Agricultural tenancies, small landholdings and land management tenancy proposals - strategic environmental assessment: consultation analysis

Executive summary

Policy context

Land is held in different ways in Scotland. The Scottish Agricultural Census demonstrates that 22% of agricultural land in Scotland is tenanted (June, 2021).

The Scottish Government has outlined its Vision for Agriculture, and is committed to ensuring that tenant farmers, smallholders, crofters, new entrants and land managers are effectively enabled to contribute towards delivering this vision, as part of the Scottish Government’s Agricultural Reform Route Map.

This report outlines the results of a consultation held as part of a Strategic Environmental Assessment of agricultural tenancies, small landholdings and land management tenancy proposals. The consultation responses will be used to inform changes to legislation, including the Agricultural Holdings (Scotland) Act 1991.

Consultation method

The consultation was open from October-December 2023 and received a total of 12 responses, 5 from individuals (42%) and 7 from organisations (58%). Responses were received from individual farmers, industry bodies and wider organisations.

The consultation asked about: Diversification; Agricultural Improvements; Rules of Good Husbandry and Estate Management; Small Landholdings Diversification and Right to Buy; and proposals for a new Land Management tenancy model. It also asked about their potential impact on:

1. Climate factors, Greenhouse Gas emissions and agricultural resilience;

2. Biodiversity, flora and fauna; and,

3. Landscape and the historic environment.

The consultation responses were analysed thoroughly and fairly. Consultation exercises are self-selecting in nature – people choose to respond, rather than being included as part of a considered sampling strategy. As such, the findings do not reflect the (weight or range of) views within the population as a whole. Some respondents have answered all questions, others focused on specific sections or repeated their answers. Some focused on specific issues in their responses.

The low response rate should be taken into account in considering the results of this consulation. It should also be noted that some respondents did not feel clear about the intended environmental impacts of many of these proposals, or did not understand the questions.

Summary of main findings^[1]

1. Diversification (for non-agricultural activities)

The aim of this proposal is to give tenant farmers greater opportunity to diversify and undertake non-agricultural activities to help address the twin crises of climate change and biodiversity loss, whilst also supporting their business and profitability.

• Respondents held mixed views on the climate, biodiversity and landscape impacts of these proposals.
• Whilst some felt they would improve tenant farmers’ ability to carry out activities with positive environmental or biodiversity impacts, others stated that diversification would not necessarily achieve this, and may be shaped by other factors such as profit.
• Others suggested these goals could be achieved in other ways, for example technological advancements in farming methods.
• Some potential benefits to the historic environment were highlighted, such as improving tenant farmers’ ability to maintain historic monuments and improve public access to them, and restoring and preserving farm buildings.
• Others noted that certain types of activity, such as windfarms, are subject to debate about their impact on the landscape.
• In several cases, respondents stated that the impacts would depend on the scope and scale of the proposed diversification.
• Wider points raised included the need for a coordinated approach to land use and to consider the long-term risks of land use and tenancy changes.

2. Agricultural Improvements

The aim of the proposal is to give tenant farmers greater flexibility to implement agricultural improvements, and to contribute to delivering the Vision for Agriculture, through changes to Parts 1, 2 and 3 and a new Part 4, Schedule 5 of the 1991 Act.

• Almost half (42%) of respondents thought that giving farmers greater flexibility to implement agricultural improvements would have positive climate and biodiversity impacts. In their answers, respondents largely focused on the practical application of these proposals.
• They agreed with the need to modernise Schedule 5 of the 1991 Act (which includes Parts 1, 2 and 3, and list improvements that need notice, consent or neither of the two) to reflect modern farming practices, and felt that the new framework would provide certainty for tenants and landlords.
• Whereas some felt the compensation for improvement proposals would provide an incentive for tenants to invest in environmental measures, others felt it would not do so, as it would not be payable until the end of the tenancy.
• Respondents highlighted the need for Part 3 (which lists improvements that need neither consent nor notice) to remain a fixed list to give landlords certainty, and to update and regularly review the list of activities in Schedule 5. Others raised concerns about the risk of valuation disputes.
• Lastly, several organisations stated that clearer guidance on the Part 4 proposals is required, and were unclear about their practical application in certain contexts: for example, decreases in land value where carbon credits have been sold, with long-term liability.
• A third (33%) of respondents were unsure about the potential impacts on the landscape and historic environment, for example due to a lack of relevant knowledge, or not understanding the meaning of the question.

