Written statement on Tenant Farming Update - Apr 23

Secretary of State for Environment, Food and Rural Affairs (Steve Barclay): The tenant farming sector is a central part of our plan to back British farmers and grow the rural economy. This is now firmly embedded within government. Today we set out the progress we have made in delivering our commitments to the tenanted sector, one year on from the publication of the government response to the Rock Review of tenant farming. I am very pleased to report that we have active work underway to deliver or have completed on 64 of 75 of the commitments we made in our line-by-line response to the Rock Review(opens in a new tab). I have written to all Members of Parliament today with more details on the actions we have taken and highlight key progress below.

Farm Tenancy Forum

In the summer of 2023, we established the joint government and industry Farm Tenancy Forum (the Forum) improving our engagement with the sector and supporting the implementation of our government response commitments. The Forum is having a very positive impact, ensuring that we consider the unique challenges facing the sector, facilitating more collaborative relationships between landlords and tenants, and helping to shape our farming policies and schemes so that they work for tenant farmers.

Agricultural Landlord and Tenant Code of Practice

I can report that the Farm Tenancy Forum, supported by the government, published a new Agricultural Landlord and Tenant Code of Practice on 8 April 2024 Code of Practice(opens in a new tab). This important new Code delivers on a key recommendation of the Rock Review by setting out standards of responsible conduct for all parties to tenancy agreements. The Code will support landlords and tenants, and their professional advisers, to establish and maintain positive, productive, and sustainable commercial relationships, achieved through dialogue and a sense of fairness and proportionality. We extend thanks to all members of the Farm Tenancy Forum and the Expert Working Group for their collaborative work in developing the Code.

We have also delivered a targeted industry Call for Evidence examining the potential benefits, impacts and role of a commissioner for the tenant farming sector to provide oversight of practices in the sector. We are considering next steps including the practical functions of this role, and a further update will follow.

Improving access to our Environmental Land Management (ELM) Schemes

We have continued to make our environmental land management schemes accessible for tenants and expanded the number of actions that tenants can select. The positive changes we have made to the Sustainable Farming Initiative (SFI) scheme include:

• offering 3-year agreements to coincide with the average length of many tenancy agreements;
• ensuring that tenants who expect to have management control for 3 years can apply, meaning many farmers with annual rolling tenancy agreements can access SFI;
• removing penalties for tenants who may have to exit a scheme early if their tenancy ends unexpectedly;
• recommending communication and collaboration with landlords but not requiring the tenant to gain landlord consent to enter the scheme, provided there is no permanent land use change. However, the tenant should always check the terms of their tenancy agreements before entering SFI.

When introduced, our expanded 2024 ELM offer will have many more actions with a 3-year duration further expanding our offer for the tenanted sector. We are also exploring the possibility of enabling collaborative joint tenant / landlord agreements in ELM. This could provide a beneficial additional route into some of our longer-term options schemes for some tenants and landlords where both parties want to work together.

We have designed our agroforestry offer in a way that is responsive to the needs of tenants. We are testing a farm woodland standard through SFI including smaller-scale agroforestry which is more suitable to tenant farmers and in line with the recommendations from the Rock Review.

Additionally, we are removing tax barriers to enable landlords and tenants to access longer term environmental schemes. We announced in our budget that from 6 April 2025 we will be extending the scope of Agricultural Property Relief to include land managed under an environmental agreement, this will open up the way for greater collaboration between tenants and landlords so that both parties can access the benefits.

Recent and ongoing surveys indicate that a third of SFI applications are from wholly tenanted and mixed tenure farms. We are pleased with these indicators that demonstrate strong uptake of SFI by the tenanted sector. We will continue to monitor the uptake and impact of our ELM schemes in the tenanted sector and report findings to the Farm Tenancy Forum.

Improving access to our capital grant schemes

We have also continued to improve accessibility to our capital grant offers supporting investment in farming equipment, technology, and infrastructure by reducing minimum grant rates and reviewing our intervention rates. We have allowed landlords to underwrite tenants' applications if both parties wanted to pursue this option and continue to explore other options for collaborative landlord / tenant applications. We also no longer require tenants to have a tenancy agreement in place for 5 years to access our grants, merely commit to holding the asset for 5 years.

Private markets and natural capital

On March 12^th we issued an update on progress under the Nature Markets Framework (March 2023), including the importance of ensuring that the tenanted sector can access opportunities that nature markets provide. The update recognised the role the Farm Tenancy Forum in developing further guidance on the management of ecosystem services on tenanted land and in showcasing best practice for approaching this within tenancy agreements. The Farm Tenancy Forum will develop this activity following the outcome of the British Standards Institution's consultation on their Overarching Principles Standard(opens in a new tab) (the first of a suite of nature investment standards sponsored by Defra) to ensure tenant sector specific guidance fits within these frameworks.

This update demonstrates that one year on we have made good progress in delivering the commitments we made in response to the Rock Review. We will continue to put the needs and voices of the tenanted sector at the heart of our policies and schemes. This is a vital part of meeting our food security and environmental objectives.