autumn 2013 from the chairman in this issue

stfanews AUTUMN 2013

In this issueFrom the ChairmanP 2 From the Chairman – continued New Professional Member

P 3 STFA Field Day 2013 Autumn Member Meetings Register your interest to buy land

P 4-5 Government Review of Agricultural Holdings

P 6 Attention – all Limited Partnership Tenants Sport, Game Damage and the Tenant Farmer

P 7 Practitioner’s guide to Scottish Agricultural Rent Reviews

P 8-9 Hamish Lean (Stronachs) – Arbitration as a means of resolving landlord and tenant disputes

P 10-13 Director Profile – Gilbert Bannerman

P 14-15 We bought our farm

P 16 Land Reforn Update Little Progress for Small Landholders

P 17 Waters under pressure – Working to protect and improve Scotland’s water environment

P 18-19 Cap juggernaut trundles on P 20 Useful Information Membership Matters

Looking at our rainfall records, this is the first August since 2005 on our farm with below average rainfall for the month, and is a pleasant contrast to August last year which produced over double the average.

Though yields have been affected by the weather at the start of the season, harvest to date has been easier than recent years. While last year combines in this SW area stood idle for weeks waiting for good weather, this year they are standing idle awaiting late crops to ripen. We hope the better weather continues into September to allow harvest to finish, and trust that the rest of Scotland is making better harvest progress than this time last year.

The shows have been busy this summer, and following the Cabinet Secretary’s announcement at the Highland Show, the subject of ARTB and the promised review of Agricultural Holdings legislation has dominated conversations. This year STFA had a stand at the Dumfries show for the first time, and we would like to thank all those who helped out on STFA stands during the season. STFA members also attended the Community Land Scotland Conference held on Skye in June, which focused on community ownership and provided quality debate on land reform issues.

In this newsletter Angus McCall provides an overview of the Government’s Review of Agricultural Holdings and explains the policy being developed by STFA. Scotland’s tenanted sector is under the spotlight not just from the Review of Agricultural Holdings, but also from the Land Reform Review Group and the Scottish Affairs Committee in Westminster. An update on land reform goes into greater detail. See page 16

The Tenant Farming Forum have been working through the current legislation looking for problem areas and possible solutions, and will present the findings in time for the Review of Agricultural Holdings.

The TFF are unlikely to reach a consensus on some topics, and it will be up to politicians to take the lead. Recently the TFF have made progress by publishing a Guide to Good Practice at Rent Reviews, and will soon publish a Practitioners Guide and a Lay Person’s Guide to Rent Reviews which should encourage better practice from agents carrying out reviews. More on these publications on page 7

SAAVA have also been working with the TFF to develop a short-form process of arbitration which was launched earlier in the summer. On page 8 Hamish Lean takes us through the advantages and shortcomings of the new arbitration process as a form of alternative dispute resolution.

This is the time of year game birds are released from rearing pens, and as the intensity of reared game increases on some estates, tenants are reporting more problems with game damage to crops. The current Code of Good Shooting Practice is lacking on areas of conflict with agricultural tenants and requires development to ensure that farming interests are respected. One member with a herd of sucklers has calculated that in recent years, in terms of Livestock Units, his holding has supported more pheasants than cows! More on page 6

Under the provisions of the Crofting Reform Act 2010, small landholders should be able to convert their holdings to croft status but in doing so are facing a lengthy and costly legal process. STFA are asking the Scottish Government to look for a fairer solution. See page 16 for more details

Given the on-going debate over ARTB, one of our directors, Gilbert Bannerman, writes about the history of his holding and puts across his view on ARTB on page 10. We also have profiles from some former tenants who have bought their holdings in the last decade.

Many photographs courtesy of Hutchinson Photography – www.farm-images.co.uk

STFA Field DayThe future for many limited partnership tenants is currently in a state of limbo as a result of the Supreme Court’s judgement on the Salvesen Riddell case. Scottish Government will be making contact with tenants this month to determine the extent of the problems. STFA are working with officials to find solutions which are fair to the parties involved. See page 6

Last but not least, Alan Boulton looks at the options for the implementation of the reformed CAP in Scotland. STFA remain concerned that a return to an area based payment will provide a strong incentive for landlords to take land back in hand to the detriment of the tenanted sector. Read more on page 18

Visit the Scottish Tenant Farmers Website: www.tfascotland.org.ukVisit the Scottish Tenant Farmers Website: www.tfascotland.org.uk2 3

By Christopher Nicholson

From the Chairman – continued from page 1

The Scottish Tenant Farmers Association (STFA) is pleased to announce the recent appointment of Richard Brown as a Professional Member to further increase the level of support and advice available to its members.

Having previously worked in North Yorkshire and South Northumberland, Richard Brown left Hexham Auction Mart in October 2012 to establish his own firm of Chartered Surveyors; Richard Brown & Partners.

Whilst acting predominantly for tenant farmers handling rent reviews, successions and end of tenancy work, the company undertakes a broad variety of other jobs. Since October alone, the company has handled the valuations of two large hefted hill flocks, prepared and negotiated

numerous utility compensation claims, been successfully involved in a planning appeal as well having prepared a number rental tenders. The business also offers advice on single farm payment and stewardship as well as an entitlement trading service.

From an agricultural background, Richard remains actively involved with the family’s tenanted farm near Berwick upon Tweed and makes the comment that, “having a sound agricultural knowledge is absolutely vital in my business and coming from a farming background gives credibility and reassurance to clients.”

With this background Richard specialises in acting for tenant farmers and is proud of the reputation he has built up in this

sector to date. Already a “Recommended Professional” for the Tenant Farmer’s Association, Richard is delighted to have now been appointed by Scottish Tenant Farmers’ Association (STFA) as a Professional Member.

Richard remarks; “now based in north Northumberland, my client base naturally spreads into the Borders and southern Scotland and I think my future association with such an excellent body as the STFA will help me ensure I provide as good a service to my clients as possible.”

For up-to-date information and to see all of the services offered please keep an eye on the firm’s website:

www.richardbrownandpartners.co.uk


Scottish Tenant Farmers Association

Appoint a new Professional Member

New chairman Christopher Nicholson meets a new friend at the Highland Show

Congratulations must go to STFA Director and stalwart Alastair Nairn for being honoured by the Speyside Farmers Club for his contribution

to agriculture pictured here relaxing with Richard Lochhead and Angus McCall after the presentation.

Contribution to Agriculture Award

2013 Autumn Member Meetings –To discuss Agricultural Holdings ReviewTenants Right to Buy; Rent Reviews; Tenants improvements and Waygo; Succession and Assignation; Limited Partnership Tenancies and other issues

Come along and help shape the future!

Meeting in Islay late Sept / early October – to be arranged – all members to be notified by mail.

Mon 28th October Fairways Golf Club, InvernessTues 29th October Porterhouse Restaurant, ThainstoneWed 30th October Huntingtower Hotel, PerthThur 31st October Kingarth Hotel, ButeMon 4th November Buccleuch Arms, St Boswells

Tues 5th November Urr Valley, Castle Douglas

All meetings start at 7.30pmNon-members welcome and can join on the night.

Members should remember their registration of interest to buy land is valid for 5 years after which they have to re-register their right to buy land. STFA has managed to get a commitment from the Registers of Scotland to issue reminders, but they are not obliged to do so and it is up to the individual to kep an eye on his registration.

Guidelines: • TheonusisontheIndividualtorenewtheirregistrations.• Re-registeringissimple;theformisidenticaltothefirstone and self-explanatory. No further details are needed unless there have been changes.•Asbefore,acopymustbesenttothelandlord•There-registrationfeeis£25•RoSestimatethatitwilltakeaweektoprocessthere-registration.•Ifyouletyourregistrationlapsearenewalapplicationcanstill be made after the expiry of the five-year period but there will be a gap during which time the pre-emptive right to buy will not apply if the landlord sells the farm.

STFA has had conflicting reports about the availability of registration forms, but they are available online at www.ros.gov.uk/pdfs/agt_notice.pdf. Click on the link and you can download a form. If in doubt, give STFA a ring on 01408 633275

If you have not already registered your interest in the pre-emptive right to buy land, you should consider doing so. Registration for the first time costs £40 and is valid for five years.

