BulletinTHE

of the Agricultural Law Association

Issue 30 — Autumn 2002

CONTACT DETAILS

Geoff WhittakerEditor /Consultant & Adviser

1 Lings F ield, Kettleburgh, Woodbr idge,

Suffolk , IP13 7JY.

Tel: 01728 723845; Fax: 01728 723205

email: geoff@geoffwhittaker.com

Geoff Whittaker is the contact for readers’ letters or

comments and welcomes enquiries from anyone

wishing to contribute material to The Bulletin.

Photographic contributions wil l be gratefully received

and credited accordingly . The Bulletin does not accept

advertisements but is happy to inser t flyers.

Eleanor Pinfold

Consulting Editor /Administration Director

Pinfold & Co., 63 Palmer Avenue, Cheam,

Surrey, SM3 8EF.

Tel: 020 8644 8041; Fax: 020 8641 7328

email: eleanor@pinfoldandco.com

Alan Brakefield

Financial Director

6 St. Peter ’s Close, Chis lehurst, Kent, BR7 6PD.

Tel: 020 8467 0722; Fax: 020 8295 5554

email: arbake@globalnet.co.uk

Alan Brakefield is the contact for details of the activities

of the Association and the benefits of membership.

Photographic credits:Page 12 – map cour tesy of The National Forest

Page 17 – Hemera Photo Objects

All other photographs by Geoff Whittaker (pages 6,13 &

14 courtesy of Blackheath Estate Farms, Suffolk)

Designed and produced by Geoff Whittaker

In this issueEUROPEAN FOCUS

Something for nothing? Comments on the CAP Mid-Term ReviewRichard Barker, head of the European Policy Unit at Barker Gotelee, provides some thoughts

on Franz Fischler’s latest proposals.

Regulating farm saved seed in Europe

Isabe lle Corbeel-Mercer, dually qualified in Belgium and the UK, presents a comparative analysis

of the treatment of farm saved seed in the EU.

GENERAL FEATURES

After Jewell – tenants and diversificationThe decision in Jewell v McGowan & Gibbons has awkward ramifica tions for tenants seeking to

diversify. Ju lie Robinson examines the issues.

Trees and woodlands – headache or opportunityJohn Lockhart, specialist in forestry and a member of the Forestry Commission East Midlands

Regional Advisory Commit tee, considers some of the opportunities available to landowners in

respect of woodland management.

Dispute resolution in agricultural commoditiesPeter Brown, Chartered Abritrator and Mediator, looks at the new NFU Cereals Contract and

highlights some areas fo r improvement.

LIVE & LEARN

Three little words – “Let’s be partners”A whistle-stop tour of partnership law from William Barr.

RICS VIEWPOINT

Many ways to skin a cat! – The rent review seasonMiichaelmas is here! Ellie Allwood looks at some of the issues involved in rent reviews in the

current climate.

OTHER FEATURES

CLA calls for tax reform to aid rural businessA commentary on CLA’s recent discussion paper on p roblems hampering farmers’ diversification.

Geoff’s Geottings

Statutory Instruments & Brussels Update

Forthcoming events

European Countryside Movement

H.M. Land Registry20

20

19

20

20

18

5

6

16

12

10

3

14

Against a backdrop of collapsed agricultural incomes, a reduction in d irect support, coup led with the government and

representative organisations trumpeting the virtues of diversification, the Court of Appea l’s decision in the Jewell 1 case was awaited with some anticipation.

Would the court be prepared to endorse the tenant’s open farm act ivit ies as falling within a modern definition o f “agricultural purposes” or would a strict inte rpretation of the lease preva il?

The factsA tenant fa rmed an organic dairy fa rm under a tenancy agreement. Clause 22 of the agreement was a standard user clause restricting the holding to use “for the purposes of agriculture on ly”. The tenant began to run the farm as an open farm, with the public and schoolchildren visiting and walking farm trails with a view to learning about farming. Various commercial facilities were built on adjoining land owned by the tenant and from there the visito rs would visit the dairy farm. At one point , the open farming activities generated up to one third of the farm’s income.

