Sue Steer FRICS, director, Steer Ethelston Rural, and 3D Rural Surveyors. Photography: David Oates
Radical changes are coming to the UK rural economy as EU agricultural subsidies are phased out. They are to be replaced by a system in which farmers and landowners are recompensed for managing land in a way that provides “public goods” such as improving air and water quality, protecting wildlife and tackling climate change. Two rural surveyors talk to Modus about the changes, and how they advise clients striving to adapt to the new regime.
For Sue Steer, the shift to the new system cannot come soon enough. In 1979, Steer was one of the first three female students to be accepted onto the estates management course at the formerly male-only Royal Agricultural College. From her Shropshire base, she has been a tenacious advocate for environmental land management (ELM) for four decades.
“For years people have been telling me to get off my soapbox. But when the 25-year environment plan came out, Fiona Mannix [associate director of RICS Land Group] said to me: ‘Sue your time has at last come.’ I am nearly at retirement age, but these things take longer than you would hope,” she says.
The government’s environment plan, A Green Future, was published in 2018. It sets out objectives for the UK’s natural environment over the next quarter-century: clean air; clean and plentiful water; thriving plants and wildlife; a reduced risk from environmental hazards; a more sustainable and efficient use of natural resources; mitigating and adapting to climate change; minimising waste; managing exposure to chemicals; and enhancing biodiversity and animal welfare.
Two pieces of enabling legislation will put the plan into effect: the Agriculture Act, which became law in 2020; and the Environment Bill, which has been delayed several times, and is unlikely to pass before the autumn. “They mean huge changes. Probably the biggest since 1947 in agriculture,” says Steer. “After the war there was a massive farm productivity drive, which has caused enormous biodiversity losses, and issues with air, soil and water quality. We are now starting to suffer for it. I hope we are not too late.”
By 2028 the current method of farm support, the EU basic payment system, which provides a per-hectare subsidy, will have been phased out. It will be replaced, at least in part, by grants for ELM, measures that align with the objectives of the environment plan.
Steer, who together with her husband has farmed a small organic landholding alongside her surveying career, suspects that despite the aims of the plan, the government will gradually withdraw most of its support for ELM. She advises landowners to strike while the iron is hot by moving quickly to assess the “natural capital” available to them, including soil, water, woodlands and biodiversity. With that information, they can create a strategy to mitigate risk, establish their environmental credentials and take advantage of grant aid and other potential opportunities before government support tapers away.
“We are saying if you are interested in countryside stewardship, get on it now. I used to work for the Ministry of Agriculture and, in my experience, schemes have always provided less support as they have gone on. Who knows what the ELM system will be like in the future with the pressure on government finances?”
Alongside the new subsidy regime, the government envisages that rural estates will generate income through new funding mechanisms, such as private payments for ecosystem services. “If you are a developer destroying ancient woodland, you will need to provide at least double elsewhere. And land management could be very powerful in terms of mitigating climate change. Carbon sequestration [capturing and storing carbon] and carbon trading may provide possible income sources,” says Steer.
She warns that landowners trying to carry on as before are taking risks. “They will get increasingly regulated, won’t be able to take advantage of new sources of income, and will face social pressure. People are much more aware of their natural environment, especially after COVID-19, when they have been walking more in the countryside. The danger lies in failing to recognise that natural capital is the basis that the whole economy sits upon. It is still heart-breaking to see how some land is managed, but at least the mindset is going in the right direction.”
“Farming families often feel quite rooted to the land, and I feel rooted to where I live. I can see my father’s farm from my garden,” says Emily Hartnell. She still lives and works in the Cotswolds where she grew up, the daughter of a tenant farmer, and recalls being impressed as a child by the string of land agents - “tweedy men, they were always men” - passing through the farmhouse kitchen.
A surveying career offered an attractive way to remain in the rural sector while avoiding the long hours and low pay of farming. She is now on the other side of the landlord-tenant divide, however. “My father slightly disapproves of the fact that I am a landlord’s agent. But I know what is a fair deal and I look out for the tenants in a rent negotiation, because I can see their point of view too,” she says.
The gradual removal of European subsidies will change the future dynamic of those negotiations, she explains, because currently a substantial proportion of tenant farmers’ rent, comes from the basic payment – often as much as £90 out of a £150 per acre rental payment. “The gap for the tenant will increase significantly, until they are unsubsidised.”
As an agent for large private and institutional estates, she anticipates that tenants will argue for reductions when rents are reviewed. For some landowners, ELM grants may fill a further part of the shortfall. “But at the moment the detail of that system is very sketchy, and it is unlikely to do so completely,” she says. “We will see entrepreneurial farmers speaking to their landlords about bridging that gap through diversification projects, whether it’s Airbnb guests, farm shops, or woodland planting. It is in their interest to stay on the land and my clients’ interest to maintain the level of rent, so more of that rent is likely to be made up from non-agricultural income.”
Some farmers will undoubtedly embrace the new regime, but others will retire, taking advantage of a clause that allows them to extract a capital payoff from the subsidy system. While it has been mooted that the changes could encourage new entrants to farming, Hartnell believes that the high capital costs will act as a deterrent, and the industry’s former direction of travel toward fewer and bigger farms will accelerate. “It may quicken the handover from one generation to another, and where we have three farms on an estate, we might end up with two larger farms that can benefit from economies of scale and thrive as a result.”
The end of a subsidy system that encouraged over-production to support high rental payments at the cost of soil quality is no bad thing in principle, argues Hartnell. “Change has been a long time coming, and I think farmers are open to it. At the end of the day, as long as they can make a profit, most farmers view themselves as custodians of the land, with a mandate to leave it in a better condition than they found it for the next generation.”
She notes an increased commitment to environmental stewardship among the younger generation of landowners, citing the example of a recent tender in which a private estate chose not to take the highest bid, instead offering the contract to a tenant that will practice regenerative farming. “It is a method that goes back to pre-Second World War basics when farmers relied on good husbandry of the land rather than chemicals and sprays. It repairs soil structure to a point at which less input is needed, and therefore less cost. Landlords may need to take a short-term hit for long-term gain.”
The upheaval of post-Brexit regime change will be painful for some farmers, but Steer and Hartnell agree that it could encourage the long-overdue repair of denuded ecosystems. Detail on how the new system will operate in practice remains thin, however. Countryside-dwellers will hope that it provides enough support to enact lasting improvements in the way that rural land is managed.
MODUS
TIna Paillet FRICS 02 April 2024
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