3. Rules of Good Husbandry and Estate Management

The aim of this proposal is to shift the current focus of the rules of good estate management and good husbandry from ‘efficient production’ to placing a greater emphasis on sustainable and regenerative agricultural activities.

• Respondents were broadly supportive of the proposal to shift from ‘efficient production’ to focus on sustainable and regenerative activities, agreeing that the rules of good husbandry should be modernised to reflect modern practices. Some argued that these proposals should be linked to the proposed Code of Practice on Sustainable and Regenerative Agriculture, and highlighted the need to include a requirement to record the baseline in a consistent way.
• Almost half (42%) of respondents agreed that this proposal would have positive impacts on the climate, landscape and historic environment, and a third (33%) that it would have positive biodiversity impacts.
• Others, however, noted that efficient production is how farmers make a profit, and is connected to issues such as food production and costs, so any regenerative agricultural activities would need to be financially sustainable.

Waygo

The Scottish Government proposes to amend Schedule 5 of the Agricultural Holdings (Scotland) Act 1991 to enable a wider range of activities to be included as factors to be taken into consideration in calculating waygo, and to introduce a set timescale to conclude the process of waygo.

• Whilst responses to this question were limited, respondents were largely supportive of the proposals to alter ways of calculating waygo and agreed they could have positive environmental impacts, for example by giving tenants greater clarity on compensation for improvements and introducing a set timescale for the waygo^[2] process.
• Others were less sure, for example highlighting a lack of clarity around the role of valuations, and concern about the loss of agricultural tenancies and the wider impacts this would have.

Rent Review

This proposal is to repeal the rent provisions in the Land Reform (Scotland) Act 2016 and introduce a new rent calculation, as part of a new approach to rent reviews. This will include balancing these factors: 1. Comparable rents for secure or fixed duration tenancies; 2. Assessment of the earnings potential by means of a farm budget; and 3. Consideration of economic outlook for the next 3 years.

• Respondents raised points including the importance of revising the rent review approach to ensure it is fit for purpose in the new agricultural policy context, and of balancing different considerations to ensure the proposals have a positive environmental impact, from tenants’ requirements for affordable rents to incentivising landlords to retain agricultural land.
• Other respondents were less positive, highlighting a number of areas that require further guidance, including how the proposals will deal with statutory improvements to the land or fixed equipment. Several felt there was a lack of clarity on how these proposals aim to address climate change.

Game Damage Compensation

This proposal aims to modernise the compensation for game damage provisions to clarify elements and enable tenant farmers to claim compensation for losses other than damage to crops (for example, damage to livestock, trees planted for different purposes, and fixed equipment). This will amend section 52 of the Agricultural Holdings (Scotland) Act 1991.

• Responses to this proposal focused largely on its practical implementation, rather than environmental impacts. Overall, responses were mixed.
• Some respondents agreed with these changes, supporting tenant farmers and strengthening their rights, and were also supportive of the proposal to remove black game from the definition.
• Other respondents asked for greater clarity in certain areas, such as the definition of ‘reasonable opportunity’ and how compensation would work in practice, for example in contexts such as damage by wild animals where attribution is difficult.

Resumption

This proposal aims to make the 1991 Act resumption procedures consistent given their effect is the same, whether for agricultural or non-agricultural activities. The provisions aim to modernise the compensation provisions to ensure that the tenant is provided with fair compensation for their loss. The provisions will allow the tenant to claim compensation on a reduction in rent, a disturbance payment, and an additional reorganisation payment.

