Valuation: Cross-roads or cul-de-sac?

This was the title of my presentation at the RICS Wales Rural Conference held on Tuesday 9 December 2014 in Llandrindod Wells.  Here are the slides.

The contrast between the complexities of valuing woodland for taxation purposes and renewable energy installations is meant to indicate the broad sweep of the challenge facing the modern rural valuer. This is a challenge which is likely to be become broader and more complex with the need to consider the valuation of natural services and capital. Equally the accountability of valuers is only set to grow as the two case updates demonstrate.

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Land tenure, soils and soil management under short-term occupation

RICS Land Journal, November/December 2013, has published an article by Gwyn Church, Ian Mackenzie and me on the links between short term tenancy arrangements and soil management by farmers.  Gwyn and Ian researched this for their final year dissertations at Harper Adams.  Gwyn explored Sussex and Ian explored Staffordshire.  They came up with some surprisingly different findings.  The full article can be read here:

RICS Land Journal Nov 2013

Green Food Report: Land Tenure is a missing link

We are overlooking the importance of land tenure in trying to map the future balance between food production and the environment.

Defra (Department for Environment, Food and Rural Affairs) has published the conclusions of its Green Food Project today (Green Food Project Conclusions, July 2012).   Further reports are also available from Defra, on its Green Food Project website.  There are also reports on wheat, bread, dairy, curry and three geographic studies at farm, catchment and landscape levels.

Land management will need to be based on a very broad view of the requirements of society and the environment, while also being much more focussed on the particular attributes of individual sites.  This will be a particular challenge for policy-makers in the design of incentives and other instruments with which to influence long term and day to day land management decisions.

The report stresses the importance of a number of issues which in my view need to be highlighted in relation to land tenure.  These include:

  • The importance of long-term decisions by farmers
  • Investment requirements and security
  • Payments for nature’s bounty: ecosystem services and their valuation
  • Land management and its fundamental importance
  • Effective structures for businesses, markets, supply chains
  • The difficulties facing new entrant/young farmers seeking investment and land

Yet nowhere in all this is the importance of land tenure recognised or discussed to any extent – the closest we seem to get is in paragraph 4.29 where there is mention of contract farming in the context of consolidation in farming.  To highlight how land tenure is important to these points, consider this:

  • If a farmer occupies land under short term arrangements, what incentive does he have to consider longer-term measures?
  • Secure tenure and underlying property values are often of the greatest importance in securing funding, and to the terms on which that funding is made available.
  • To whom should payments for ecosystem services be made: landowners, or occupiers under traditional grazing rights, tenancies, or licences?  And how should they be divided between these parties.  There is already a strong view that tenant farmers in the uplands miss out on a number of environmental schemes for example.
  • Land management has to start with fundamental considerations of tenure – this is the basic foundation on which land use and management decisions are made.
  • Effective structures therefore also need to deal with land administration, tenure and management structures
  • The new entrant/young farmer problem is a complex one involving economics, risk and tenure – but questions over availability of land inevitably revolve around related considerations of tenure, value and returns.

Some of these points were recently highlighted in a Farmers Weekly article on ‘Quarry Farming‘ by Ian Pigott, himself a farmer, arguing that high rents for short term agreements lead to exploitation rather than stewardship.  Ian’s perspective is certainly not the only way to look at this problem, but it does again emphasise the importance of land tenure in short and long term food security, environmental protection and business development.

Internationally the fundamental importance of land tenure governance has been well recognised – see for example the United Nations FAO (Food and Agriculture Organisation) Voluntary Guidelines on responsible governance of land tenure, endorsed by the FAO Committee on World Food Security on 11 May 2012

The UK is currently leading the way in the development of new approaches to ecosystem services, food security and environmental sustainability issues over carbon and water.  But we are now lagging in their relationship with land tenure.  We are in danger of overlooking the fundamental importance of land tenure and the basic workings of land markets to both security and sustainability.