Remember to – Register yourinterest to buy land

Senior Winner of acronym STFA competition was Murdo Ballantyne, Clynelish Farm, Brora, Sutherland with “Shekels To Fund Active-retirement” – winner of a tea towel!

Junior Winners of the colouring competition “Decorate beltie’s belt”: 1.EilidhFrenchofrossknoweFarm,Crawfordjohn,Biggar,Lanarkshire.2. LiamGibbonofEasterCottage,Tornaveen,Torphins,Aberdeenshire.3. LouisaStoddartofCoulstonMains,Haddington,EastLothian.

Prizewinners will soon receive their easy care border collie prizes in the post.

Junior and Senior ShowCompetition winners

To be held at:ARNPRIOR FARM,

Nr Kippen, Stirlingshire, FK8 3HA (By kind permission of the McEwen family)

Farm Walk followed by lunch and discussionattheKippenVillageHall

11.00am Friday 18th October 2013

To reserve your place: Contact STFA:

01408633275 / [email protected] let us know of any dietary requirements

Reservations will be taken on a first come first served basis.

All members welcome A view of Arnprior Farm

...the Cabinet Secretary announced that the forthcoming

review would also provide an opportunity

to discuss the introduction of the

absolute right to buy...

in holdings, tenants improvements, waygo compensation, succession and assignation as well as a raft of ongoing concerns that will inevitably come to the fore. Many of these will have been considered by the Tenant Farming Forum, but there are a number of important areas where consensus will not be reached and it will be up to the Cabinet Secretary to make a decision where there are fundamental differences between landlords and tenants.

Rent reviewsAlthough STFA is broadly in agreement with some of the recommendations of the Rent Review Working Group – for example, codes of conduct, the practitioner’s guide and the move towards easier dispute resolution, we fundamentally disagree with the Group’s opinion that the rent review formula remains unchanged.

Despite SL&E’s and land agents’ protestations to the contrary, the current premise that rents should be based on open market comparables is flawed. Although landlord and tenant may agree to settle the rent informally, if a disagreement arises and the rent falls to be determined by arbitration or a Land Court hearing, the bottom line is that the rent would have to be valued following Lord Gill’s interpretation according to the open market principle, (the rent the farm would be expected to fetch on the open market, subject to various adjustments) – a sure-fire recipe for unsustainable rent hikes.

STFA is determined to maintain the pressure for change to the rent test so that rents are primarily based on what the farm can produce. This view is widely shared by almost everyone else in the industry (apart from landlords and their agents)anditsamajorfrustrationthattheRRWGweresooutofstep.Itisnowveryimportant for all tenants to make this point forcibly during the government’s review as this really is the last chance saloon.

SuccessionEvery year there are a number of heritable tenancies brought to an end because there is no eligible successor. Although the class of near relative entitled to inherit a tenancy has been expanded to include grandchildren there will be many other close relatives who may have an equally valid claim to a tenancy; brothers and sisters, nephews and nieces and even cousins.

Consequently, a tenancy which may have been in the family for generations can be lost just because the natural successor is not a close enough relative. Inevitably there will then be a struggle for the family to recover adequate compensation for their long term investment in the farm. Moreover, once taken back in hand, most of these tenancies will not be relet on anything but a short-term arrangement.

STFA believes the “near relative” restriction should be removed to allow a broader range of family members to inherit the tenancy.

Creating tenancy opportunitiesExtending assignation rights to a tenancy to wider family members or to non-family members is almost as contentious as ARTB, but it could well provide a route into more secure tenancies for new entrants and existing tenants wanting to climb the farming ladder, by creating share farming opportunities, for example.

There is a general reluctance of landlords to let out land and if the tenanted sector is not going to stagnate further we must look for another source of available land. Richard Lochhead has been doing what he can with Forestry Commission Starter farms and he has said that his officials will examine their property portfolio for more opportunities.

The recent announcement that the department bull stud at Knocknagael near Inverness is to be converted into a starter farm is most welcome and we await further developments.

The area of rented land has been falling (1million hectares over the last 30 years). It is now time to look to ring fencing tenanted land with a view to ensuring that where there is no successor to a retiring tenant, the land is relet on a new tenancy. This could be achieved by introducing assignation to non-family members or by registration of tenancies with a requirement to relet, as is still the position with Smallholding legislation.

If the tenanted sector is to thrive, it must be in the public interest to ensure a continuing supply of let land and STFA is exploring ways of doing this.

During the Highland Show the Cabinet Secretary announced that the forthcoming review would also provide an opportunity to discuss the introduction of the absolute right to buy (ARTB) for tenant farmers as a possible way forward for the tenanted sector. This, along with some equally radical alternatives, will form part of the review and it is to be hoped that it will attract some rational discussion on the future of the land tenure system in Scotland.

Cabinet Secretary Richard Lochhead has said that he will be taking charge and will be announcing the remit of the review in the next few weeks and how he intends to carry it out. Early indications are that the review will be undertaken by an advisory group appointed by ministers, it will start this autumn and will not be completed until the end of 2014 with a view to meeting the deadline of possible legislation before the end of this parliamentary session in 2016.

The work of the group will take place outside the Tenant Farming Forum and all stakeholders and interested parties will be encouraged to contribute and submit evidence. The eventual report will be very much evidence based, both from individuals and from government research on the tenanted sector. It will examine the impacts of implementing ARTB on landlords, tenants, the taxpayer and the wider economy; review land tenure systems in other countries; and assess the impact of taxation on tenant farming and the land tenure system.

The government will be undertaking a detailed survey of tenant farmers over the coming months and it is vitally important that tenants respond. The review will be the main topic of STFA autumn meetings,sothatwecanheartheviewsofmembers,wewillalsobecarryingoutour own survey to ensure that we fully represent the views of our members. STFA has already submitted a briefing paper to government setting out some of the areas we would like to see examined and a range of possible alternatives.

ARTB will be discussed in great detail and we are pleased that the government intends to carry out research into the legal, economic and social impacts of introducing ARTB. As things stand, it is very difficult to take a reasoned position on the subject without having more facts available, particularly to whom it might apply.

However, when all is said and done, the decision whether or not to implement ARTB will be a political one and it should be taken in the context of the Land Reform Agenda. Although the Land Reform Group is not looking at tenancy issues, we hope that they will look at land tenure and the over-arching impact that ARTB would have on the landowning structure of Scotland.

As well as looking at big picture land tenure questions, STFA would like to take the opportunity of the review to settle some of the outstanding day to day tenancy issues such as rent reviews, investment


Government Review of Agricultural HoldingsThe review of agricultural legislation promised in the SNP manifesto is now beginning to take shape. The feeling of widespread dissatisfaction from the tenanted sector over the last few years has not gone unnoticed and the scope of the review has been dramatically expanded to encompass a root and branch examination of how the tenanted sector is currently working, what improvements could be made to the operation of existing tenancies and how government ambitions could be met to encourage more land to be let and create greater opportunities for new entrants.

By Christopher Nicholson By Christopher Nicholson

Submission of evidenceIt has been made clear that theoutcome of the tenancy review will be evidence based and so it is important that we produce evidence justify the changes we wish to be made. Individual tenants must also be prepared take part in this process.

Cabinet Secretary Richard Lochhead has said that he would like to see case studies of tenants’ situations and hear their views so that he can understand the arguments being put forward and use this knowledge to justifyhisdecisions.

STFA will be asking members to get involved in this and will be contacting individuals over the next few weeks.

If you would like to take part in this please contact:

Angus McCall tel. 01408 633275 email. [email protected]

Any individual’s views or evidence will be treated in absolute confidence by us,RichardLochheadandhisofficials.

Although STFA is broadly in agreement

with some of the recommendations of the Rent Review Working Group...... we fundamentally disagree with the

Group’s opinion that the rent review formula

remains unchanged.

STFA is determined to maintain the pressure

for change......It is now very important for all tenants to make this

point forcibly during the government’s review

as this really is the last chance saloon.

