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.
Freeport will not be a silver bullet
AT THE beginning of September, before political focus temporarily dimmed, the Welsh and UK Governments invited applications for Wales’s first freeport, which is planned to be up and running next year.
After years of wrangling, Welsh Ministers agreed to support freeport policies in Wales after the UK Government agreed delivering them would meet the Welsh Government’s demands for a “partnership of equals”.
Part of the agreement reached placed Wales on the same footing for starter funding after three years in which the UK Government refused to fund Wales to the same level as Scotland and England.
A Welsh freeport will be a special zone with the benefits of simplified customs procedures, relief on customs duties, tax benefits, and development flexibility.
Milford Haven Port Authority, which has already expressed interest in Freeport-status, to push the Haven’s claims to be the location of a Freeport in Wales.
WHAT IS A FREEPORT?
Freeports are a special area where normal tax and customs rules do not apply. These can be airports as well as maritime ports. At a Freeport, imports can enter with simplified customs documentation without paying tariffs.
Businesses operating inside designated areas in and around the port can manufacture goods using the imports and add value before exporting again without ever facing full tariffs or export procedures.
Suppose the goods move out of the Freeport into another part of the country. In that case, however, they must go through the full import process, including paying any tariffs.
The UK was previously home to several Freeports, including Liverpool, Southampton, and the Port of Tilbury.
The legislation governing them was not renewed in 2012 because – while the UK remained a member of the EU and in the EU customs area – the economic case for keeping them was lost.
The UK could have chosen to retain freeports; nothing in EU law prevented them. Ending them was a political choice made by the then-administration.
Despite the absence of freeports, England remains home to 24 free zones, which operate on the same principle: in the Tees Valley and Manchester.
THE BENEFITS FOR PEMBROKESHIRE
The Milford Haven Waterway, a busy energy industry hub, is also a sensitive marine environment.
Supporting a scheme which could potentially undermine the Haven Waterway’s environmental status while pursuing a green energy future will be a difficult balancing act.
Milford Haven Port Authority argues that locating a Freeport in Milford Haven makes sense due to the Haven Waterway’s status as a nationally strategic energy asset and a key trade hub for the British energy supply.
A Freeport, it claims, will be an essential vehicle to help safeguard the existing professional energy jobs and skillsets to utilise for low-carbon ambition while regenerating the economy.
The Port Authority says the port’s existing energy infrastructure presents the opportunity for large-scale hydrogen production and injection with minimal additional infrastructure requirements. Alongside strong wind, wave and tidal resources, deep water access has already accelerated an emerging renewable sector such as floating wind in the Celtic Sea.
The Authority claims that a Freeport could support supply chains from equipment manufacturing to system integration and power connectivity, helping companies develop bankable projects and lower energy costs for UK consumers.
The proximity to major shipping routes and the existence of LNG terminals mean the Haven Freeport could also support a cleaner global maritime sector.
NOT PLAIN SAILING
Although freeports could, theoretically, redress imbalances in the UK’s economy by encouraging economic activity in areas where the economy is weakest, a careful balance must be kept.
The use of government subsidies for freeports – whether through direct grants or tax breaks – potentially falls foul of the WTO rules upon which Westminster seems determined to trade.
While freeports are successful in stimulating investment and jobs in a range of locations worldwide, they are neither a “silver bullet” for all locations nor the only way of boosting the UK’s main global gateways.
Freeports are notorious globally for being used to evade tax, launder money, and ease the transportation of stolen or illicit goods.
Moreover, as the experience at the Teesside Freeport development shows, they can lack any form of accountability and create fewer and less widespread economic opportunities than hoped.
The financial scrutiny of the Teesside Freeport is not much more than zero, and a box-ticking exercise carried out without any forensic examination of where the money goes and how contracts are awarded.
Milford Haven Port Authority operates a trust port. There are no shareholders or owners, and, importantly, its Board has independence of action without independent oversight.
A freeport’s financial structure is, if anything, even more financially opaque.
As public money is being invested in a freeport, proper public scrutiny – not merely loose “oversight” or lip service -must be the minimum standard.
Moreover, a freeport could be a money pit and public funding magnet. Too big an opportunity and too large a political totem to allow to fail, even when its economics don’t add up, freeports could end up being propped up by public money while delivering less than promised on the tin.
In all the positive publicity about a possible Freeport in Milford Haven, the Haven is not alone in wanting one.
Holyhead is Wales’s largest Irish Sea port. It is also in the key marginal constituency of Anglesey.
