Push for contract and share farming ’misguided’

The Tenant Farmers Association has branded as misguided the current trend to support the increasing use of contract and share farming agreements.

Speaking in advance of this year’s Great Yorkshire Show in Harrogate, TFA National Chairman Stephen Wyrill said, “We all want to see more new entrants getting into our industry and seeing those who have recently started farming having the opportunity to progress. Everybody accepts that purchasing land is not an option for the vast majority of people in these situations and that many of the Farm Business Tenancies on offer tend to be too short term and at too high a rent. However, if we are looking for sustainable opportunities with reasonable security, share farming and contract farming are not the way to go.”

“The current push for more contract and share farming seems to be the current fashion but it ignores the reality of their uncertain and unstable basis. Although there are a handful of notable exceptions, the TFA’s experience is that these agreements are driven more by the taxation considerations of the land owners involved than a desire to create viable business structures for both parties. The success of these agreements relies upon both parties accepting risk, taking joint management responsibility and contributing towards investment. However the truth is that, in most cases we see land owners working hard to avoid risk, taking no active responsibility and investing very little,” said Mr Wyrill.

“It may be old-fashioned but agricultural tenancies remain the best way to bring together those with land who don’t want to farm and those without land who do. However, there are problems to overcome. The TFA has been vocal about the unwillingness of landlords to let on viable lengths of term. Again it is clear that tax is a big driver for landlords when making decisions about whether or not to let land. We need the Government to intervene to create the right incentives for landlords to let land openly for sustainable periods of time rather than inventing sham arrangements purporting to be other types of agreement,” said Mr Wyrill.

The TFA is in correspondence with both Treasury and DEFRA Ministers seeking changes to the system of Agricultural Property Relief for inheritance tax claimed by landlords such that the relief should be available only to landlords with secure tenants under the Agricultural Holdings Act 1986 or where land is let on a Farm Business Tenancy under the Agricultural Tenancies Act 1995 for a period of at least 10 years.

“This simple tax change will encourage more sustainable, long-term farm tenancies to become available and allow farm businesses to invest, grow and contribute to the rural economy. The current system which allows 100% relief from inheritance tax to apply in all situations where land is let after 01 September 1995 regardless of the nature of that letting, is a significant subsidy to the landlord community for no specific national benefit,” said Mr Wyrill.

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