The Scottish Government recently carried out an obligatory review of the role of the Tenant Farming Commissioner (TFC). It's one of those reviews that doesn't grab headlines, had few responses to the survey on which it's based, but could have a profound effect for the commercial agricultural sector and landowners.
The role of the TFC was introduced by the Land Reform (Scotland) Act 2016 at the same time as the Scottish Land Commission was established. The role functions are set out in statute, and directed at improving the functioning of the Agricultural Holdings sector, primarily by providing codes and guidance. This was in response to the recommendations of the Agricultural Holdings Legislation Review Group. At the time there was tension in the sector, which was seen as preventing letting of land, plus adding costs and risk to landlord tenant relations.
Upon the TFC's introduction in 2016, views ranged from supportive to sceptical, with most stakeholders in favour of the initiative. Bob McIntosh was appointed to the role, and his measured and thoughtful approach to codes and guidance has been well-received. Some may argue that these codes and guidance add nothing to underlying law and good practice, but nevertheless if it gives the sector a ready source of go-to information in plain language, that has to be welcomed.
Fast forward to 2020, and the Scottish Government published its review on the functions of the Tenant Farming Commissioner on 1 April. Just a week after COVID-19 restrictions were implemented, it largely went unnoticed - and even before that only 36 individuals responded to the preceding online survey, with responses apparently absent from most key industry lobby bodies. Yet some of the report's recommendations could have radical impact and point to a significant extension of the TFC's reach in agricultural commerce and land management.
Since at least 2016, farm businesses and landowners have been voting with their feet and moving away from leasing as a way of bringing capital (i.e. land) and operators (i.e. farmers) together. Parties have reacted, not just to the perceived spectre of right to buy and all the baggage of the old tensions, but to the regulatory burdens that accompany agricultural tenancies. The legislation has become complex and rigid in terms of the types of leases available, and lack of freedom available to parties to reach commercial solutions that allow investment and growth. In contrast, the industry has pivoted to adopt the freedom of contract and flexibility offered by contract farming, joint ventures and partnerships.
One of the recommendations in the report is that "ministers should consider extending the remit of the Tenant Farming Commissioner to include alternative business arrangements, such as joint ventures and business partnerships". Bearing in mind that the industry has moved towards these flexible measures in response to the regulatory burdens of agricultural holdings, the report's recommendation has to be questioned. The proposal came from the TFC himself, not the industry, which would suggest that the sector itself does not perceive the need for the TFC's involvement in this area. It would be a major departure from agricultural holdings if the TFC did become involved in providing codes and guidance on some basic - and widely used - business structures such as partnership and contract law. Indeed, while the powers of Scottish Ministers to amend the TFC's functions are wide, these are not limitless and such a change could arguably overstep the available powers.
Whatever the case, the industry urgently needs to engage with Scottish Ministers if it wishes to preserve the freedom of contract that other business arrangements provide.
This article originally appeared in the Press & Journal.
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