The competing interests of sport and agriculture are a constant source of irritation and often conflict on many tenanted farms which can flare into open warfare at certain times of the year. At this time of the year newly released pheasants are relishing their freedom and, unless fed away from crops will inevitably rampage through ripening fields of cereals or newly sown winter crops, often causing damage. Later on in the year they may haunt feed rings and calf creeps much to the annoyance of the farmer and during the winter unless handled sensitively shooting parties can be the source of bad relationships between the landlord, his gamekeepers and the tenant.

Generally speaking, the impact of game sports is felt most acutely on lowground and upland farms where pheasants are introduced into rough cover to provide shooting for sporting tenants. The occupying tenant farmer, depending on the farm to make a living, understandably feels that agricultural production is the main purpose of the lease and sporting activities should take second place and fit in with farming practices.

Problems have increased in recent years as the income from sport has become more important to landowners and pheasant numbers have risen. Over-enthusiastic gamekeepers, eager to provide good sport for their clients can make matters worse. The law provides redress for game damage to crops but the conflicts between agricultural and sporting tenants are less easy to resolve and relationships are dependent on adherence to codes of conduct.

However, although the TFF guide to Good Relationships provides some advice on relationships between the shooting tenant and the agricultural occupier, the Code of Good Shooting Practice is deafeningly silent on the matter. This Code has been drawn up and is recommended by landowning and sporting organisations but, although it has plenty to say about respect for the countryside and the welfare of the shooting quarry, nowhere is there any mention that the sport is taking place over another person’s workplace whose interests also have to be taken into account.

We will have to ensure that as the shooting season approaches sporting landlords treat farming interests with consideration and respect, make good any game damage promptly and make sure that the sporting activity takes place within clear guidelines agreed at the start of the season. I am sure that in return tenant farmers will be prepared to co-operate with the sporting enterprise and arrange farming activities accordingly.

One thing is certain, shooting interests cannot be allowed to run roughshod over farming businesses.


Practitioner’s guide to Scottish Agricultural Rent Reviews

The Rent Review Working Group was set up in 2012 to look at how farm rents are set in Scotland, and to recommend changes to improve the rent review process. In summary, the Group’s recommendations were:

• Nochangestotherenttestcontainedin Section 13 of the 1991 Act,

• Improvingaccesstocomparablerents through the establishment of a rent register maintained by an impartial body,

• ImprovingunderstandingoftheSection 13 rent test by developing a Practitioner’s Guide, a Lay person’s Guide, and a Guide to Good Practice.

STFA fundamentally disagree with the RRWG’s first recommendation that there should be no changes made to Section 13 of the 1991 Act, however we are broadly in agreement with the other recommendations which should limit some of the inappropriate practices seen at rent reviews.

No progress has been made to date in the development of an impartial rent register due to concerns over cost and Data Protection Legislation. Access to comparable rents is essential to a rent review procedure that relies on them, and the impartial rent register was an important recommendation of the RRWG. If such a rent register is not to be developed then it is unlikely that rent reviews will work as envisaged by the RRWG. Given that we are unlikely to see the development of an impartial rent register, it is vital that STFA members continue to submit details of rent reviews to the STFA database.

However, progress is being made in the development of rent review guidance.

The ‘Introduction and Guide to Good Practice at Farm rent Reviews’ was published in May 2013 and should now be included with all rent notices served. The document sets out time scales for rent reviews in order to avoid negotiations being left to the last minute.

The Practitioner’s Guide and an abbreviated version, the Lay Person’s Guide, are currently in draft form and should be published by October 2013. These documents are being drafted by Jeremy Moody of the CAAV who has in the past drafted equivalent guidance for English rent reviews.

At over 180 pages, the draft Practitioner’s Guide is 60 pages longer than the English version which may be an indication that the Scottish rent test is more technically challenging. Much of the Guide focuses on recent case law, in particular the Moonzie

case which was the first rent review determination by The Land Court since the 2003 Act, subsequently appealed to The Court of Session and heard by Lord Gill. It will be the first guide to be published on Scottish rent reviews since the 2003 Act

The draft Practitioner’s Guide is broad in scope and content. As expected, it includes chapters on marriage value, scarcity, comparables (both open market and sitting tenant), budgets, and tenant’s improvements. It also addresses some of the grey areas such as houses and cottages, SFP and grants, environmental schemes, diversifications, and small units, and details all the options available for dispute resolution.

Reading the Draft Practitioner’s Guide it is clear that rent determinations have been greatly changed in the last decade due to the introduction of the new limited duration tenancies and the case law provided by Lord Gill in the Moonzie case. The purpose of the Guide was to add transparency and consistent methodology to the rent review process, but this is difficult to achieve given the complexity of the law and the abstract concepts of marriage value and scarcity which play an increasingly important role in determining rents.

The Guide works through all the adjustments required to arrive at a sitting tenant rent having started with an open market comparable. However, with the increasing number of adjustments needed, and their increasing order of magnitude, it is difficult to imagine that an arbiter can arrive at the correct sitting tenant rent other than by sheer luck having worked through the complexity of adjustments. Given the difficulties involved in setting a rent through analysis of open market lettings, the Guide covers other admissible evidence including sitting tenant comparables and farm budget evidence.

Following the publication of their recommendations, the RRWG were keen to reassure tenants that Lord Gill’s findings in the Moonzie case had not signalled a step change in the way rents are set. However, since Lord Gill’s decision, and with SLDTs becoming the main vehicle for new lets, the rent review process for many tenants has become a clumsy and lengthy process to arrive at a sitting tenant rent from the evidence of open market SLDTs. In recent years it has become common for landlord’s agents to ignore evidence other than open market lettings. The main benefit of the Guide as far as tenants are concerned is that it directs an arbiter to look at evidence beyond the open market and shows how to use sitting tenant comparables and farm budgets as evidence in a rent review, which all contribute to the task of arriving at a reasonable rent figure. We hope that the Practitioner’s Guide, used in conjunction with the Guide to Good Practice, will put an end to the increasingly common practice of landlord’s agents seeking last minute rent rises and offering only SLDTs or LDTs as comparable evidence

The author has made a good attempt to guide an arbiter through the complexities of the Scottish rent review process, and the draft addresses subjects in great detail, though some important areas such as scarcity remain largely unexplored and difficult to define. While adding understanding to the current rent test, the Guide is unlikely to allow rent reviews to be simpler and less costly, and the reader can only question whether the law surrounding Scottish rent reviews is fit for purpose in the 21st century.


All tenants will be receiving a letter from Cabinet Secretary Richard Lochhead in the next week or two asking them to get in touch with government officials if they have been involved in a Limited Tenant partnership agreement over the last 10 years.

The government is in the process of trying to find a remedy for the mess that has arisen as a consequence of the UK Supreme Court’s ruling on the Salvesen Riddell case. The government are working to a strict timetable with a view to being able to legislate in the Spring of 2014 having completed the statutory consultation processes.

Readers will remember from Hamish Lean’s article in the last newsletter that, in a landmark judgement this spring, the UK’s highest law court confirmed that the provision in S72 of the Agricultural Holdings Act in 2003 contravenes ECHR and is outside the competence of the Scottish Parliament. S 72 set out to give additional protection to tenants in Limited Partnerships and sparked off a spate of notices to quit served on general partners in these tenancies in what became known as the “Night of the Long Knives” on 3rd February 2003.

In making its ruling the Supreme Court granted the Scottish Government a year’s

grace to consult the industry and work out a remedy within the 2003 Act which would be compliant with ECHR. As part of this process the Cabinet Secretary would like all farmers involved in Limited Partnership tenancies to contact his officials with details of their circumstances.

STFA is playing a major role in assisting the government in seeking resolution which will be as fair as possible to all parties.

Anyone who would like more information should contact:

Angus McCall: 01408 633275 Eddie Henderson: 01577 862566

Attention – all Limited Partnership Tenants

Sport, Game Damage and the Tenant Farmer

Visit the Scottish Tenant Farmers Website: www.tfascotland.org.uk8 Visit the Scottish Tenant Farmers Website: www.tfascotland.org.uk 9

Accredited Agricultural Law SpecialistStronachs LLP, 34 Albyn Place Aberdeen AB10 1FW

Tel: 01224 845845 E.mail: [email protected]

ByHamishLean

Arbitration as a means of resolving landlord and tenant disputes

The starting point for the discussion is Section 60 of the Agricultural Holdings (Scotland) Act 1991. In essence, Section 60 provides that all disputes between an agricultural landlord and tenant except for issues which have to do with the inheritance of a deceased’s tenant’s interest in the tenancy are to be referred to the Scottish Land Court. However, Section 61 provides that if the landlord and tenant agree then they can have the matter between them determined by arbitration. A landlord and tenant are prohibited however from having some disputes resolved by arbitration.

