Louise Staples is the NFU's rural surveyor.
She writes:
The NFU believes that FBT duration is a very complex subject with many criteria influencing the decision of why landlords are willing to let a farm or a block of land for a certain length of term.
We know from the CAAV survey that the average length is four years, but this is taking into account small paddocks which will greatly influence the length of term. We know from the same survey that more substantive blocks of land are also being let for six to seven years - and that whole farms are being let for an average of ten years.
Before 1995 when FBTs were introduced, landlords had stopped letting land on to the market due to the security provided by AHAs, but with the new terms possible under Agricultural Tenancies Act a large area of land came on to the letting market in 1995. The amount of available land stabilised in 2003, partly due to the influence of CAP including SPS and BPS.
In the years leading up to a new policy, landlords tend to take land back in hand until it is clear how the new schemes will work. This is just one of the factors which affects the lengths of terms land is let for on a FBT.
The NFU does not agree with the TFA view, stated most recently at a House of Lords debate this week, that FBTs have failed to create economic efficiency in agriculture. FBTs have allowed farmers to expand their businesses by taking on an extra block of land and in doing so spreading their costs and having a more viable unit. As we say above, it has greatly encouraged more land to be let.
It has increased some opportunities for new entrants, but not enough. The NFU, though, believes FBTs alone cannot be expected to be the one solution for new entrants.
New entrants are always going to find it difficult to compete with established businesses.
We also think that landowners using share farming, contract farming and share partnerships or grazing licences are vitally important within the industry because all these different types of agreement along with different lengths of FBTs allow the sector to have greater flexibility to meet the needs of many different agricultural businesses. These types of arrangements do need entrepreneurial input and management control.
Where we do agree is that it would be beneficial to see more land being let on the open market for a longer term. This allows the tenant to invest in the holding and also establish a viable business with returns. The NFU is also only too aware of how longer term tenancies promote tenants’ investment in the land, in maintaining and manging a good quality soil structure. It is now common to see soil management being introduced into new tenancies.
The NFU does not agree that there should be a minimum term of ten years - but flexibility must be kept with different lengths of terms and different types of agreements being available to meet all landlords and tenant requirements.
To do this it is not just about changing how taxation works on land which is owned and occupied, as this is only one factors and there are others, as mentioned above, which affect land being let on the open market and the length of term.
All the factors need to be looked at together; changing only one factor like tax may do more harm than good. The NFU agrees that tenure duration does need to be looked at to achieve more sustainable businesses and when a new tenancy is being set up, both parties need to show what they are trying to achieve.