The landlo rds, having apparently been supportive of the venture for some years, then withdrew their backing and asserted that the open-fa rm activities breached the user clause. The tenant stopped the activity so as not to risk the loss of the tenancy. When the tenant later wanted to resume the operation he sought a declaration from the county court that this would not const itute a breach of the tenancy agreement.

It may seem odd that the parties should be at loggerheads over the issue, particularly when the landlord had originally acquiesced in the venture (a waiver argument was orig inally run by the tenant but d ropped at an early stage). Suffice it to say that behind the bare facts lay a family trust and a dispute as to whether the land should be sold for development.

At first instance, the court drew a paralle l between the user clause and the provisions of the Agricultural Holdings Acts 1948 and 1986. Given that the primary agricultural use (the working dairy farm) would not be substan tially a ffected by the open-fa rming activities, t he holding would remain an agricultural holding within the meaning of both Acts. Applying the same logic, the restrictive user clause was held to permit exceptions “provided they do not substantially affect the agricu ltural

character o f the tenancy”. The presence of the word “only” in the user clause was not regarded as critical.

The landlord appealed; the Court of Appeal took a dif ferent view.

While clearly sympathetic to the tenant’s open-farm activities and regretting tha t the matte r could not be resolved without proceedings, the Court dealt with the issue purely by reference to the terms of the lease. The wording of Cl.22 excluded any exceptions to the agricultural use, even where it did not affect the character of the tenancy. To use “only for something” was not the same as to use “substantially for something”. The open-farming activit ies were a separate commercial enterprise, d istinct in character and purpose from the dairy farm. However much they might benefit the p rimary act ivity of agriculture (by raising money to put back into the farm), that did not mean that they themselves const ituted agricultu ral activity or were done for agricultural purposes.

The orig inal declaration was set aside, with the result that the Jewells would be in breach of their agreement if they continued with the ir open-farm activities.

Case commentIt is fair to say that tenant representatives held their breath afte r the first instance finding. Encouraging as it was to hear that “the concept of agricu lture is not fixed in a time warp” and that open-fa rm activities were “essential to make farms profitable and could therefo re be described as use fo r agricultural purposes”, there was vague unease tha t such a broad approach might not make it past the next hurd le and that Parliament might be the more appropriate forum to endorse such a shift.

Even if the Court of Appeal had found for the tenant, would we have achieved certainty? Future decisions would surely have depended on the facts of each case. It is one thing to hold that in these particular circumstances – with the education of the public and schoo lchildren about farming through an open farm – an operation is ‘ancillary’ to agriculture ; it is quite another to hold that, for example , a go-kart track could fall into the same category pure ly on the basis that p rofits help to sustain the original fa rm business.

Meanwhile, back on the ground, advising clients as to whether an activity might or migh t not breach the agricu ltural user clause would st ill not

have been a clear-cut call. All the usual issues involving landlo rd’s consent/variation/’54 Act tenancies would have been in play just as before.

Policy implicationsThe case has served to confirm one point . A traditional tenant without a willing land lord is precluded from diversifying out of agriculture if he wants to operate within the terms of a standard agricu ltural user covenant. Some may argue that this is absolutely right and it has to be sa id that there is some force in their argument. If we draw a parallel with commercial leases, once a tenant has agreed to a strict user clause (perhaps mirroring a part icular planning use class), he must operate within that clause or find an alternative solution – payment in re turn for a variation, surrender and re-grant, re-location etc. Parties areafter all free to contract in and ou t of agreements and everything is negotiable.

The para llel is not perfect, however. The government and industry are not currently advocating diversification out of a part icular use class. Use classes are updated and adapted to the changing rea lities of the commercial world 2. This is not so with agriculture, stuck as it is in a post-war production-oriented defin ition. To ignore that reality does no service to either tenants or their landlo rds, forced as both are to go through hoops before a tenant can access income from non-agricultural sources in order to keep the farm business afloat and pay the rent.

Two policy options are currently on the table to address this. Both are like ly to be high on the agenda for consideration by the Tenancy Reform Industry Group (TRIG). This cross-industry group has been inactive since the passing of the Agricultural Tenancies Act in 1995 but has been reconstitu ted following a recent meeting between industry representatives and DEFRA ministers.