• In answering this question, respondents raised more general points on resumption, and were largely unclear on its potential environmental benefits.
• Several felt that the proposals risked making resumption a less attractive option for landlords, who may have wished to do so for the purpose of environmental activities.
• However, one respondent stated that the proposals may lead to tenants being more willing to carry out environment improvements on land they would have previously seen as ‘at risk’ of resumption.^[3]

4. Small Landholdings: Diversification

The diversification proposal for small landholdings seeks to give small landholders greater opportunity to diversify their business, support profitability, and help address the twin crises of climate change and biodiversity loss.

• Responses to this section were mixed, with a quarter (25%) of respondents unsure about its climate, biodiversity and landscape impacts.
• Several respondents highlighted a lack of clarity on how these proposals are expected to lead to environmental benefits, and the potential for both positive environmental impacts and wider socio-economic benefits in rural areas if the changes proposed increase the number of available small holdings.
• Others felt there were likely to be positive outcomes, as it would give small landholders greater ability to undertake non-agricultural measures to mitigate emissions or improve the landscape (such as maintaining historic monuments or improving public access).

5. Small Landholdings: Right to Buy

The proposal aims to remove barriers to sustainable rural development by providing small landholders with greater certainty, to encourage them to invest in their small landholdings. It is intended that the pre-emptive right to buy proposal for small landholders will follow that of secure 1991 Act tenant farmers with minor alterations.

• A third (33%) of respondents agreed that this proposal will have positive environmental and biodiversity impacts, and a quarter (25%) that it would have positive landscape impacts.
• Respondents highlighted a small number of potential benefits, including the fact that a pre-emptive right to buy will encourage small landholders to make long term investments in the climate, biodiversity or landscape, whilst others also emphasised the wider socio-economic benefits in rural areas if the changes proposed encourage greater availability of small landholdings.
• Others felt there would be no substantial changes, and highlighted a lack of clarity on how the relevance of the proposals to these wider goals; or a general lack of understanding of the policy.

6. Land Management Tenancy

To support the development of a new model of lease – a ‘Land Management Tenancy’ – which will aim to support people to use and manage land in a way that meets their needs, and Scotland’s needs and interests in the 21st Century.^[4]

• Half (50%) of respondents were unsure about the climate, biodiversity or historic environment impacts of this proposal.
• Two positive impacts identified were that the proposed tenancy model has the potential to improve the speed and scope at which tenants and landlords are able to respond to environmental challenges, and may be more likely to facilitate the types of activities required to achieve net zero.
• However, several felt the likely low uptake of this model would decrease its impact; others were unclear what it would add to the current system or how it would interact with the other proposals, which already aim to allow non-agricultural activities within existing tenancy models.
• A number of respondents said that further information and detail on the proposal was needed in order for them to comment further.

Succession and Assignation

This proposal aims to enable small landholders to assign their tenancy to the same classes of people as tenant farmers with secure 1991 Act agricultural tenancies can through the Land Reform (Scotland) Act 2016 to encourage investment and growth.

This question received a small number of relevant written responses. Whilst one respondent stated that the proposals would have a positive impact in terms of regenerative agricultural activities being taught to the next generation, and encouraging young people to stay in farming, another emphasised an earlier, wider point on protecting access to small landholdings.

Umbrella Body proposal

This proposal aims to allow landlords and small landholders to have access to the Tenant Farming Commissioner (TFC) and intends for the Tenant Farming Commissioner to have similar functions for small landholdings as those currently set out for agricultural holdings in the Land Reform (Scotland) Act 2016.

This question received no detailed written response. Instead, participants highlighted a lack of understanding of the policy’s aims and the question not being relevant to them. A previous point on protecting access to small landholdings, and the social and environmental benefits they offer was reiterated.