Prohibited disputes include any dispute in connection with the making of a Record of Condition, any issue to do with the inheritance of a tenancy, any issue to do with a Notice to Quit, any issue to do with a Certificate of Bad Husbandry, any issue to do with a partial Notice to Quit, any issue to do with whether or not a proposed improvement is a suitable and appropriate improvement, any dispute with regard to whether or not a holding is to be treated as a market garden and issues arising from time limits for compliance with Notices to Remedy and subsequent Notices to Quit.

If the parties do agree to refer their dispute to arbitration (and they cannot be obliged to do so) Section 61A of the 1991 Act applies which provides for a right of appeal on a question of law from an arbiter’s award within 28 days of the award being made. SAAVA’s short-form arbitration procedure is governed by the Arbitration (Scotland) Act 2010. The 2010 Act states that where existing legislation expressly provides for arbitration the provisions of the existing legislation will override any contrary provisions within the 2010 Act. This is an important point because the arbitration rules

set out in the 2010 Act provide for an appeal on a point of law from an arbiter’s decision to the Inner House of the Court of Session but only if the parties agree to the appeal taking place or where the aggrieved party makes an application to the Court and the Court decides that the matter is suitable to proceed to appeal.

These appeal rules do not apply to the SAAVA short-form arbitration where an appeal by either party is available to the Scottish Land Court but solely on a point of law.

Section 61 of the 1991 Act also provides that arbitration includes any other method apart from arbitration for resolving the matter i.e. by reference to an expert for an expert determination. An expert determination falls out with the scope of the 2010 Act. It would also appear that there is no explicit right of appeal from an expert’s determination. Such a determination can certainly be a quick means of sorting out a dispute but the expert is entitled to rely on his own knowledge without disclosing it to the parties and is entitled to make a decision without issuing full written reasons. In the absence of a right of appeal my own view is that expert determination should be treated with caution and is probably best suited to disputes where the stakes aren’t particularly high. The SAAVA short-form arbitration rules and application forms etc. are available on their website (www.saava.org.uk). SAAVA rules provide for arbitrations being conducted by a sole arbiter (referred to in the rules as an arbitrator). For the purposes of this article “arbiter” and “arbitrator” are one and the same thing. As an aside and as a Scottish lawyer, it is unfortunate that the 2010 act makes

Earlier this summer the Scottish Agricultural Arbiters and Valuers Association launched a short-form process of arbitration which an agricultural landlord and tenant can use to resolve any differences between them in respect of the tenancy. This is an attempt to solve the problem of how to deal with agricultural tenancy disputes without going to the Scottish Land Court and avoiding the expense and delay which that can cause. In this article, I want to have a look at the new short-form arbitration as promoted by SAAVA and to comment on whether or not it will be an effective means of resolving disputes in a quicker and cheaper way than going to Court.

Free Legal Helpline

Stronachs LLP, 34 Albyn Place, Aberdeen AB10 1FW www.stronachs.com

Our Agricultural law team provides legal services to the local, regional and national community and are proud to represent many Scottish farmers.

• Farm Purchase & Sales • Succession• Farm Tenancies • Arbitration & Land Court Disputes• Rent Reviews • Litigation

STFA members can obtain expert legal advice on agricultural law issues by telephoning Hamish Lean or Emma Robertson on 01224 845845. Members are entitled to up to 30 minutes of time with a solicitor without charge dealing with their query. Opinions are not able to be given in writing and are without liability.

Stronachs LLP provides a full range of legal services including Asset Protection, Wills, Trusts, Executries, Corporate, Residential and Commercial Property, Woodlands and Freshwater Fishings.

Hamish LeanAccredited Agricultural Law Specialist


Emma RobertsonSenior Associate


use of the term “arbitrator” whereas in Scots Law prior to the Act the proper term was “arbiter”! A joint application must be made to SAAVA with an administrative fee of £150. SAAVA then have a period of ten working days within which to identify and appoint a suitable arbiter who does not have a conflict of interest.

When appointed, the arbiter has the power to request the parties to pay a reasonable deposit against his fees and must issue his proposed terms of business setting out how he will charge his fees and if possible to identify a fixed fee. If the parties and the arbiter cannot agree the terms of business the matter can be referred to SAAVA.

The arbiter is under a duty to act in an impartial matter and to be independent of the parties and the arbiter and the parties are obliged to conduct the arbitration without unnecessary delay and without incurring unnecessary expense.

Fourteen days after having been appointed the arbiter has to issue directions concerning the conduct of the arbitration. These will provide for a Statement of Claim to be issued by both parties within fourteen days which should include all evidence including witness statements, documents, photographs or other information. The Statement of Claim is to be copied to the other side. Both sides then have fourteen days from receipt of the original Statement of Claim to lodge a Statement of Counter Claim answering any points raised against them in the other side’s Statement of Claim. The arbiter has power to allow the parties to adjust their documents thereafter.

It is for the arbiter and the parties to decide whether or not he should issue his decision based on the documents only or to have a hearing. However the arbiter does have discretion to order a hearing of evidence if he considers it necessary in order to reach his decision. He has power to make unaccompanied visits to the site for his own purposes.

He must issue his award within fourteen days of having received the last documents or submissions in the case or at the close of any hearing if a hearing was fixed or after a site visit after he has considered the documents or after a hearing has taken place. The arbiter has power to extend that deadline by seven days but can only extend it thereafter if both parties agree and the arbitration award “shall include the arbitrator’s succinct reasons for his award”.

If the parties have agreed that the arbiter has power to award expenses the arbiter can make an award of expenses at his own discretion and can take into account any settlement offers which might have been made. These expenses will include the arbiter’s own fees and expenses, the parties legal and other expenses in the arbitration and the fees and expenses charged by SAAVA. Although not contained within the rules themselves, there is a power of appeal on the part of an aggrieved party, on a point of law only, to the Scottish Land Court to be made within 28 days of the issue of the award.

There is no power within the rules by which the arbiter can refer a question of law to the Scottish Land Court or any other Court for an answer prior to making his or her award. Likewise there is no express provision within the rules for the arbiter to appoint a legal clerk for legal guidance. This is not expressly prohibited by the rules but could only be done as a matter of agreement between the parties to the arbitration itself. It is hoped that arbiters generally

won’t feel the need for a legal clerk and that the parties will be reassured that they have a right of appeal on a point of law to the Scottish Land Court if the arbiter does make a mistake in applying the law to the dispute which is the subject of the arbitration.

Whether or not voluntary arbitration along these lines will be a success will depend very much indeed on the level of commitment and engagement which all parties have to the process. Although tight timescales are imposed by the rules, there is scope for these time limits being extended as will almost certainly prove to be necessary from time to time in the real world. Also, if as a party to such an arbitration you find out that the other side has engaged a solicitor and land agent to assist them with framing their Statement of Case to the arbiter and answering your own Statement of Case will you then feel it necessary to do likewise? Much will also depend on the professionalism of the arbiters and the quality of the decisions which they make. If the process fails to command the confidence of either side of the industry it is likely to fail.

Also I have to point out that when agricultural disputes were made subject to the jurisdiction of the Land Court as the Court of first recourse in 2003, as opposed to being dealt with by arbitration, which was widely seen at that time as having become very expensive and cumbersome, it was hoped that this would lead to such disputes becoming quicker and cheaper to resolve. It seems to me that the circle has now turned completely and I can’t help but wonder if in ten years’ time we’ll be listening to arguments about why agricultural tenancy disputes should be sent back to the Land Court!


By Gilbert Bannerman

DIRECTORPROFILE

I took over the tenancy of Old Manse Farm on the east shores of Loch Lomond when my father passed away in 2008. I live here with my wife Sheila and daughter Iseabail Mary who was our new arrival in March this year. Sheila works on a contract basis for RHET and Seafood Scotland, educating school children about where their food comes from she also works part time for the Loch Lomond National Park. My mother, a retired university lecturer, stays with us on the farm as does my brother Seonaidh and his family, with Seonaidh helping on the farm as well as running a fencing business.

