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Farming

Welcome evidence of longer farm tenancies

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TFA Chief Executive: George Dunn

THE TENANT FARMS ASSOCIATION has welcomed a report from the Central Association of Agricultural Valuers (CAAV) indicating that there has been a significant improvement in the average length of Farm Business Tenancies (FBTs) in England and Wales.

Since the introduction of FBTs in 1995 the TFA has been concerned that average lengths of term have ranged between only 3 to 4 years. As a result the TFA launched the FBT10+ campaign in 2015, the 20th anniversary of the introduction of the new legislation, to argue that farm tenancies had been too short for too long and that urgent change was necessary.

The short-term nature of agricultural tenancies has held back progression, investment, sustainable land use and productivity on farms. With much higher demand for land than supply, landlords can offer short-terms, for high rents at very little risk whilst at the same time pocketing generous and unconstrained tax benefits which the TFA argues must be addressed.

TFA Chief Executive George Dunn said: “It is encouraging to see from the CAAV report that the average length of all FBTs has increased to 4.5 years and that excluding lettings of less than a year, the average was six years. This is a step in the right direction towards the goal of seeing average lengths of term in excess of 10 years and clearly the TFA’s campaign has had an impact in encouraging more sustainable tenancy lengths being brought forward. However still more needs to be done to encourage the landlord sector to offer the longer terms that we need to see.”

“The new Government must grasp the nettle to introduce measures to change the fiscal environment within which rural landlords make decisions about letting land to encourage longer term FBTs. The tenanted sector cannot begin to consider issues of resilience and sustainability in the post Brexit environment with average lengths of term on new FBTs of under 10 years,” said Mr Dunn.

The TFA is arguing for the following measures to be in the new Government’s first Budget:

(a) Restricting the generous, 100% Agricultural Property Relief from Inheritance Tax (currently available to all agricultural landlords, regardless of the length of time for which they let land) only to those landlords prepared to let farmland for 10 years or more (excluding rotationally let land on short terms for vegetable and other high value crops).

(b) Clamping down on those land owners who, through schemes promoted by agents and accountants, are using share farming, contract farming, share partnerships and grazing licences as thin veneers of trading activity and as vehicles for aggressive tax avoidance where they take no risk in the business, have little, if any, entrepreneurial input and lack any management control.

(c) Offering landlords prepared to let farm land for 10 years or more the ability to declare their income as if it was trading income for taxation purposes.

(d) Reforming Stamp Duty Land Tax to end the discrimination against longer farm tenancies.

“The TFA is pleased to see that the Government has reconvened the Tenancy Reform Industry Group and this must be a key element for it to consider alongside other important measures to provide a sustainable framework for the tenanted sector of agriculture in the post Brexit era,” said Mr Dunn.

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Farming

Record potato stock levels

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Potatoes: Marketing season could be extended

P‚ÄčOTATO stock levels reached a record 2.4 million tonnes in January – up 25 per cent on last year, according to the Agriculture and Horticulture Development Board.

The latest data survey also showed that the rate at which they were drawn from store was also at its highest level since 2010, when AHDB began measuring stock.

According to the new figures, GB stock levels held by growers rose by 492,000 tonnes compared to the 2017 end-January estimate.

And from November to January 2018. 1.19 million tonnes were drawn from grower’s stores – 226,000 more than the same period last season and 14 per cent higher than the five-year average drawdown rate.

Peter Collier, analyst at AHDB said: “Retail sales of fresh potatoes were up 3.6 per cent in the three month period to the end of January, as measured by Kantar Worldpanel. While this is good news, it does not entirely explain the increase in drawdown rate.

“Another factor is a greater level of grade outs in this year’s crop. With quality reported as reduced in 2017/18, there has been an increased tonnage requirement to meet specifications, as seen by reports of a higher ‘out grade’ percentage than usual.”

AHDB Potatoes has released a new storage dashboard on Potato Data Centre, where users can examine data on the region or market sector pertinent to them. The portal also includes the ability to distinguish between stock held that is intended to fill a ‘on-contract’ purchase and stock for the ‘free-buy’ market.