Conclusions

Respondents identified potential positive impacts on the climate, biodiversity and landscape for each set of proposals; in many cases they stated that this would depend on the scope and type of activities planned.

Respondents were broadly supportive of proposals to modernise and update legislation and tenancy mechanisms to reflect modern farming practices, in the context of a wider move toward regenerative, sustainable agriculture. However, several noted the need to balance tenants’ rights with landlords’ long-term security.

In several areas, including proposals for a new tenancy model, respondents stated that further guidance and consultation is needed. Wider points included the need for a coordinated approach to land use; to balance environmental considerations with issues such as food production, agricultural costs and efficiency; and to consider the long-term risks of changes in land use or agricultural tenancies.

It should be noted that the sample size was small, respondents’ views were mixed and in several cases, they did not clearly understand the question or terminology.

Next steps

This consultation has provided an insight into respondents’ views on the potential climate, biodiversity, landscape and historic environment impacts of the Scottish Government’s agricultural tenancies, small landholdings, and Land Management Tenancy proposals. The consultation findings will inform the Scottish Government’s work to bring forward these proposals as part of the Land Reform Bill.

Table 1. Summary of responses^[5]

Proposal topic: Diversification (non-agricultural activities)

Question: 1. Climate change

Responses

Yes (33%)

No (33%)

Don’t know (17%)

Not answered (17%)

Question: 2. Biodiversity, habitats, flora and fauna

Responses

Yes (42%)

No (25%)

Don’t know (17%)

Not answered (17%)

Question: 3. Landscape and historic environment

Responses

Yes (25%)

No (25%)

Don’t know (33%)

Not answered (17%)

Proposal topic: Agricultural Improvements

Question: 1. Climate change

Responses

Yes (42%)

No (25%)

Don’t know (17%)

Not answered (17%)

Question: 2. Biodiversity, habitats, flora and fauna

Responses

Yes (42%)

No (25%)

Don’t know (17%)

Not answered (17%)

Question: 3. Landscape and historic environment

Responses

Yes (25%)

No (25%)

Don’t know (33%)

Not answered (17%)

Proposal topic: Rules of Good Husbandry and Estate Management

Question: 1. Climate change

Responses

Yes (42%)

No (25%)

Don’t know (17%)

Not answered (17%)

Question: 2. Biodiversity, habitats, flora and fauna

Responses

Yes (33%)

No (17%)

Don’t know (25%)

Not answered (25%)

Question: 3. Landscape and historic environment

Responses

Yes (42%)

No (17%)

Don’t know (25%)

Not answered (17%)

Proposal topic: Small Landholdings: Diversification

Question: 1. Climate change

Responses

Yes (25%)

No (25%)

Don’t know (25%)

Not answered (25%)

Question: 2. Biodiversity, habitats, flora and fauna

Responses

Yes (25%)

No (25%)

Don’t know (25%)

Not answered (25%)

Question: 3. Landscape and historic environment

Responses

Yes (25%)

No (25%)

Don’t know (25%)

Not answered (25%)

Proposal topic: Small Landholdings: Right to Buy

Question: 1. Climate change

Responses

Yes (33%)

No (17%)

Don’t know (25%)

Not answered (25%)

Question: 2. Biodiversity, habitats, flora and fauna

Responses

Yes (33%)

No (17%)

Don’t know (25%)

Not answered (25%)

Question: 3. Landscape and historic environment

Responses

Yes (25%)

No (25%)

Don’t know (25%)

Not answered (25%)

Proposal topic: Land Management Tenancy

Question: 1. Climate change

Responses

Yes (17%)

No (17%)

Don’t know (50%)

Not answered (17%)

Question: 2. Biodiversity, habitats, flora and fauna

Responses

Yes (17%)

No (17%)

Don’t know (50%)

Not answered (17%)

Question: 3. Landscape and historic environment

Responses

Yes (17%)

No (17%)

Don’t know (50%)

Not answered (17%)