In this issue we profile one of our younger STFA directors Gilbert

Bannerman a hill farmer at Balmaha on the shores of Loch Lomond.

Gilbert gives us a flavour of his life as a hill farmer and also his political

beliefs as a keen Nationalist and Land Reformer.

Above: Gilbert with wife Sheila and daughter Iseabail Mary

By Gilbert Bannerman

Gilbert Bannerman –

a view from the hills“we chose Highlanders because they could

be put to the hill for most of the year......The cows are brought off the hill at

New Year and fed silage in the hill parks”

The farm itself is a hill farm made up of 3200 acres of bracken and heather hill and 50 acres inbye. We also rent another 120 acres of better ground to make silage and hay and to summer ewes with twins and 100 ewes with cross lambs and also cattle young stock. The farm carries a stock of approx.1000 Blackface ewes and 60 cows.

The majority of the ewes are kept pure and are on the hill for most of the year, only being brought into hill parks and fields for lambing and tupping. About 100 of the older ewes are kept in the better ground all year and put to a Texel. Fifty of the cows are pure Highlanders which are mainly crossed with a Whitebred Shorthorn and ten put to a Highland bull for stock replacements. Each year we keep some of the cross heifers ourselves to create a herd of around 20 to 30 cows.

We reintroduced cattle to the farm in 1994 after I returned home from being at Agricultural College in Ayr, we chose Highlanders because they could be put to the hill for most of the year and felt that the hill was needing some of the roughage grazed down. They also suited because we had no cattle sheds at that time so any cows would have to be outwintered and easy calved.

The cows are brought off the hill at New Year and fed silage in the hill parks and concentrates are added 6 weeks before calving. We used to keep all the cows pure and would fatten all the bullocks and retail the beef privately and at Farmers’ Markets, doing up to eight markets a month. But as feed costs started to rise and the recession hit the consumer, the profit margin started to be eroded, so we are

only doing a small bit of retailing privately currently. We have turned to crossing the cows and selling the cross heifer calves at speaning time in October at Oban market. We keep the bullocks til March and sell them at the Caley market in Stirling.

The ewes are tupped in mid November to lamb mid April. We scan at the end of February and keep the hill twins in-bye for a bit of extra feeding. We usually bring the ewes off the hill for lambing, but with this years grass growth in the spring being so bad we could only keep the gimmers in, but thankfully the hill ewes managed not too badly on the hill themselves. We keep the majority of ewe lambs for replacements, they are sent to Ochiltree in Ayrshire for wintering. All the wedder lambs are sold store at United Auctions in Stirling.

The farm itself is a hill farm made up of 3200 acres of bracken and heather hill and 50 acres inbye


By Gilbert Bannerman By Gilbert Bannerman

To improve the hill we burn as much heather and spray as much bracken each year as possible both weather and cashflow permitting.

Outside of farming I am a keen supporter of the SNP and am the Chairman of our local branch. Therefore naturally I am keen to see a positive outcome in the referendum in September 2014 which will pave the way for Scotland to become Independent and to flourish again as a nation in it’s own right.

I believe that the SNP have done many good things since they have come to power, particularly for agriculture but the one item I am becoming frustrated with is their lack of movement on Land Reform, which many say is in the Party’s DNA.

I have always had an interest in the subject of Land Reform, probably instilled in me by my father who was not only a farmer but a senior lecturer in Scottish History at Edinburgh University and my mother who comes from the Western Isles where some of the worst atrocities of the Clearances

were carried out during the early 1800’s. Through family discussions and holidays back to the Islands I have found the matters of Scotland’s land ownership of great interest to me and ask, how did we go from a country made up of Clan system with it’s Chiefs and followers looking after the land for the benefit of their own people (admittedly with a bit of murdering and stealing along the way from the neighbouring clans of some better ground, though who couldn’t do with a bit of better land!) to a system where the clan Chief became the Laird with the people and land being used to increase their personal wealth at any cost, to today where 432 people own 50% of Scotland’s Land.

Ironically when I was asked to write this article it was during the commemoration of the 200th year anniversary of the clearances of the Strath of Kildonan in Sutherland (heart of the Clearances) where my Bannerman ancestors had come from. Having returned to Glasgow from the Battle of Waterloo suffering from gunshot wounds, my great great grandfather was told not to go back home to Kildonan

because his family had been cleared to Canada. He died within the year from his wounds. Some reward for fighting for your country that you could not even go home to die because it no longer suited the landlord to have people on the land!

So the question now being how do we put right the wrongs of the past and more importantly how do we secure Scotland’s land for the future for the betterment of rural communities?

Firstly, I am in favour of the Absolute Right To Buy (ARTB), not as a stand alone issue but in the wider context of land reform. It must be used as a vehicle to create a more diverse land ownership pattern along with many other elements for the enhancement and sustainability of rural communities.

I believe ARTB would be of benefit to the individual farmer allowing for greater investment in the unit, a broadening of different diversification streams without the ‘to-ing and fro-ing’ to the factor’s office – simply a freedom to get on with it.

I think that ARTB would have to be well regulated and not seen as a get rich quick opportunity for tenant farmers to sell off the assets of their newly acquired unit. My vision would be that a Land Commission would be set up by the Scottish Government to help administer the ARTB, initially passing and recording farms going through the process.

I realise and can fully understand why some of the New Entrant groups are against ARTB believing that it will reduce the tenanted sector thus limiting the likelihood of them getting a foot on the farming ladder. With a Land Commission set up in such a way that all farms bought under ARTB which come back on the market would be sold back to the Commission. It could then be sold on to a suitable new entrant at its’ true agricultural value and not at an over inflated land value which bears no resemblance to how productive the land actually is on that holding, as is reflected in land prices today.

Another possible way of getting new entrants into farms would be through a share farming system where the Commission could marry up the new entrant with a farmer who is interested in going down this route. Also in this situation there should be planning legislation which allows the retiring farmer to build a house on the farm so that they can remain part of the community in which they have spent their working lives and contributed towards its’ social and economic well-being.

The Commission could also look at some of the public land owning bodies to see what opportunities there might be to set up more starter farm units on some of the unused land they own.

I have to admit that during this period of change there could be a potential for unease through the whole tenanted sector, thus there must be some robust legal measures put in place to offer all tenants a sense of protection, as was attempted in the 2003 act but obviously this must be better put together and able to stand up in court.

As Isaidbefore,ARTBshouldonlybeapart of a wider land reform package with many other elements such as –

1. To own land in Scotland you must be resident on the property for at least six months of the year and pay your taxes in this country. I have no problem with other nationalities owning land here as long as they live and work on it, maybe adding something different to the community, but not to own huge tracts and return it to a wilderness.

2. Better regulation of land that is or has been left for the common good which seems to get squandered away at the moment by Local Authorities etc.

3. A continuation and strengthening of support for the crofting areas to allow more community ownership and carry on the hard work carried out by the Assynt crofters through to the successful buyout of the South Uist estate and all the investment being carried out on the island.

There are also many other facets of land reform that still remain to be explored that I don’t have space for here.

It could be argued that land reform goes against the landowning fraternities human rights. I don’t agree with this on the basis that ownership of a country’s most basic finite resource should not be based on who has or had the most money and influence, but who would work and look after it to the best of their ability for the betterment of local rural communities and a socially just Scotland.

These are wholly my own ramblings and aspirations on land reform, and you may agree or disagree, you may pick holes in them or have much better ideas, be more or less radical. But I hope there is one thing we can agree on that it is time to push the elephant out the room and get on and discuss Absolute Right To Buy and Land Reform out in the open without fear or favour.

DIRECTORPROFILE

To improve the hill we burn as much heather and spray as much bracken each year as possible both weather

and cashflow permitting.


