The tortuous negotiations over the next Common Agricultural Policy reached a conclusion of sorts today although some of the details remain unclear. This morning BBC Radio Scotland invited me to speak about the implications of “capping the CAP” – an upper limit on what any claimant can receive in EU farm subsidy. You can hear the interview here.

This is a very short blog to highlight the key issues covered in the interview.

The current distribution of EU farm subsidy in Scotland is grossly unequal as the graph above shows. (see previous CAP blog) for further discussion). The top 10% of farmers receive 48.6% of the total 2011 Scottish farm budget of £710.4 million.

This is not surprising since the distribution of agricultural land in Scotland is concentrated in relatively few hands and Scottish farms (average size 107ha) are the largest in the EU. (1) Fully 75% of Scotland’s agricultural area is held by fewer than 9% of farmers in holdings of over 200ha in extent.

As a consequence of this and the operation of the system of Single Farm Payments (a system of transferable “entitlements” to subsidy that have been much abused over the past 10 years), the amount of subsidy received by the top 50 recipients has risen from £22 million in 2008 to £35 million in 2011.

The simple fact is that these 50 people (who include the Earl of Moray, Earl of Seafield, Earl of Southesk, Duke of Buccleuch and Duke of Roxburghe) do not need any of this money but they are the beneficiaries of the system.

There is a proposal to cap farm subsidies at €300,000 (£254,000). Neither this nor the question of whether it is to be mandatory or voluntary have yet been agreed and are to be dealt with separately within the Multi-Annual Financial Framework for the overall budget. (2) In any event, it may have little immediate effect since the Scottish Government seems keen to phase in the new CAP regime over, perhaps, as long as five years.

At a time when welfare payments to the poorest and most vulnerable in society are being capped at £26,000 per year, perhaps it is time to consider capping farmer welfare at a level considerably lower than £254,000

UPDATE 27 June 2013

George Lyon MEP reports in a tweet that capping will be voluntary. He says this is good news. I am not sure why.

Press Release from European Commission on the final shape of the CAP.

UPDATE 28 June 2013

Excellent analysis from Professor Alan Matthews – “A triumph for the Irish Presidency – a damp squib for CAP reform” including the astute observation that “The bulk of the CAP budget will continue to be spent on land-linked payments under Pillar 1 with no obvious rationale other than that to remove them is opposed by the current beneficiaries.”

(1) For detailed analysis of farm holdings see Eurostat – Large farms in Europe.

(2) According to Alyn Smith MEP today, “capping of direct payments is “square bracketed”. Council are adamant that capping should not be mandatory for Member States to apply.  A likely compromise will revolve around degressivity of payments above 150,000 EUR, with Member States deciding on the percentage to be applied.”

 

Image: Jane Lawson, London (Doctors’ Commons) : Judd & Co., 1881

We are pleased to publish this Guest Blog from Professor James Hunter, Emeritus Professor of History at the University of the Highlands and Islands. From 1998 to 2004 he was chairman of Highlands and Islands Enterprise and between 1985 and 1990 he was the first director of the Scottish Crofters Union, now the Scottish Crofting Federation. Until April 2013, he was a member of the Scottish Government’s Land Reform Review Group. The article outlines a radical way forward for reform of agricultural land tenure by moving to a more European model of owner-occupation and freedom to contract in the leasing of land. It makes eminent sense and could be the bold initiative that breaks the current impasse in the debate over agricultural land tenure.

This article was first published in the Scottish Farmer on 15 June 2013 and is reproduced here with its kind permission.

Time for a Lochhead Act?

Professor James Hunter 14 June 2013

In October 1900, Britain’s then Prime Minister, Lord Salisbury, made a fellow Conservative and fellow aristocrat, George Wyndham, Chief Secretary for Ireland – all of it, at this point, still in the United Kingdom. Three years later, Wyndham took through the UK Parliament the legislation that resulted in easily the most far-reaching land reform the British Isles have seen.