Redefining agricultureThe f irst option is to redefine agriculture within tenancy legislation.

If you say it qu ickly, this proposition has a certain attraction. Few would disagree that the

After Jewell – tenants and diversificationJulie Robinson, Legal Adviser, NFU, London

A traditional tenant without a willing landlord is precluded from diversifying out of agriculture

“

” 3

statu tory definition of agriculture is out of step with modern farming practices and, more to the point, the change was specifically recommended in this year’s Commission on the Future o f Food and Farming report (the Curry report).

Drawing the lineOn closer inspection, it is not quite so straightforward. Where you draw the line between what is or is no t agricu lture is not as easy as might first appear. Breeding ducks for the ir eggs to be used in vaccine production – not covered within the current statutory definition of livestock – fits in relatively snugly within our traditional perceptions, but we would have to balk at a second-hand car lot being dragged under the same umbrella. It is worth no ting that in Jewell there was no question of the fa rm trails and visits being agricultu re itself; t he question was whether carrying out the activity was for agricultural purposes, given the interdependence of the two enterprises.

Knock-on effectSecond ly, how would changing the def inition in one area of legislation impact on other areas such as rating, planning, employment and taxa tion?

On the one hand the issue might no t concern one too much. There is much common ground in how agriculture and agricultural activities are defined in the various pieces of legislation and where there are differences these are rigorously applied on ly to the relevant legislative context. So while ra ting rules allow a certa in leve l of processing within the agricultural exemption, plann ing law is more restrictive and genera lly considers p rocessing to constitute a material change of use. Conversely, the Jewell farm trail was no t considered agriculture under tenancy legislation but wou ld be unlikely per se to constitute a change of use under planning law.

On the other hand, the common ground shared by the various definitions follows from the fact that they rep licate the orig inal definition set

out in S.109 of the Agriculture Act 1947. Were it simply a case of changing the definition in S.96 of the Agricultu ral Holdings Act 1986, other areas might well no t be affected. If , however, the original 1947 Act were amended, then logic would dictate that derivative legislat ion would eventually follow that lead. Should this happen, the most worrying aspect would be the potential effect on wages payable to workers. If work is agricultural work as defined in S.17 of the Agricultura l Wages Act 1948, then a minimum agricultura l rate – significantly higher than the national min imum wage – is payable . Extend the definition of agricu ltural work in the 1948 AWA in line with any amendment to the 1947 Act and farmer employers will be landed with a huge increase in their wages bill, particu larly if processing is more widely encompassed within the de finition.

Scottish option � the independent appealThe o ther policy option is that preferred by the Scottish Executive in their draft Agricultural Holdings Bill. It has a lot to be said for it as a way round the redefinition rou te and, although likely to be fie rcely resisted by the landowners south of the border, should serve to protect their interests too. Essentially, the Scottish proposals provide for a tenant who wants to use the land for a non-agricu ltural purpose to give a written notice to his landlord to that effect. The landlord can then choose to consent, not rep ly or withhold consent. If he withholds consent, then it will be for the Scottish Land Court to decide whether his interests will be materially prejud iced by the tenant undertaking the activity. The court will also have jurisdiction to take account of changes in the holding’s value following diversification in rent review and end-of-tenancy compensation disputes.

As for what counts as diversification, there will not be a fixed list of elig ible diversificat ion schemes. Instead, criteria will be d rawn up ensuring, for example, that the ho lding remains

predominant ly agricultural and that diversification does not significantly change the essential character of the holding. Conservation activities will be specifically permitted .

Clearly, the system would need significant adapting for use south of the border. Issues to be resolved include the appropriate forum (ALT or some other body); whether the notice is obliga tory even where parties have previously agreed to diversification; the minimum length of lets the provisions would apply to. Nonetheless, such a mechanism represents a potentially simpler way forward and would ensure that tenants could pursue other income avenues without being in breach of an ‘agricultu ral use only’ clause or risking their holding being treated as non-agricu ltural. There could even be a provision that permitted diversification wh ich does not change the holding’s essentia l characte r to be treated as ‘agricultura l work’ for the purposes of the principal source of livelihood test under succession legislation.