We bought our farm

The percentage of farm tenancies of the total farmed area of Scotland has dropped from 68% in 1940 to 26% in 2011. Whilst that statistic is open to wider interpretation, what is clear is that tenants are a becoming an increasingly rare breed. Buying the family farm has always been a natural aspiration of many tenant farmers and most can name families who have bought their farm. This aspiration is never felt more keenly than where past generations have farmed the land and invested heavily in the stewardship and fixed equipment of the holding over decades. In some cases the duration of the tenancy can run into a century or more and a few tenants can trace their ancestry back several centuries having seen several landlords come and go. However, the chance to buy has frequently eluded tenants – estates nowadays are usually tied up in trusts and sold as a whole and many a tenant has only discovered he has a new landlord in the aftermath of the sale.

The pre-emptive right to buy came into place with the Agricultural Holdings Act of 2003, part of the wider Land Reform suite. This now gives sitting tenants, who have registered their interest, first refusal should the landllord decide to sell, and is governed by a strict valuation process. However the pre-emptive right to buy has done little to dilute the concentration of land tenure in Scotland. Indeed the Scottish Affairs Committee at Westminster has recently published the 432:50 Report highlighting the fact that 50% of the land area of Scotland is still owned by a mere 432 individuals. A fairly staggering statistic considering the Scottish government is the largest landholder in Scotland.

As returns from growing land values outstrip other investments, particularly in the current global recession, there’s a resistance to sell off land assets and this means it is a very lucky sitting tenant who gets the opportunity to buy. However for the fortunate minority most relate that they seized the chance with both hands and never looked back. In this article we have gathered some quotes from those new owners who were happy to share their experiences. We have given them the protection of anonymity for reasons which are clear from the following short narratives.

“We bought the farm five years ago after a bitter and protracted negotiation with our landlord involving way-go compensation. For the first two or three months, this left us and the wider family, feeling completely rung out from stress. This gradually gave way to feelings of utter relief and virtual disbelief that it was finally over - we owned our farm at last! We slowly gained peace of mind that came from becoming the architects of our own lives and the realisation that we could now expand and diversify without the obstructive interference which had been an oppressive, stressful feature of our tenancy. Our landlord had invested nothing in the fixed equipment of the farm and had no understanding of farming yet enjoyed the annual added growth value which the land added to his capital worth. If landlords were subject to quality control many would fail. We now have security and something to show for our life’s work to pass on. Our only regret is that this didn’t come earlier when we were in the prime of our working lives. We would have the energy and drive to have maximised the opportunities which we believe the family will go on to develop from the farm as owners. Emotionally and financially they will benefit from the change of status. Although many tenants have decent landlords, there are many still stuck between a rock and a hard place. Luckily we got out and can see an independent and good future ahead for us as a family of owners and for that we feel very fortunate.”

“We were offered the chance to buy the farm, out of the blue. Our estate was not a ‘selling’ estate, or so we thought. We are happy to be owner occupiers now, even though the process was stressful at the time – it proved to be no more stressful than a rent review. These are of course now a thing of the past and I am thankful for that. Some years ago our estate engaged a city land agent for a rent review – he lied to and bullied the tenants in his attempts to get improvements written off after 15 years and the rents doubled. For the first time we (estate tenants) all worked together, employing professional help to fight our case. We offered 10% and after many weeks of argument the Landlord accepted 9%. The experience was an eye opener to us and damaged LL/ Tenant relations for some time and at three figures per hour for his fees, it must have cost the estate thousands. All for nothing but ill feeling on our side – disappointment on theirs. There is little enough income to share between LL and tenant, without a parasitic land agent. Later they ‘sacked’ the city agent and employed someone more sensible, future dealings on improvements, repairs and rent reviews became more reasonable. This was the man with whom our ‘negotiator’ had to deal, when agreeing the values of the farm/tenants improvements and so on. They reached a fair agreement – more than we thought it was worth but probably less than the owners were hoping for – so it was probably fair - the rest is history. I feel strongly that greedy land agents giving unrealistic expectations to Landlords have caused much damage to LL/Tenant relationships. It must be possible to fix fair rents using the widely available economic data of the various enterprises. With perhaps a cross check with the profitability of the estate’s in hand farms!! In any case if land values have trebled in the last ten years (so land agents say) this is a return of nearly 12% – which is an excellent return with no rent increase.”

Introduction

“The opportunity to buy our tenanted farm occurred later rather than earlier in our farming career. Before the chance came along, there had been a gradual breakdown in the partnership aspect of tenant farming to the extent that the only communication with the landlord was the receipt for the rent and the notice of rent review so that as a tenant, I felt increasingly isolated, not a healthy situation. A positive outcome was that the improvements we had made over 2 generations were capitalised in the sale price. Our bank provided the mortgage to purchase the farm but after completion of the sale with our new asset base they also provided encouragement for future long term investment. This was despite our mortgage repayments being higher than the rent we had been paying. The emotional comfort gained by owning our farm was much stronger and more satisfying than we had imagined in the lead up to the sale and became a very stimulating outcome.”

“I was a second generation tenant on the 600 acre hill unit running 110 beef cows and 640 breeding ewes in partnership with my wife and son before buying the farm in 2005 and it’s the best move I ever made. If the farm needs an investment I just go ahead and do it instead of having endless negotiations with my landlord. For example, I’m about to invest in new cattle housing but that wouldn’t have been possible if we were still tenants. The farm is more profitable since we became owner occupiers partly because we have a very different attitude to the business and partly because we no longer pay rent. At one time a young man who saved money could get started by renting a small farm and then move on to a bigger and better farm – but that doesn’t happen anymore – the system of tenancies isn’t working any more as any farms that do become available are privately let to existing tenants.”

“Though unable to buy our farm, we did manage in 2002 to acquire the farmhouse. Our landlord wasn’t really a willing seller but he needed to do a deal with us. The house had been the family home for 60 years and the difference this has made to our lives has been incredible. We now have a degree of security and a better power balance with the landlord. The factor has always been difficult with tenants improvements but at least with the roof over our heads being secure, we have invested and developed the house into a very successful B&B enterprise. The security and collateral of this has enabled us to diversify further both inside and outside the farm enterprise giving us a brighter future as a family and simplifying succession issues. As an owner, I too can now enjoy the capital growth of owning an asset. Too many landlords “let it and forget it” sitting back watching land values increase whilst inhibiting tenant enterprise and investment. I would like to see a fairer distribution of national rural assets in Scotland to enable the countryside to thrive. More ownership would unlock a large number of small rural businesses and sterilised feudal communities of another era could come alive and thrive. Ownership is so important as it gives you freedom and more essentially – control.”

The breakdown in landlord tenant relations, usually through the actions of a factoring agent, featured as big negative issues for these ex-tenants. The positives of freedom from stress and insecurity and now having the ability to to drive a business forward are common strands.

Most commented on how lucky they were to get such a rare chance. Cabinet Secretary’s Richard Lochhead’s surprise announcement at the Royal Highland Show of his intention to re-consider ARTB has opened up the land reform debate both in the press and in on-line debates.

STFA awaits further clarification on this and within the organisation there is a wide range of opinion dependent largely upon the views and situations of individuals. Dissatisfaction on vexed issues such as rent reviews, tenant compensation and compensation at waygo play a huge role in shaping the views of STFA members who, when recently surveyed for our response to the Land Reform Review group report, delivered resounding 85% support for a more diverse pattern of ownership in Scotland.

It’s very clear from these individual short accounts that buying a farm is an exciting, positive experience which they viewed as benefiting them and their familes and also the wider public interest of their rural communities.

Conclusion

“Being unshackled from the on-going battle with an unhelpful Factor in 1999 by purchasing our farm was like being released from a cage. Years of hassle and stress trying to get the landlord to live up to their responsibilities without any effect and the stress of fighting his attempts to asset strip and ‘’rationalise’’ our tenancy just melted away. Despite being heavily borrowed we were happy to spend tens of thousands of pounds putting our assets into better repair so that they were safe for the future. I was free to invest, diversify the business and manage the land that I had spent my whole life on, in a way that I believed was right for our business, knowing it would be ours at the end of the day without any skimming by the landlord. We have continued investment to strengthen our business and today we are incredibly secure compared to the days of not knowing whether our not we would have a home tomorrow. Our purchase has been good for us, good for local employment, good for the assets of our countryside, good for local people, good for tourism, and I believe good for Scotland.



