is not realistic for tenant farmers to build up a flock of sheep and a herd of suckler cows in the short-term as breeding to improve quality takes years to achieve. The animals may have to be sold after each five year period, and buying in sufficient quality stock is an expensive business.
- Investing in the thorough training of tenant farmers, their shepherds and farm workers is difficult when there is no long-term job security for either employee or employer.
The Forestry Commission has taken action in Scotland to redress the lack of new entrants into farming, but these initiatives are few and far between.
The current situation with short-term tenancies, low investment in farm infrastructure and a lack of new entrants is not sustainable.
To safeguard the future of farming, food production, our rural communities and environment, we need a new approach.
There are five actions that can and should be taken by DEFRA to reverse the current short-term nature of the industry and help foster a sustainable future for both tenants and owner-occupiers:
1. 20 year tenancy schemes
Letting farms on a 20 year tenancy - or longer to retirement age - should be encouraged by offering tax advantages to landlords. The market has proven that with FBT landlord behaviour will result in shorter lets and less farms to rent. Financial incentives can help reverse this.
2. Young entrant loans
Long-term loans at a fixed, low rate should be available to trained young entrants with a viable business plan to start farming. This, in combination with renting on a 20-year term, will enable young people to enter the industry and build up their farm businesses.
3. Support active farmers
CAP money should only be spent where there is active farming. This encourages investment, prevents farms becoming derelict, retains jobs, and helps maintain rural communities as well as protecting the environment.
4. Invest in education
Quality education on the business side and the practical side should be reintroduced. British agriculture needs a highly skilled workforce with expertise from shepherding to arable, dairy and agribusiness, to enable our diverse industry to develop in the future.
5. Invest in research and advisory services
A professional, accessible, independent advisory service based on the practical implementation of best practice and current research covering all aspects of land management and breeding should be supported by DEFRA. Commercial advice on pharmaceuticals, agrochemicals and feed will always be available by those promoting their products.
In Britain, we have such quality and such potential in our land, our farmers, workers, breeds, varieties, climate, universities, colleges and agribusinesses.
With the right coordination, we can be world leaders in agriculture.
If DEFRA take these five actions, they will be supporting farmers in investing to maximise their potential and facing the multiple challenges of producing food, protecting the environment and running viable businesses in an ever more competitive and unpredictable world.
Maintaining the status quo by indecision is not an option.
DEFRA should grab the bull by the horns and start leading the way to a stronger future for British agriculture.
Julie Pörksen trained as an agricultural economist at Wye College and was a lecturer on the FBOM (Farm Business Organisation and Management) course at the Scottish Agricultural College, before working on fair trade and agricultural workers’ rights in the asparagus export industry in Peru. Her practical farming experience stems from working on her father’s sheep farm in Cambo, Northumberland, and lambing on other farms.