In practiceAs we all know, there are relatively few prob lems in practice. Most of the time, most landowners and most tenants reach agreement on most o f the issues facing them. Generally p roblems only a rise when there is an underlying breakdown in the relationship, as happened in the Jewell case.

No careful practitioner would encourage a potential b reach of a tenancy agreement without advising tenants to get at least the landlord’s written consent. Some of the time, it is landlords who are encourag ing d iversification and tenants who are resistant. Whatever the outcome in Jewell, this would have remained the case. Tenants can always negotiate a surrender of an old lease and a new FBT which allows the envisaged diversification – this might in the end be an op tion where the opportunity is just too good to miss but the landlord has an effective veto over the project.

In conclusionWhat with the Jewell finding, the Plymouth report on the Agricultural Tenancies Act and the Curry recommendations, TRIG has its work cut out in beating a pa th through the issues, balancing interests, and reaching consensus.

1 Jewell v McGowan & Gibbons [2002] EWCA Civ 145, February 2002.

2 See the recent consultation on changes to the Use Classes Order: http://www.planning.odpm.gov.uk/consult/ucotup/index.htm

John Steel of White & Bowker, who acted for the landlord in the Jewell case, will continue this discussion in the next edition.

4

A discussion paper entitled Reform to Perform has been published by the CLA, highlighting areas in which the tax system

inhibits the rural economy. Six recommendations (see sidebar, right) call for changes aimed at improving the position of unincorporated businesses.

In his foreword, CLA President Sir Edward Greenwell reaffirms support for the measures proposed in the Curry Report but points out that the countryside needs a wider range of economic, social and environmenta l activities than food and farming – important though those industries are – to improve the lot of t hose living and working in it.

Continuing impedimentsSuch activities are p rovided by small and medium-sized businesses, many o f which are unincorporated and do not there fore benefit from corpora te assistance given in previous Budgets.

The paper builds on The Bunbury Report, published in 1992 by CLA, and continues the call for a coherent set of rules applicable to all rural concerns operating as a single economic un it.

Some of the issues highlighted in the 1992 report have been addressed, bu t many remain and yet more measures have since been introduced which hinder the development of new rural business opportunities. All are tackled in this latest consultation.

In the area of Income Tax, attention is drawn to the limited relief available for repairs to redundant property being converted to new use caused by their treatment as capital and not revenue expenditure.

Tax creditComplaint is also made tha t, although the rules relating to Sch.A expenditure have been modified to align them with the ru les under Sch.D1, the external division requiring the two categories of business to be ‘ring-fenced’ remains an imped iment to business development.

Reform to Perform also sees a need for tax credit to be given in respect of expenditu re incurred which, although not strict ly necessary in the context of the business, produces a result which has a lasting public benefit, such as the maintenance of woodland as a landscape feature or the p rovision of a car park to enhance public access.

In respect of CGT, a proposa l is made to expand the definition of property qua lifying for

business asset taper relief to include property and land let for any commercial o r charitable use, regardless of the occupier’s business structure.

Simila rly, repeating recommendations made in Budget Representat ions for several years, the paper looks for a new form of reinvestment relief in respect of gains spent on improvements to such let land.

Broader �agriculture�The position regarding IHT is also addressed in relation to the disqualification of land from APR result ing from diversification and the complications which arise from the Farmer case. The decision in that case has inhibited agricultural businesses from extend ing d iversified act ivity fo r fear o f disqua lifying the business from BPR as being one concerned wholly or mainly with the making or holding of investments.

CLA considers that these problems can be alleviated by widening the definition of ‘agriculture’ for these purposes.

In respect of the second point in particular, the further recommendation is made that, where the property is occupied by activities qualif ying it for APR under such a wider definition, those activities shou ld not be classified as excluded for the purposes of BPR.

A copy of the CLA’s consultation can be obtained from its website at www.cla.org.uk.

ALA intends to become involved in the debate on tax reform. We fee l in the interests of our members� clients Government must be pressed to recognise and deal with the issues which are highlighted in this paper.