Land Reform Update

Initially, the Group encouraged tenant farmers to submit their views on tenancy issues, including ARTB, but then decided to concentrate on community ownership, relegating tenancy matters to be dealt with by the TFF. Tenants were dumbfounded at this, especially as many had taken the trouble to make their views known to the LRRG.

However, the LRRG has since had a refit. Three new vice chairs have been appointed and, significantly, Robin Callander has taken up the role of special adviser. Robin brings huge experience to the group, he has been involved in practical land management for nearly 40 years and is an independent special adviser to parliamentary and other public interest committees. In recent years he has served in that capacity in both Parliaments for inquiries by the Treasury, Scottish Affairs and Scotland Bill Committees into the Crown Estate. He is currently special adviser to the Scottish Affairs Committee.

It would seem that the LRRG has re-defined its remit and tenancy matters are back on the agenda. Giving evidence to the RACCE Committee in parliament Robin Callander said the tenancy issue

is “….a prominent land reform issue in Scotland and the committee will not ignore that. It is in the frame.” This is good news to STFA, we have said all along that review on agricultural holdings legislation and consideration of tenants’ right the buy should not take place in isolation but should be examined within the context of a wider land reform agenda. The LRRG will not be taking any fresh evidence but we hope to have a meeting with the group in the next couple of months.

Land reform and tenancy reform are in the spotlight just now and recently another consultation was announced following a report on land reform commissioned by the Scottish Affairs Committee in Westminster. The report, “432:50 – Towards a Comprehensive Land Reform Agenda for Scotland”, is the work of Professor Jim Hunter, a former chair of Highlands and Islands Enterprise, Peter Peacock, a former MSP and Minister, Andy Wightman, a land rights researcher, and Michael Foxley, a former Leader of Highland Council. The report’s title reflects the fact that just 432 owners control 50 per cent of all the privately owned land in Scotland.

The Scottish Affairs Committee’s report makes interesting reading, it starts with the premise that the current concentration of landownership is reinforced by fiscal arrangements, by agricultural support, forestry grants and other taxpayer-financed payments. It concludes by recommending further investigation into these areas, looking at how greater landownership can be extended to communities and others, tenants right to buy and the undertaking of further work to provide a full understanding of the human rights dimension of land reform.

The committee has launched a consultation on land reform in Scotland closing on 30th September. Details can be found on the committee’s website:

http://www.parliament.uk/business/c o m m i t t e e s / c o m m i t t e e s - a - z /commons-select/scottish-affairs-committee/news/land-reform-inquiry/

The Scottish Affairs Committee has no jurisdiction on land reform in Scotland so it’s hard to assess the impact of this intervention beyond exerting greater pressure on the Scottish Government for land reform.

Little Progress for Small LandholdersThe Scottish Tenant Farmers Association has been urging the Scottish Government to honour its pledge to Small Landholders by addressing the difficulties they face in converting their holdings to croft status under the provisions of the Land Reform Act of 2010.

According to government statistics there are approximately 100 small landholdings in Scotland, mainly in the Island of Arran, Ayrshire, Wigtownshire and Speyside. Small landholdings are a historical anomaly having been excluded from the original crofting legislation and ignored by successive reforms to tenancy legislation ever since. Mike Russell, previous Minister for the Environment, promised to cure the wrong inflicted on these tenants 125 years

ago, however the measures introduced into the Crofting Reform Act have been unsuccessful in allowing any of these tenants to convert to crofting status.

In a letter to Environment Minister, Paul Wheelhouse, STFA said that the first attempt by a small landholder to convert to crofting status on Arran is still no further forward after three years. Experience has identified several shortcomings of the legislation, especially where there is a hostile seller, which will need to be addressed if the reforms in the 2010 Act are to be effective.

The Crofting Reform Act has said that it’s in the public interest that the historical exclusion of some areas from the crofting counties by the Napier Commission of

1883 should be corrected. It should therefore follow that the pathway to croft conversion should be made easier to allow the mistakes of the past to be put right so the tenants of these holdings can realise their economic potential. Therefore, the process of conversion must be simplified and placed within the financial reach of small landholders who are faced at present with a process of indeterminable length and a likely cost well beyond the capital value of the holding in question.

Having received an unsatisfactory reply from Minister Paul Wheelhouse we will be pursuing the matter further to make sure that Small Landholders are not ignored again and get a fair resolution to their difficulties.


Waters under pressure – Working to protect and improve Scotland’s water environment

Almost one quarter of Scotland’s rivers, lochs and coastal waters have been physically altered in one way or another because of historic industry, urban and rural development. A consequence of these alterations is that there is now less capacity to cope with high rainfall events, resulting in increased flooding and less available habitat to support wildlife.

It’s clear that, as a nation, we need to address this. But how do we balance the way we use our water environment – for example, balancing important requirements like producing energy or maximising land for crop production, with the need to safeguard and improve our natural assets?

Taking actionSEPA is delivering a pilot project within four catchments across Scotland looking at ways to combine improvements to river habitats with measures that will reduce the risk of flooding to our homes, businesses and agricultural land. Focusing on the River Dee (Aberdeenshire), River South Esk (Angus), River Nith (Dumfries and Galloway) and the Glazert Water (Glasgow), we are working with a variety of stakeholders, including local landowners and land managers, to identify appropriate locations where we can best direct our efforts to get maximum benefit; benefits to people as well as the environment. Fundamental to this is ensuring proper consideration of existing land use.

The project is voluntary so even if an area is identified as the best location (in environmental terms) for putting in place on the ground improvements, we would need landowner support to turn it into a reality. In some cases, the measures under consideration will be incompatible with existing land use and in these instances the importance of food production will make an environmental opportunity infeasible on economic grounds.

Funding for measures delivery will be available and the kind of improvements we want to demonstrate include: creating more space for rivers by changing the way we use adjacent land; enhancing the quality of bankside vegetation; re-connecting the river with the flood plain or simply safeguarding space to allow the river to restore itself naturally over time. Simple actions which can have a big impact!

Improving our river habitats can also deliver multiple benefits such as helping to reduce pollution, make our communities greener, contribute to sustainable economic growth through improved opportunities for tourism, and help endangered habitats and species such as the freshwater pearl mussel populations of the South Esk and Dee.

Leaving a legacyIn the future, population growth and climate change are likely to mean we will all need the water environment to do more; to provide us with more water; capture more waste waters; and store and dissipate flood waters. Making improvements in the right places now can help maintain and increase our water environment’s capacity to provide these services and ensure we all enjoy the benefits of a healthy and productive Scotland in years to come.

Moreinformationabouttheprojectcanbefoundonourwebsitewww.sepa.org.uk/implementingRBMP. You can also sign up forupdatesaboutthepilotcatchmentprojectbyregisteringyourinterest with us at [email protected]

TOP: Lemno Burn, South Esk catchment – culverted watercourse which has then been straightened, minimal buffer strips of the left bank.

BOTTOM: Rottal Burn, South Esk – this burn was once straightened and now restored to follow the natural historic channel. Image was taken shortly after restoration so riparian vegetation will have improved further.

Scotland’s waters are a beautiful and vital asset to Scotland’s environment and economy. They provide an iconic landscape that supports our internationally-renownedwhisky industry, unrivalled salmon fisheries and agricultural productivity, and attract a huge number of visitors fromhomeand abroad.However, look a little closer and adifferent picture emerges – oneof awaterenvironmentunderpressure.Here,theScottishEnvironmentProtectionAgency(SEPA)explain how they are seeking to address this.

By SEPA

Billed as a group set up to generate innovative and radical proposals on land reform the Land Reform Review Group has had a chequered career since it’s formation a year ago. The evidence gathering process has been criticised for not being inclusive, the interim report was greetedwith almost universaldisappointment,apartfromScotland’slandowners,andthetwovicechairsleftthegroup.


By Alan Boulton

Cap juggernaut trundles on

EligibilityThe question of eligibility and the process of applying for new entitlements are now somewhat clearer although there are still decisions to be taken at national level. The first application for the new scheme will be in 2015 and the assumption is that this will be through a variation of the IACS process. To be eligible, a farmer needs to have either; activated entitlement in 2013 (was 2011) or provide proof of active farming in 2013. This opens the door to all those farming without entitlement and is bound to take a lot of pressure off the potentially underfunded national reserve.

