Farming agreements post EU Referendum

Now that over two months has passed since the EU Referendum, we are a little bit clearer on the immediate future of agricultural support schemes.

In the middle of August, the Chancellor announced that direct, Pillar 1, funding would remain in place through to the end of the current CAP programme in 2020. The future of Pillar 2 is rathermore vague, with the only guarantee being to honour those agreements agreed prior to the Autumn Statement, which normally takes place at the end of November.

Subsequent information suggests that, should we leave the EU prior to 2020, a transitional scheme would be put in place until a new policy kicks in post 2020. This would be based along the lines of the current Basic Payment Scheme.

If we do actually leave the EU, it seems likely that April 2019 will be the due date. Currently, there seems to be no rush to sign Article 50, so triggering the 2 year exit timescale. Leaving at the end of a financial year, and before the EU parliamentary elections of May 2019, would seem sensible.

This means that any farming agreement in excess of two years may span 2 or 3 different farm support schemes. The first we know about, the second should be along similar lines, but the third is a total unknown. That does create some additional considerations for Farm Business Tenancies and other farming agreements.

The landowner will want to ensure that the farmer does actually take up all relevant entitlements as the schemes evolve. The landowner also needs to ensure that all future entitlements, credits, quotas or whatever they may be, remain with the land and not traded away by the farmer.

The farmer in the agreement, whether tenant, share or contract farmer, may wish to ensure that there are reviews built into the agreement so adjustments, or even termination, can be made if new support programmes are radically different. Both parties may wish to include flexibility so that they can both take advantage of any new approach, and not be locked into outdated thinking.

In this uncertain period, it is impossible to try and second guess policy makers, but it is essential that due consideration is given to the possibility of life outside the EU. When formulating any new farming agreements, legal provision must be made to limit the downside and maximise the opportunities for both parties.

If you would like any further information or to discuss any rural related matter, please contact Tom Wills, head of the agriculture & estates department at Sintons.

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