The stalled Wylfa development for nuclear power (part of the UK’s Government economic and energy strategy) is also on the island, and an already massive and expanding wind farm lies off its coast.
Holyhead links the North Wales corridor to England’s northwest and the Midlands. Transport infrastructure is already better to and from Anglesey than from Pembrokeshire to those destinations and will need less investment.
Cardiff Airport is another potential rival and one that could be especially attractive to the Welsh Government.
Since it bought a controlling stake in the Airport, the Welsh Government has propped it up with loans and grants.
Without Welsh Government support, the Airport would be insolvent.
The Welsh Government might be persuaded that making Cardiff Airport the first of Wales’s freeports would kill two birds with one stone.
It would attract more air and freight traffic to the site and decrease the Airport’s reliance on financial help from the Welsh Government.
As with Holyhead, the transport and infrastructure links from Cardiff Airport to other parts of the UK – in this case, the Midlands, the M4 corridor, and Bristol – are superior to those connecting Milford Haven with those regions.
A substantial concern expressed in a report on the Freeport scheme presented to the County Council is the undeniable fact they often do not create jobs but move them from one area to another.
The economic displacement of employment and funding opportunities could pull jobs and investments from one community to another.
If a new freeport only moved jobs and capital from (say) Newport to either Milford Haven or Holyhead, the economic case for their creation becomes – at best – shaky.
That raises the question of whether freeports provide value for public money through direct investment or tax relief.
Freeports could also be used to erode the high standards the UK currently places on workers’ rights and the environment.
Granting freeport operators carte-blanche to do what they want within a designated development area: for example, by allowing shortcuts through planning and environmental law or through allowing employment practices prevented elsewhere, involves trade-offs with unions and planning authorities could find problematic.
While jobs are needed, it is reasonable to ask what jobs and at what cost.
The experience of Welsh Enterprise Zones suggests few new jobs at a massive cost per head.
At a time of enormous hardship, it’s easy to be gulled by the prospect of large sums of public money and the prospect of that money pulling in private investment.
Tax and tariffs apart, a cautious individual might wonder why, if freeports are such a sure-fire thing, they need so much public money.
Welsh Government must balance farming priorities
IN EARLY July, the Welsh Government published its proposals for the Sustainable Farming Scheme.
Robert Dangerfield, Communications Manager for the Country Land Owners and Business Association Cymru, responds.
We are pleased to see the ambition shown within the document to support sustainable and profitable food production alongside addressing the climate and biodiversity emergencies.
The proposals arise after three consultations over five years and reflect the work our members and the CLA team have done with Welsh Government.
We are happy to see considerable detail on what the scheme will pay for, the process for how farmers and landowners can apply, and how the transition from the current landscape of the Basic Payment Scheme and Glastir to the Sustainable Farming Scheme will work.
We do, however, have some specific concerns.
Firstly, the requirements for 10% woodland/forestry cover and a 10% requirement for habitat creation and maintenance may not be suitable for all holdings. The need to balance sustainable food production must be considered further.
Secondly, there are no specific payment rates for the scheme. Welsh Government have explained that this is because the current funding settlement with the UK Government only goes to 2024, so they cannot commit to specific rates. This is disappointing, and we will continue to lobby to ensure future funding matches the commitments within the proposals.
WHAT HAS BEEN PROPOSED?
Despite the concerns highlighted above, there is a fair amount of detail within the document. To summarise, the scheme includes a farm sustainability review that will include farm details (size, sector, livestock), a carbon assessment and a baseline habitat survey.
The review will be digital, where possible, to reduce cost and concentrate resources on scheme delivery.
It will provide entry to the scheme and identify the actions Welsh Government will pay for. These will consist of a mixture of universal activities that all applicants must undertake – for which they will receive a baseline payment via a five-year contract and optional and collaborative actions which will attract additional payments.
The universal actions include:
· Record of key performance indicators;
· 10% of land for woodland/forestry and 10% for habitat creation/maintenance;
· Undertake animal health and welfare plan;
· Undertake a biosecurity plan;
· Manage areas of cultural/heritage significance;
· Undertake a five-yearly soil analysis.
The optional and collaborative actions are very wide-ranging and will be able to be tailored for the plethora of different farm types across Wales. One particular area of importance for our membership is access.
The proposal outline that any options relating to access are optional and include:
· upgrading footpaths to multi-use paths;
· enhancing existing paths to make them more accessible;
· establishing joined-up and new access routes and trails;
· establishing new access;
· hosting educational and care farm visits.