Interested members are recommended to obtain a copy of the paper and those with views are invited to express them to Geoff Whittaker who will collate our response.

Although no time limit is sta ted for contributions to the discussion, you are asked to re lay your opinions as soon as possible.

CLA calls for tax reform to aid rural business

CLA’s reform proposals1. THE FISCAL boundary between

Schedu le A and Schedule D should be removed and all activities carried on as a single economic enterprise that are taxed within Case 1 Schedule D should be treated as one business for all income tax purposes.

2. If, for reasons beyond the purview of the CLA, our first recommendation cannot be adopted, then:–

! a more liberal regime for the relief for losses brought forward should be investigated; and

! some measure of immediate relief for the costs o f repairs to dilapidated properties put to new economic use shou ld be introduced; and

! where a business managed as one entity has minor sources of income, the income generated by the minor activities shou ld, at the taxpayer’s option, be taxed as if arising from the major activity, and thus disregarding the application of the st rict tax position.

3. Government should initiate consultations on proposals for the introduction of a tax credit for all businesses for expenditure, not otherwise allowable for tax purposes, which is incurred for the delivery of outputs that have lasting public good.

4. Let land and property, which is used for any commercia l or charitable purposes, shou ld qualify for capital gains tax business asset taper relief irrespective of the business structure of the occupier.

5. A new form of reinvestment relief within capital gains tax shou ld be introduced to allow land lords to defer capital gains that are reinvested in improvements to any let land used for commercia l or charitable purposes.

6. For the purposes o f inheritance tax:–! the meaning of “agricultu re” be widened

for the purposes of agricultural property relief when app lied to let holdings and owner-occupied businesses sub ject to unified management; and

! activities that occupy property qualifying fo r APR shall not be classified as excluded activities for the purposes of BPR.

5

The rain this harvestime has given those Tenant Farmers, who last year served a rent review notice “to protect my inte rests”,

time to ponder on forthcoming rent reviews and reach the conclusion tha t surely the rent shou ld reduce – well, shouldn’t it?

That’s the question directed at his Agent who must then put into context not only the rent review provisions of the 1986 Act but also the cost and implicat ions of pursuing a review. That is most certainly not to suggest waving the white flag. Many rents must reduce even further but not every rent review can be judged a success purely on whether the rent was reduced or not or how large was the reduction achieved. After all a la rge reduction last time leaves less room for movement this time. In these difficult times many landlords and tenants are looking at alternative ways of dealing with the rent review and are often approaching the kitchen table with a list o f other issues which can be used to mitigate the effect of a rent review, whether the rent stays the same, reduces or even increases.

The Tenant�s List

SuccessionWith a co-operative landlord, there is the opportunity to remove uncerta inty over the future and save some professional costs, albeit that there is an e lement of ‘buying’ the succession by payment of rent without reduction until the next review. For the landlord there is the additional incentive of improved Inheritance Tax status.

Bu t some potential successors are reluctant to become the tenant, frustrating as this may seem to Father (and his Agent!). To them it can seem like entrapment in an industry producing lower returns. With survival o f paramount concern some ‘successors’ would rather see money saved on a rent review than their name on the tenancy agreement. It is therefore essential to quantify the risk of not satisfying the tests in the future and the stronger barga ining position of a younger tenant wishing to surrender the holding against the alternative rent reduction achievable.

“Asset stripping” Reluctantly tenants a re now looking for part s of

the holding to surrender to reduce the rent – usua lly surplus or sub-let cottages. Not every let cottage is the goldmine of income envisioned by the landlo rd. Whilst the actual p roportionate rental reduction likely to be offered by the landlord will not reflect the freehold value of the cottage (especially if let on an assured shortho ld tenancy) many tenants are looking to ‘cash in’ such cottages particularly where the renting experience has been fraught with difficulties. The advantage of dealing with this at rent review is that there is more opportunity for the tenant to throw this potential surrender into the melting pot and negotiate better terms overall than if the surrender were dealt with in iso lation – especially if the landlord really does have his eye set on that cottage! A surrender a t a ren t review also avo ids the risk of inte rrupting the three-year rent review cycle under Sch.2.

