What does the new Agriculture Act mean for farm tenancies?

The Agriculture Act recently received its Royal Assent. Here’s what it means for British farmers.

As part of our annual agricultural seminar, which took place this week, Duncan Sigournay provided insights on the current political landscape and farm tenancies. More specifically, he focused on the Agriculture Act, and the implications it has for tenant farmers.

The full seminar is available to watch here, but we’ve also included a helpful summary of Duncan’s discussion below.

What is the Agriculture Act?

Receiving its Royal Assent in November 2020, the Agriculture Act aims to increase sector productivity, deliver a cleaner and healthier environment, strengthen food security and pave the way for life post Brexit and the Common Agricultural Policy. It also introduces the concept of farmers being rewarded with public money for providing ‘public goods’, including environmental improvements such as better air and water quality.

Despite its passing, the Act is essentially an enabling statute. This means it sets the direction of travel, but does not provide all the details. There will need to be more regulations, rules, further statutes and statutory instruments needed to put it into full effect.

What does the Agriculture Act mean for farmers?

One of the biggest concerns for those in the agricultural sector will be the phasing out of the Basic Payment Scheme (BPS). This starts in January and will be a process that lasts seven years until 2027.

At the moment, we only have details about the reductions for next year. But what we do know is that BPS will eventually be replaced by the Environmental Land Management schemes (ELMs). However, this will not happen until 2024, creating a gap in terms of reduction in BPS and the phasing in of ELMs.

There is likely to be an interim measure, which will probably be known as the sustainable farming incentive or something similar. This will look to close the gap between the provisions of the Countryside Stewardship scheme and ELMs. It will be focused on soils and emissions etc.

We are expecting announcements from the government soon on the details of the agricultural transition programme, which will provide more detail on the transition period.

Are there changes to tenancy law?

The Act contains several changes to farm tenancy law:

  • In relation to the 1986 Agricultural Holdings Act, there is a change to one of the succession criteria, which will raise the bar on the current criteria. It will make the suitability test more focused on high standards of efficient production and care for the environment.
  • The commercial unit test will be repealed once the new suitability test comes into force
  • The minimum age for retirement (65) is being removed so that succession can happen earlier
  • Landlords and tenants will be able, in the future, to apply for arbitrators from the CAAV and Agricultural Law Association, as well as the RICS
  • Due to ELMs replacing BPS, tenants will be able in due course to seek to apply to have their tenancies amended under the 1986 Act, in order to allow them to enter those schemes

Find out more about the issues affecting agriculture

As we mentioned, there are still a lot more regulations needed as the Act comes into full effect. This is the information we know for now, but we’ll continue to monitor the developments and provide you with the relevant updates.

As one of the UK’s largest and most experienced Agricultural teams, we’re committed to using our specialist knowledge and legal insight to always benefit our farming clients.

If you would like to know more about the Agriculture Act or have any other agriculture issue that you would like to discuss, please contact Duncan Sigournay dsigournay@thrings.com

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