We will continue to work with the various access fora and the Welsh Government to ensure that any new access is voluntary, incentivised, and permissive.
The Royal Welsh Agricultural Show took place a week after the publication of the proposals, providing an ideal opportunity for discussion with lots of different organisations and our members.
Not surprisingly, the “10 and 10 requirements” dominated many meetings and conversations I had.
Some farmers were not concerned as they had already reached these percentages on their holding but were worried about land held under Farm Business Tenancies that often did not include the woodland.
In the short term, there are no quick answers; but the CLA Cymru team will be part of a Welsh Government-organised tenancy working group to discuss the impact of the proposals on landowners and tenants.
Other members outlined their worries that they needed all the productive land they had to go towards feeding their stock or growing their crops. This is a real concern.
For some, the solution will be to sustainably intensify other parts of their farm and become more efficient.
Where this is not possible, the role of exemptions for some farms must be considered by Welsh Government.
AGRICULTURE (WALES) BILL
The Agriculture (Wales) Bill will be published this Autumn.
It will be the legislative mechanism by which Welsh Government can administer the new scheme.
Ministers are confident it will receive Royal Assent by summer 2023, ready to begin testing, trialling, and introducing the new scheme.
We will be working with Members of the Senedd to ensure scrutiny of the Bill and to propose amendments if we see fit.
Carmarthen producer wins best sausage in Wales award
RED VALLEY FARM in Carmarthen is celebrating coming first in Hybu Cig Cymru – Meat Promotion Wales’s ‘Put Your Best Sausage Forward 2022’ competition, with their wild garlic sausages crowned as the very best bangers in Wales.
Business partners Andy Washbourne and Graeme Carter were delighted with the victory, with the high-flying producers taking the coveted award for the second year running. As winners, they will now automatically qualify for the ‘Champion of Champions’ sausage competition at the UK-wide Butcher Shop of the Year 2023 awards.
Speaking after winning the title during a special event at the Royal Welsh Show, Graeme Carter said: “It really is an incredible honour to have our sausages named as the very best in Wales. Winning an award like this really makes all the hard work worthwhile and shows that our ethos of producing quality, small-scale and locally produced pork pays off in the end.
“We were really proud of our wild garlic sausages, but it’s still a pleasant surprise to win the title. We had a really good time at the final judging event and the fact that the standard was so high amongst all the shortlisted finalists just goes to show what a fantastic pork industry we have in Wales.
“Since taking over the farm from my parents a few years ago, specialising in rearing pigs has really turned into a passion for me and Andy. We were gifted one boar to help clear the ground following some tree planting and everything has literally grown from there. We just plan to go from strength to strength and concentrate on what we do best, which is quality, sustainably produced pork.
“We’re now really looking forward to be representing Wales at the ‘Champion of Champions’ sausage competition and hope to be crowned the best across the whole of the UK.”
Red Valley Farm pipped Haverfordwest’s Prendergast Butchers and Puff Pigs of Ynysybwl to the title, wowing the panel of judges including leading Welsh food personality Chris ‘Flamebaster’ Roberts.
Chris said: “Nobody likes a banger more than me and the quality of those that made the final meant it was certainly a pleasure to be on the judging panel.
“It’s always really tough to choose a winner when the standard is so high, but right from the off we were impressed with the wild garlic sausages. They looked the part, the consistency was spot on and they just tasted amazing. Having now had a sample of them I’m pretty keen to get my hands on the recipe myself to try and work out the secret of making sausages taste so good!”
Speaking about his delight at the standard of entries to this year’s competition, Rhys Llywelyn, Market Development Manager at Hybu Cig Cymru – Meat Promotion Wales, said: “It was fantastic to be back at the Royal Welsh Show to hold the awards and the standard of the three finalists certainly didn’t disappoint. However, in the end Red Valley Farm just about came out on top, so a huge congratulations to them and we wish them the best of luck at the UK ‘Champion of Champions’ finals.
“Our small-scale pork producers in Wales have a fantastic story to tell. They specialise in creating a unique, hand-reared product that is often only available to buy directly from themselves and local independent shops, like butchers. This makes it a more sustainable food product, generating fewer food miles, and I’d urge consumers to seek out their local producer and find out for themselves the fantastic quality that’s on offer.”
For more information on pork produced in Wales, and where you can buy it, please visit porcblasus.cymru.
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