Consent to sub-letWhether it is the sub-letting of surplus cottages or sheds or the letting of land for potatoes, tenants are looking to tap in to any alternative and seemingly read ily available sources of income. As in most cases this will be a breach of their tenancy agreement, the rent review is the opportunity to ask for consent. Should the landlord refuse, or put too high a price on the consent then this will almost certainly be useful as evidence in the rent review itself!

Investment in new buildingsWith the bank manager tightening his g rip on the overdra ft facilit y and loans, the tenant who needs further investment in f ixed equipment may turn to the landlord fo r support in the provision of investment in return fo r a rent standstill. Where economies of scale and efficiency of operations can be crucial to survival, this may be the only option open to the Tenant. But there is no such thing as ‘free investment’!

Investment in return for a rent standstill by a landlord who a lways charges 10% interest rent is neither a rent standstill nor free investment! A ‘rent standstill’ where the standard terms are usua lly 10% inte rest on a £50k investment actua lly represents a rent reduction from current rent of £25k to £20k (i.e. 20% reduction) plus 10%

interest rent of £5k bringing the to tal rent payable to £25k. Semantics? It won’t seem like tha t when the rent falls to be reviewed next time. A base rentof £20k plus interest rent (to be merged with the whole rent for the Holding at the next review) is considerab ly better for the tenant than £25k!

ACCSThere has been a sea change in the view of both landlords and tenants towards ACCS. Until recently the requ ired works have been considered as the tenant’s responsib ilit y or even by as an unnecessary expense of a hyped-up scheme. Now many landlords and tenants are recognising the importance o f doing whatever is necessary to maximise the returns from arable crops.

There are implica tions for the rent review. The landlord may agree to contribute to the works in return for a rent standstill or a smaller reduction. Whether o r not the actual tenant decides to carry out the work will be considered irre levant if the hypothetical tenant would have done so. But if a landlord refuses a request from the tenant to assist in carrying ou t improvement works o r to carry out works which are the landlord’s responsibility, then this is pretty damning evidence for the landlord in review negotiations.

Repair obligationsThe impact of repair obligations depends on the size of the holding (and the rent payable) and the amount and type of fixed equipment. Many tenants are proposing to carry out the landlord ’s paint ing obligations in return for a rent reduction. This may make sense fo r a tenant with surplus time or labour on his hands but this is often not the case. Landlords may be concerned that the standard o f workmanship will match the time available for carrying it out and not be sa tisfied with the arrangement.

RICS Viewpoint

Many ways to skin a cat! – The rent review seasonEllie Allwood, JHWalter, Lincoln

6

Consent for diversification The necessity to supplement falling farming incomes is forcing many tenants to overcome what fo r many is an abhorrence of the outside world interfering with their farm. The result is many are looking for d iversification projects, be they Countryside Stewardship Schemes with water features and permissive paths or opening tearooms and bed-and-breakfast enterprises. Most if no t all will need landlo rd’s consent and it is important to establish the ‘price tag’ (if any) attached to this consent. Most of these projects will involve high levels of risk and considerable investment capital, expertise and sheer handwork. The bulk of the return should therefo re go to the tenant. The landlord is entitled to a fa ir and appropriate share o f the earning capacity of the holding and its fixed equipment as part of his rent. Additional ‘rents’ for consent must reflect the fact that ren t is already pa id fo r the ho lding plus the fact that the tenant should receive a fair re turn for the risk that he bears.

The Landlord�s List

“Asset stripping”The ren t review has always been a golden opportunity to secure possession of surplus cottages and other parts of t he holding . If ever the tenant was willing to discuss te rms it is now.

Full utilisation of fixed equipmentLandlords are sta rting to expect the tenant to use every opportunity to increase the earning capacity from the holding. As a result consents to sub-let

cottages, for example, are being offered at rent reviews on the basis that the hypothet ical tenant would accept the consent and thereby increase or at least mainta in the renta l level o f the holding.