However this is not without its pitfalls. If the business name is to change between now and the 2015 application there is a risk that the new business would not carry the eligibility of the old one. This could be the case where limited partnerships are converted to SLDTs or where SLDTs come to an end and the name is changed to avoid the creation of an LDT by default. There is an intention to allow the transfer of eligibility with the land but specific rules to govern this are not yet in place. The advice to any tenant who is likely to be in the situation where their business identity will change before 2015 is to seek advice to ensure that whatever conditions are set to regulate the transfer of eligibility can be met.

Alongside this eligibility generated in 2013, the applicant must have at their disposal eligible hectares and be an active farmer. Eligible hectares are the easier of the two to define at the moment. The land must be used for an agricultural activity for the whole year. All of the time honoured descriptions of agricultural activity apply and there is provision for non agricultural activity as long as this is not the predominant land use.

ActivityAn active farmer is slightly more difficult to define. Activity on inbye worked land does not seem to create any problems but to be deemed active on land which is “naturally kept in a state suitable for grazing” a farmer must be carrying out a minimum level of activity. This minimum level of activity is likely to be defined by a stocking density. The setting of a minimum stocking density poses some serious dilemmas. Set it high and many hill farms will fall below it and become ineligible; set it low and we bring in lots of lightly stocked land and create situations of over compensation. Scottish Government officials, to their credit, have been out on farms with stakeholders looking at stocking levels both low and high on different types of land. The discussions have highlighted the fact that there are really two issues; eligibility and getting the payment level right on extensive

land. Eligibility could be assessed by a variety of methods and all active farms with appropriate stocking rates for their land should be eligible.

The more difficult problem is how to structure an appropriate payment. If one considers that, at one end a Perthshire grassland hill might carry one ewe per hectare and at the other, a Sutherland peatland hill might carry one ewe to eight hectares with both stocking rates being appropriate to the conditions. In this scenario with rough grazing being in the same payment region all over Scotland the farm in Sutherland could receive eight times the payment of a Perthshire one carrying the same stock numbers. A solution is obviously required but finding one which is efficient but not headage linked will be extremely difficult.

Activity by proxyLurking within the issues of eligibility and activity is the potential for landlords to look for opportunities to become the applicant for entitlement in 2015 where they themselves held entitlement in 2013 and are able to be in possession in May 2015. STFA will be asking Scottish Government to ensure that the active farmer test includes an examination of the business structure to establish that the applicant is fully engaged in the farming business and exposed to

In the last newsletter I expressed some guarded optimism that the EU council meeting on the 27th of June might bring agreement on the principles of the CAP reform package. The summit did indeed reach agreement on the framework of the reforms. This has answered some questions and focused attention on the decisions Scotland must now take in order to implement a new direct payment scheme in 2015.

the financial risk as well as the profits. Any suggestion that a landlord could be “active by proxy” through a tenants farming activity should be ruled out at an early stage to avoid uncertainty in tenancies due to be renewed between now and 2015.

Phasing in paymentsThere is still no decision on how quickly to move to the new rates but some options have been agreed in Europe. The extremes are; at one end to move directly to the new regional rate which is fairly unlikely and at the other to ensure that by 2019 no payments are less than 60% of the regional rate with the additional option to ensure that the higher value current entitlements do not lose more than 30% of their value. The second option does look like a bit of a fudge and likely to leave us well out of step with the rest of Europe by 2019. We eagerly await more news on this front and no one envies SGRPID’s job in working this out.

CouplingScotland now has the ability to use up to 8% of the direct payment ceiling for coupled schemes and after all the campaigning for more, we are likely to use all of this but there are no decisions yet on where to use it. It represents slightly more than we currently use for the beef calf scheme so we could give the beef sector additional support or we could use part of it for a hill sheep scheme.

GreeningGreening is now clearer. The permanent grassland measure can now be measured nationally to ensure it does not fall by more than 5%. The crop diversification measure is clearer in what is required and which farms will be exempt. Farms with less than ten hectares of arable are exempt; between ten and thirty hectares will need to grow two crops; over thirty hectares will need to grow three crops. Where the arable is less than thirty hectares the farm can be exempt where 75% of the farm is permanent or temporary grass or 75% of the arable is in grass.

Ecological Focus Areas will be required on farms where the arable area is over fifteen hectares and will have to be located within the arable or adjacent to it if in the form of landscape features. The exemptions are the same as for the crop diversification above. The area of EFA is set at 5% in 2015 potentially rising to 7% in 2017 however there are yet to be implementing rules which will include a weighting matrix which may reduce the area required depending on the environmental value of the features and habitats used. There may also be a list of alternative schemes which could be considered equivalent to the greening measures. Organic certified farms are of course already exempt from all greening as is the small farmer scheme if we chose to use it.

Conclusion All in all we now have a framework on which to hang the detail you have all been waiting for. STFA will continue to represent the tenanted sector at the CAP stakeholder group as the process moves on.

All in all we now have a framework on

which to hang the detail you have all been

waiting for. STFA will continue to represent the tenanted sector at the CAP stakeholder group as the process

moves on.

By Alan Boulton

Alan Boulton of Huntaway Consulting

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This STFA newsletter contains general information and is not a substitute for professional advice in individual circumstances. However every effort is made to ensure that the information here-in is accurate at the time of publication and no

responsibility can be accepted for any errors.

Area ContactsNORTH HIGHLANDSMalcolm McCall 01408 621208GeorgeMacIver 01463811564

NAIRN, MORAY & STRATHSPEYHughRobertson 01667404291WillieHamilton 01479851739

ABERDEENSHIRE & NEAlastairNairn 01807590266Jim Riddell 01467 642203

EASTAndrewStoddart 01620823596

WESTGilbert Bannerman 01360 870210

CENTRAL & PERTHSHIREDuncan McEwen 01786 870236Sandy Simpson 01738 840260IanMuirhead 07824513415

SOUTH & BORDERSBrianShaw 01576202572MikeHalliday 07818034026

WIGTOWNSHIREJamesMcIntyre 01776860225ChristopherNicholson 01988500423

BUTE & THE ISLANDSDuncanMcAlister 01700831257

SCOTTISH TENANT FARMERS ASSOCIATIONwww.tfascotland.org.uk

STFA Office CulmailyFarm,Golspie,SutherlandKW106TALandline/Fax:01408633275Email: [email protected] STFA Chairman – Christopher Nicholson KidsdaleFarm,Whithorn,WigtownshireDG88JUMobile:07730940193Landline:01988500423Email: [email protected]

STFA Membership Administrator – Karen Young GlenRowan,BunchrewFarm,InvernessIV38TAMobile:07919240945Landline/Fax: 01463 234128Email: [email protected]

MEMBERSHIP MATTERS

STFA ManagerAfter a short spell with STFA as manager, Fiona Wallace has

decided to move on to pastures new. We all wish her well for the future. In the meantime Angus McCall will be handling

the management and administration of STFA.

STFA Membership AdministratorWe are also pleased to announce that, having reorganised business at home, Karen Young has decided to carry on looking after the membership. We would like to thank all

those who expressed an interest in the job.

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Communications Check out STFA’s new look website!

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ADMINISTRATION OF DAS FARM BUSINESS PROTECTOR POLICY

FBP New Policies and Renewals queries:From2013,theFBPinsurancepolicyrenewalsarenow administeredbyTowergateInsurance.Anyquerieson newpolicies,renewalinvoicesandremindersshouldbe addressedtoTowergateInsurance.Pleasecontact:

Liz Ferrier of Towergate Insurance on: 0141 2236828 Email: [email protected]

FBP Insurance Policy Cover queries:All queries relating to any aspect of the FBP insurance

policy will be dealt with by DAS in Scotland. Please contact:

Helen Farquhar, Account Manager Tel:07768142885Email:[email protected]

Pavlina Passissi, Account TechnicianTel:01619236013Email:[email protected]

FBP Technical assistance on items covered by

the Farm Business Protector Policy is provided by:Hamish Lean or Emma Robertson of STFA legal

helpline Stronachs:Tel:01224845945

autumn 2013 from the chairman in this issue

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