By enabling virtually all of Ireland’s tenant farmers to buy their farms and by advancing cash to help them do so, the Wyndham Act, as that 1903 measure is still known, eliminated big estates from Ireland and made the entire country, both south and north of the present border, a place where farms and smallholdings are overwhelmingly owner-occupied.

Might the review of agricultural holdings announced last week by Richard Lochhead, the Scottish Government’s Cabinet Secretary for Rural Affairs and the Environment, do for Scottish tenant farmers what the Wyndham Act did for their Irish counterparts?

To get the answer, it won’t be necessary to wait for the outcome of Mr Lochhead’s promised review. All that will be needed are details – to be revealed shortly – of how the review is to be conducted.

If the Cabinet Secretary opts for a review group representative of all the divergent interests with a stake in this key issue, it will immediately be apparent that a tenant farming right to buy (something that long ago transformed not just Ireland but lots of other European countries) has been ruled out for Scotland.

That’s clear from the record of the Scottish Government’s already established Tenant Farming Forum (TFF). The forum can only deliver on matters on which its members reach consensus. Since both landlords and tenants are represented on the TFF, and since they’re at odds over what’s best for them, the forum has so far delivered little.

A better model for Richard Lochhead’s agricultural holdings review would be the Land Reform Policy Group set up by the late Donald Dewar in 1997. The group, which paved the way for the land reforms enacted during the Scottish Parliament’s first session, consisted not of competing interests but of senior civil servants with the ability to draw as necessary on external (and non-aligned) expertise.

Most critically, the Dewar group was chaired by Lord Sewel, the Minister responsible in the pre-devolutionary Scottish Office for what’s now Mr Lochhead’s portfolio. Lord Sewel made clear what he and colleagues wanted by way of reform – and the group’s task was to work how how these reforms could be delivered.

So why doesn’t Richard Lochhead now set up and chair a similar group of high-ranking officials (drawing on external academic or other expertise as required) whose job will be to tell the Scottish Government how a tenant farming right to buy could be made to work in Scotland? A review group constituted on this basis might investigate:

  • Giving a right to buy to all farmers with secure (so-called 1991) tenancies;
  • Helping purchasing farmers by giving appropriate government backing to mortgage arrangements to be negotiated with banks;
  • Possibly extending similar right to buy opportunities to other (non-1991) tenants.

These measures would ideally be taken forward in conjunction with other land reforms already under consideration, such as expanding the area in community ownership, the overall aim being greatly to diversify Scotland’s land ownership structure by reducing the number and size of big estates and putting an end to the current ownership of more than half the country by fewer than 500 people.

But as well as exploring how to get farm tenants out of the ‘feudal time warp’ (as it’s been described by the Scottish Tenant Farmers Association’s Chair, Christopher Nicholson) in which they’re presently stuck, Mr Lochhead’s review group should look at the possibility of a right to buy for existing tenants being quickly followed by:

  • The repeal of all agricultural tenancy law.

This would create a situation where farmer-to-farmer rental arrangements (whether for a field for a year or an entire farm for ten years) would be on exactly the same basis as, for example, the letting of premises for a shop or some other business.

In the post-reform Scotland, which (like Ireland, Denmark and many other European countries) would be largely owner-occupied, then, there would be complete freedom of contract in respect of letting of land – just as there is with regard to other forms of commercial letting.

This would have the effect, among others, of making it easier for new entrants to get into farming. But the Cabinet Secretary and his review group might also consider helping new entrants further by investigating:

  • The formation of a farmer-led co-operative which would buy agricultural land with a view to establishing on this land a network of differently-sized starter units (of different farming types) which would be let (for five, ten or more years as appropriate) to new entrants renting under freedom of contract arrangements.

Such a co-operative might be pump-primed financially by government – but would thereafter be dependent on its letting income both to cover its costs and to generate an annual surplus sufficient to enable it to add to its landholdings and thus aid, over time, a growing number of new entrants.