There is a chance, that despite these record stock levels, the market could still ‘tighten’ as the season progresses.

Peter said: “The delayed, wet start to 2018/19 earlies planting could see this marketing season extended, causing a tightening of supplies before the new crop is lifted. Conditions can change quickly, so I would recommend keeping an eye on Potato Data Centre, or our newsletter Potato Weekly for more information.”

The latest estimate is based on an AHDB survey, covering stocks held by growers and does not include stock held by purchasers.

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Farming

First Milk simplifies pool pricing

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Milk: Producer pricing simplified

FIRST MILK has announced that from April 1, 2018 it will be changing its approach to regional milk pool pricing, which will see its previous payment schedules simplified to just two payment schedules – First Milk Liquid and First Milk Manufacturing.

This development has been made in response to member feedback and is fully supported by the Member Council and Board. It will see milk prices harmonised at a standard litre of 4.0% butterfat and 3.3% protein, with the April price on this basis being 26.0 ppl.

Commenting on the developments, Jim Baird, Farmer Director and Vice-Chairman, said: “Whilst in recent weeks we have seen some recovery in the market, unfortunately, the overall global dairy commodity markets remain weaker than last year, which continues to impact on our returns. We know that this price drop will be disappointing news for our members and continue to do all that we can to minimise the impact of reductions.”

He added: “This more simplified and transparent approach on milk prices reflects the requirements of the business today and is a progressive step which unites our members across the country.”

Milk Policy Manager, George Jamieson of NFU Scotland, said: “NFUS has consistently believed that First Milk, as a farmer-owned business, should as far as possible have a pricing policy that is transparent, uncomplicated and treats all members, regardless of geography and end use, the same way.

“All First Milk members contribute to the business diversity so this move is welcomed by NFUS and we congratulate it for taking this step. The strength of a co-op is in bringing members together to draw strength in a common cause. First Milk Members in Scotland have suffered from lower prices on the whole, but this move is more important than regional sensitivity as it demonstrates a commitment by First Milk to a simpler and equitable pricing model.

“NFUS has met with First Milk recently and supported this move and also discussed other areas, such as governance and ongoing price challenges. The new governance model with a new Council and Board structure and a new Chief Executive is, we believe, making progress. Ultimately it will be farmer owners who will decide if it is working for them, which will be judged on price paid back to the farmers aligned with investment and sustainability.

“On price, First Milk’s new price of 26ppl is disappointing but not out of line with other processors. The drop does not reflect the new pricing model, but the downturn in the dairy market, which NFUS believes should be at the bottom of the curve. First Milk, as a farmer owned co-op, must pay as much as it can based on its markets and costs regardless of competitors pricing, and over the last two years it is pleasing for hard pressed FM farmers to see the gap in prices between FM and competitors closing.

“Looking ahead, commentators and futures indicators are cautiously suggesting that the recent price drops may be at an end. NFUS was very clear that we believed that farmgate prices last year did not reach the levels that were justified by the market, and that the slide back to unsustainable farm gate prices has been too speedy. Milk pricing remains at the discretion of milk processors, who under intense pressure from competitors and retailers have the reassurance that they have the power to set the price they pay for their primary product and largest cost.

“This is not an acceptable nor efficient way for any supply chain to be sustained. NFUS has consistently strongly lobbied for a dairy supply chain that was fair and efficient.

“While the Grocery Code Adjudicator has declined to include the primary producer under its remit, it has acknowledged the strong evidence supplied by NFUS and NFU that dairy farmers and the supply chain needs additional measures. Defra has committed to introduce mandatory contracts with minimum standards in the dairy sector and will consult soon.

“NFUS is fully committed to this and strongly urges all with the best interests of the dairy sector to engage and support this move. This is perhaps the single biggest opportunity the dairy sector in Scotland and the UK will have to set a direction of travel that can grow a dairy sector which is competitive and sustainable.

“Mandatory contracts on their own will change nothing, but contracts which are agreed, as against imposed, covering such contentious issues as pricing, management, shared risk and reward, will make a significant difference.”

