Who wants what this time?

Systemic Solutions at the landscape-water interface was the title of a workshop held at Bristol Aquarium on Monday 10 February 2014, and I was asked to speak about the landowner’s perspective.

Who want what this time? was my opening question.  When dealing with anything in relation to rural land it’s vital to realise that you are rarely starting with a blank sheet.  Are you dealing with the Somerset Levels or the Cambridge Fens, Exmoor or the Peak District, or something in between?  Some of the items that may already be listed on that far-from-blank sheet include:

  • Are there tenants, and if so on what terms?  Traditional agricultural lettings with very long term security of tenure and considerable freedom for the tenant, or newer farm business tenancies of shorter duration?
  • Alongside tenants, are the sporting rights actively used?  By the owner or by sporting tenants?
  • Are the minerals owned separately?
  • What is the farming policy on farmland?  How will a ‘systemic solution’ seek to influence this?
  • Is the land already dedicated to other schemes, for example Environmentally Sensitive Areas, Higher Level Stewardship, Entry Level Stewardship, Forestry Dedication covenants, ‘Open Country’, Access or other management agreements?
  • How is the transition from CAP Single Farm Payment to Basic Farm Payment going to affect the land, and how will this interact with a systemic solution?
  • Will there be implications for the IACS return to the RPA, and how will eligibility for new Pillar 2 schemes be affected?
  • In the longer term, how will this affect plans for continuation, succession and inheritance?
  • What about supply contracts – for example grain may have already been sold for delivery next September or later?

Plenty to think about already, so is water even on my ‘worry list’   It most certainly is:

  • We are suffering from either having too much water or too little;
  • Is it worth investing in longer-term storage for the resilience of the farm or estate business?
  • The Water Bill due to become law later this year may offer new opportunities to sell or buy water for commercial users and suppliers;
  • Meanwhile the water abstraction consultation currently under way from Defra looks as if it will have considerable implications for trading in abstraction rights, and for the management of water abstraction rights.  Does this mean it may be more difficult to get irrigation water when it is most needed – underlining the point already made about the economics of investing in longer term water storage;
  • Waste water management and disposal if always of concern on livestock farms.

For the farmer in particular, what are likely to be the knock-on effects of being part of a systemic solution?

  • Will this involve interference with land drainage and what will this mean for agricultural productivity and animal welfare?
  • Who else needs to be involved or who will this affect?  Tenants?  Landlords? Graziers? Mortgagees?  Trustees of land in trust?
  • How will this affect other diversification opportunities, in particular renewable energy?
  • Will there be a knock-on effect on other development opportunities?
  • How will it affect asset values and return on capital with rural estates showing revenue returns of no more than 2% on asset value?
  • Will it affect eligibility for Agricultural Property Relief from Inheritance Tax, or Business Property Relief?  If either of these is compromised the consequence could be a 40% IHT bill on an asset earning only 2% or so a year – so the diversion of 20 years’ profits to pay the tax bill off, just in time for the next IHT bill.
  • Will I still be classified as a ‘farmer’ for tax and other purposes?
  • Will this interference lead to further designations, for example SSSI designation and what will the effect of this be?
  • How secure will any payments be?  Or will this be the usual mish-mash of using a shorter-term scheme (e.g. HLS) to achieve longer term goals (e.g. Water Level Management Plans with a 100 year timescale)?

Systemic solutions for landowners, farmers and land managers need to be an excellent fit with long-term farm or estate business plans, inheritance and succession as well as short term requirements like farming, tenure and the need for a secure income.  In short they should offer a solid business opportunity rather than another short-term ‘scheme’.

The workshop was the first of a pair, with the second due in May or June in the form of a field visit in Gloucestershire.  It was organised under the auspices of the Environmental Sustainability Knowledge Transfer Network, by the University of West of England, the Royal Agricultural University and with support from the Landbridge Network.

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