Subsequent to getting rid of the plethora of legislation that’s been keeping lawyers and the Court of Session’s Lord Gill & others so busy of late, the one regulatory measure that might be required would be an upper limit on the area of farmland that can be owned by any individual or company – other than the farmer-led co-operative mentioned above.

This upper limit would vary in accordance with land quality. It would have the effect of dismantling and returning to individual farmers some of the bigger in-hand operations which have recently been taking shape on some estates. And it would prevent the re-emergence of something approximating to the sort of estates these reforms would be designed to remove from the farming scene.

There might, however, be no ban on the amount of land an individual might rent on a freedom of contract basis – thus enabling the formation, as appropriate, of large-scale farming enterprises.

And what of the barrier allegedly put in the way of any meaningful land reform by Article One, Protocol One (A1P1) of the European Convention on Human Rights (ECHR)? In fact, A1P1, which has to do with ‘peaceful enjoyment’ of property, need be no barrier at all. As Lord Gill commented in December, when ruling on measures that give crofting communities an absolute right to buy crofting estates, such reforms are perfectly in accordance with A1P1 – provided the Scottish Parliament takes care to ensure that the case for reform is made on clearly stated grounds of public interest.

Over, then, to Richard Lochhead. While it’s clear that his review group, if it were to have the sort of remit suggested here, wouldn’t have an easy job, it wouldn’t (as is shown by the experience of other countries) have an impossible one either. And all that’s required, in the first instance, is for the Cabinet Secretary (who pushed strongly for a tenant farming right to buy when in opposition) to launch the sort of review that shows he’s still committed to the one thing that’ll truly help a group of people who, though they include some of Scotland’s most go-ahead farmers, have for far too long had a really lousy deal.

Politicians holding office can opt simply to administer their departments – which means they’ll have a quiet life and quickly be forgotten. Or they can choose to promote game-changing legislation to which, as in George Wyndham’s case, their name will long after be attached. Time, then, for a Lochhead Act?

 

[UPDATE 30 May 2013 This blog is an edited version of the one published yesterday (pdf copy here) in which I incorrectly argued that there was only one review promised in the SNP manifesto. There were in fact two as explained below. However, this fact does not change the substance of my argument. Why are farm tenancies being removed from the scope of land reform to be dealt with on their own?]

Richard Lochhead, the Cabinet Secretary for Rural Affairs and Environment for the past six years, told a conference yesterday that “the future of land tenure is one of the biggest issues facing the future development of rural Scotland“. Here is his speech in full. He was speaking at a National Farmers Union Scotland (NFUS) seminar entitled A Vision for Land Tenure: 2020. (1)

In his speech he announced a new review of farm tenancy legislation.

Now this is interesting because the Land Reform Review Group (LRRG) has been given the task of coming up with radical proposals to take forward land reform but, in its Interim Report published last week, it said that it would be taking no further interest in land tenure as it affected Scotland’s tenant farmers (see my previous post for a fuller discussion). This was a shock to all those who had submitted evidence on the topic and particularly to tenant farmers some of whom, as the report noted, were “fearful of speaking at open meetings, or even of putting their concerns on paper, because of possible recriminations should their landlord hear they were expressing these views in public.” They thus (mistakenly as it happens) placed some faith in this independent review of land reform to address their concerns. Yesterday, Mr Lochhead announced a separate review of agricultural tenancies.

All of which is rather confusing. The rationale for a separate review was that two separate reviews were promised in the SNP election manifesto in 2011. The relevant part of Lochhead’s speech is as follows.

11. This event is very timely, because we are at an important stage of the government’s work in this area.

12. That work includes two separate reviews, as set out in our election manifesto back in 2011.

13. The first review is the one being run by the Land Reform Review Group, who recently published their interim report.

14. That report set out a range of areas to be investigated more fully during the next phase. The group’s intention is to collect more evidence, by speaking to   those involved at the heart of those issues, before presenting recommendations to the Scottish Government.