Alternatively, of course, th is income could go straight to the landlord . Refusal to grant consent to the tenant to sub-let may put p ressure on him to surrender the cot tage etc. in question so that the landlord can le t it and receive 100% of the rental income – all’s fa ir in love, war and rent review!

Investment in fixed equipmentInvestment in fixed equipment is a way of maintaining the ren tal value o f a farm and persuading the tenant not to pursue a ren t reduction. At the end of the day the money has been invested in the landlord’s property (rather than the tenant’s overdra ft repayment) and it constitutes fixed equipment for which the tenant is required to pay rent, if not immediately then at least in the future.

Repairing obligationsIf the tenant is willing to convert the tenancy into a full repairing tenancy, then some landlords will view th is as not only a go lden opportunit y to relieve themse lves of the immediate bu t also long term, much more substantial repairs. Faced with a tenant who subsequently does no t carry out the works, the land lord may resort to the de fault provisions under the Act or the con tract of tenancy but in the meantime he is re lieved of the costs and hassle of carrying out these repairs. The resultan t rent reduction to reflect the change in tenancy terms is likely to be a small price to pay.

DiversificationWith Diversification as the buzzword a t the moment many tenants are supported by numerous agencies to undertake multifa rious ventures. Whether the landlord is happy to financially assist the tenant or mere ly just give consent, he must also look to ensure that his position is p rotected, for instance , public liability, repair obligations, pollution aspects. The landlord may also be proactive in encouraging the tenant to exploit the fixed equipment provided on the holding and thereby supplement his fa rming income and thereby mainta in the renta l value of the holding.

Ult imate ly, a review has to be settled and probably the most cost effective way of doing it is to do so without the need to appoin t an Arbitrator. That needs co-operation from both parties but it particularly requires a good understand ing o f the pressures on farming incomes a t the moment and a realistic approach to the effect that other landlord and tenant matters can have on the rental value of the ho lding.

LETTER TO THE EDITORSIR – I respond to the a rticle by Nigel Davis in the Summer edition of The Bulletin , no t to challenge the content – mediation is undoubtedly slow in being recognised as a first stage of dispute resolution in UK (as many will agree who have undertaken the expensive course to accreditation) – but rather to add a little to what Nigel says, from the perspective of my involvement with ADR in agricultura l commodities, as an Accredited Mediator and Chartered Arbit rator.

The London-based in ternational body GAFTA (the Grain and Feed Trade Association) incorpora ted mediation into their rules in early 2001. While the use of this means has been slow in being taken up, nevertheless it is noticeable tha t many more enquiries are being made about how to implement it. I have suggested to NFU and to UKASTA that they might incorporate media tion into their jo int rules of dispute resolu tion. UKASTA has declined to do so on the grounds that there are so few arbitrations, which is similar to the stance taken by RICS.

However, I believe NFU are still considering it. They clearly ‘missed a trick’ by failing to include the provision in their new Cerea ls Contract. That is an omission which shou ld be beneficially reconsidered at the first review of the contract (if it lasts that long!).

In my practice I have on many occasions suggested to clients that they might adopt media tion and, where the other party has agreed, this has been pursued successfully in several instances, with the parties always expressing the ir sat isfaction at the outcome and with the p rocedure.

Peter BrownAldeburgh

MEMBERS WILL be interested to know that we have had a good response to Nigel Davis’s article. Many thanks to a ll those who kindly got in touch.

We are considering the way forward in relation to mediation and its promotion as a dispute resolut ion medium in the agricultural context bearing in mind the schemes which are statutorily prescribed in many areas of dispute.

We are also looking a t the prospect of arranging a meet ing some time in 2003 to discuss the subject – Ed.

7

Farmers could be forgiven thinking tha t the news could not get any worse following confirmation that Rumanian wheat was

being delivered into this country fo r less than £40 per tonne. How on earth can they compete effectively in such a marke t?

For many months the Mid-Term Review of Agenda 2000 had been heralded as just that – a review not a reform. The policies had been agreed by the Intergovernmenta l Conference in Berlin in 2000, providing a European model for agricu lture – the first pillar – making it more competitive, guaranteeing farmers a fa ir income and benefiting food quality and the environment. A second pillar would provide new ru ral deve lopment g rants to help improve their businesses and diversify income.