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Can Labour reconnect with the countryside?

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Labour needs new rural stategy: Thinktank report claims

LABOUR must reconnect with the politics and culture of the countryside to be confident of winning the next general election, according to a new Fabian Society report published today. To secure a working majority the party will need to capitalise on the demise of Ukip and the decline of the Liberal Democrats and gain seats in both rural and semi-rural constituencies.

Labour Country, a new report from the Fabian Society, supported by the Countryside Alliance, shows Labour still has a way to go to win over rural voters. The report argues that to gain countryside seats Labour needs to be seen as ‘a natural party of the countryside’.

To win a UK majority, the party does not need to beat the Conservatives across all rural areas, but it does need to be competitive. Of Labour’s target seats ahead of the next general election, 16 are rural and a further 28 have at least 3,000 rural inhabitants. A YouGov/Fabian Society poll shows that as things stand:

  • The Conservatives lead Labour by 54% to 31% in rural England and Wales (23 points)
  • Even amongst working class rural voters the Conservatives beat Labour by 49% to 35% (14 points)

But in better news for Labour, the party is ahead of the Conservatives in rural England and Wales among people aged under 50 (48 per cent to 36 per cent) and among those who voted remain in the EU referendum (45 per cent to 34 per cent). There are large numbers of both groups across rural England and Wales, despite the countryside being older and more Eurosceptic than the nation as a whole.

The report identifies the policy areas that are key to Labour rebuilding its connection with rural voters – including transport, housing and farming. But focus groups conducted for the report also show the party needs a shift in how it campaigns and organises to ‘rural-proof’ everything it does.

The report concludes that Labour’s next manifesto should set out an economic strategy that delivers for rural areas. It makes recommendations in four key policy areas:

A place-based industrial strategy:

  • support for small-scale enterprise and manufacturing
  • place-based investment
  • support for technical education

Better rural transport:

  • the restoration of the rural bus routes lost since 2010 and the municipalisation of bus services
  • reviewing the effects of the Beeching cuts to rural train services

Local, affordable housing:

  • democratic local involvement in planning
  • affordable and social housing to meet local need
  • small-scale development on disused plots of land
  • architectural form that fits the environment

A post-Brexit agricultural settlement:

  • a new support system that values the labour that sustains the countryside, rebalanced towards small-scale and marginal farms as well as the provision of public goods

Shadow secretary of state for environment, food and rural affairs Sue Hayman MP said: “The Conservatives take rural communities for granted, imagining that they have their votes sewn up. But it is all too clear that they have nothing of substance to say on the real challenges facing rural communities.

“As the member of parliament for a rural constituency in West Cumbria, I know only too well how creaking Victorian infrastructure, rural poverty and a lack of employment opportunities for young people are leading to a growing disconnect between city and countryside. At the same time, austerity is leading to the steady erosion of the pubs and post offices, bank branches and local businesses that serve as the heart of so many of our small towns, villages and hamlets.

“This new report outlines positive recommendations for how to take on the Conservatives in their rural heartlands and deliver for rural communities across England and Wales.”

Andrew Harrop, general secretary at the Fabian Society said: “To win the next election Labour must gain seats with lots of rural voters and that will take a big shift in the way the party campaigns and organises. But there is room for optimism, with Labour now leading the Conservatives among rural voters under the age of 50.

“As a former Labour candidate in a rural seat, I know myself that the party is often dismissed as an ‘urban’ intruder that does not understand country life. Labour must prove to countryside voters that it is on their side with rural-friendly policies for saving banks, bus routes and countryside businesses.”

Baroness Ann Mallalieu, Labour peer and president of the Countryside Alliance said: “There is no doubt that there can be no future Labour government without improved support in the countryside, but this can only be achieved if the party gets serious about making a credible policy offer to the countryside. For too long Labour have conflated rural issues with animal issues, to the detriment of Labour’s vote in the countryside. This report lays out how Labour can correct this trend and challenge the Conservative party’s rural dominance, by speaking to the genuine concerns of people in the countryside.”

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