15. Meanwhile, the government has also been committed to a separate review of farm tenancy legislation.

He then continues,

22. However there’s one thing I can make clear even today.

23. We were always committed to two separate reviews, and now the Land Reform Review Group has decided to focus on other issues for the remainder of their work.

24. So I want to confirm today that all the issues on farm tenancies raised during the Land Reform Review Group’s work will not be lost. They will be carried forward and looked at very carefully in the farm tenancies review.

I have read the SNP election manifesto carefully and the topic is covered on page 39. It states that,

We will amend the Agricultural Holdings Act to support tenant farmers and will work to encourage new entrants. We also believe that when a farm business is being passed from one generation to the next it should be easier for the successor to build a home on the farm where required.”

So no mention of a review there – simply a clear commitment to amend the legislation which most Governments do by holding a consultation, drafting legislation and introducing a Bill to Parliament.

On the same page, under the heading “Land Reform” it states that,

We believe it is time for a review of Scotland’s land reform legislation. For example, we believe the current period for three months for communities to take advantage of their right of first purchase is too short, and we would wish to see it extended to six months. We will establish a Land Reform Review Group to advise on this and other improvements which we will legislate on over the course of the next five years.”

Scotland’s land reform legislation is the body of statute that emerged from the work of the Land Reform Policy Group chaired by Lord Sewel from 1997-1999. it is all laid out on the Scottish Government’s website and it includes the question of agricultural holdings legislation which also formed an explicit part of the remit of the LRRG (Annex A here). The task of the LRRG is to “review Scotland’s land reform legislation“.

However, the SNP also published a farming manifesto which states that.

We will work with the sector to increase the amount of land available for rent and bring in the legislative changes already proposed and review the effectiveness of the amended act within 18 months.”

The legislative changes referred are now included in the Agricultural Holdings (Amendment) (Scotland) Act 2012 which received Royal Assent on 12 July 2012. The review promised in the farming manifesto is only of this amended Act and does not address the many issues tenant farmers raised with the Land Reform Review Group.

All of which gives rise to a number of questions.

Given that the LRRG has dropped the issue, will the remit of this second review be broadened out beyond a simple review of the effectiveness of the 2012 Act?

Why exactly has the LRRG dropped this topic from the mainstream of land reform?

Why, if farm tenancies were indeed “always” to be the subject of a separate review, was this not made clear at the beginning of the LRRG process?

Why, if farm tenancies were “always” to be the subject of a separate review, were tenants led to believe that the LRRG would be considering these issues, were encouraged to provide evidence and indeed were involved in face to face meetings in the field?

Did Scottish Ministers exert any influence over the LRRG to drop any further consideration of farm tenancies?

Land reform is an integrated programme of work designed to do four things.

1.reform land tenure

2.redistribute land

3. provide a fiscal framework for land & property

4. establish appropriate governance arrangements for land relations

That, more or less, is what the Land Reform Policy Group did in 1977-1999.

Why is the Scottish Government messing around with this issue and passing one of the most pressing land reform issues to another as yet unknown review process to be announced “after the summer break“?

What on earth is going on?

 

(1) two of the presentations given at the seminar are available – Phil Thomas, Chair of Tenant Farming Form and Clive Phillips of Brodies, Solicitors.

UPDATE 30 MAY 2013 2115hrs

The Chair of the LRRG gave a speech to the AGM of Scottish Land and Estates on Tuesday 21 May. It was given from notes and no written speech was published but I understand that she said that the farm tenancy issues was dropped due to “timescales and lack of specialist knowledge”.

The timescale of the LRRG from July 2012 to April 2014 is a generous 20 months. Members & advisers were appointed by Scottish Ministers who presumably were fully aware of what specialist knowledge the members and advisers have. It is reasonable to conclude therefore that the lack of specialist knowledge was by design not accident. The Scottish Government press release of 24 July 2013 states clearly that advisers would be appointed “with expertise in areas such as property and land issues, economics, legal issues, community-led organisations, landownership, forestry and access“.