Yet when the proposals came, the magnitude of the changes was met with surprise and, in some quarte rs, shock. We were aware that the politicians had to some extent fudged the issues in Berlin by lessening the effects of the proposed cuts and compensatory payments, but what is now proposed goes far beyond restoring that balance. As the in troduction to the Mid-Term Review (COM(2002)394) states, gaps remain between the object ives se t in Agenda 2000 fo r the CAP and its capacity to deliver the outcomes expected by society. European citizens generally see their concerns and expectations reflected in the Agenda 2000 objectives, but they are less confident as to whether current policies meet these objectives fully, especially with emerging new challenges for EU agricu lture. How does it seek to achieve those objectives?

A single de-coupled paymentPerhaps the most startling proposal is the de-coup ling of direct aids and the int roduction of a single de-coup led income payment per fa rm. The level of payment will depend on the subsidies received during a “reference period” likely to be the three years 1999-2001, but it could differ for each sector. Initially de-coupling or single farm

income payments include payments for cereals, oilseeds, prote in crops, grain, legumes, rice, flax, hemp, linseed, starch potatoes, durum wheat supp lement, dry fodder, beef, sheep and, from 2005/06, milk. It is proposed that the single de-coup led fa rm income payment can be sp lit into payments rights attached to eligib le hectares, giving a number of “payment entitlements to facilitate a part ial transfe r of the payment when only part of the farm is sold or leased”.

The Regulations will con tain anti-avoidance provisions to avoid speculative transfers leading to the accumulation of payment rights without what the view calls “a corresponding agricultural base”. Other conditions will need to be observed to retain the payment entitlements.

Farmers will be free to produce the crops they wish, as a single farm payment will be cond itional on compliance with “a statutory environmental food safe ty and animal health and welfare standards (cross compliance)”. As sector payments diffe r, so will the payment rights. What effect will this have on land prices?

There are already mutterings to the effect that if the farmers are free to g row the crop they prefer and still receive the payment and if tha t crop can only be grown at a loss, then why grow it at all? Sit back, do nothing and take the money. The regulations will almost certainly contain provisions to prevent th is.

Cross complianceOne o f the key features is cross compliance, which the review specifically states should take on “a whole farm approach” – not just relating to respecting environmental food safety and animal welfare regulations but including “keeping land in good agricultu ral conditions in line with environmental requirements”, “occupational safety requirements” and “enfo rcing good fa rming practices” defined in encompassing mandatory standards. It will relate to unused agricultural land and will allow Member States to apply conditions to prevent the conversion of pasture land to arable land. Breach of cross compliance requirements will reduce the single farm payment.

To ensure cross compliance there are proposed fa rm aud its for all commercial farms,

mandatory fo r producers receiving more than €5,000 per year in direct payments (about £3,000). The Review proposes that there should be grant aid available payable under the Rural Development Regulation. Compulsory long term set-aside (10 years) on arable land is proposed, with farmers obliged to put in an amount of arable land on their holding equivalent to current compulsory set-aside into non-rotational set-aside.

�Dynamic modulation�Under the current regime modulation is voluntary and singu larly unsuccessful – only three Member Sta tes have taken it up and France has recycled less than 30% of the modulated funds. Commissioner Fischler was the architect of the second pillar – the Rural Development Regulation – it is clearly his pride and joy, but the monies going into rural development programmes is, in his opinion, no t yet enough. His solut ion is not simple modulation but ‘dynamic modulation’. This will be compulsory with all d irect payments being reduced progressively in steps of 3% per year to reach 20%, the maximum agreed in Agenda 2000. It will cover both coupled and de-coupled payments and will replace the current volun tary arrangements from 2004 onwards, with transitiona l arrangements for Member States such

EUROPEAN FOCUS

Something for nothing? Comments on the CAP Mid-Term ReviewRichard Barker, Barker Gotelee, Ipswich

If farmers are free to grow the crop they prefer and still receive the payment, then sit back, do nothingand take the money

“

”8

as the UK, currently applying modulation on an optional basis.

The amount saved by modulation will be distributed to Member States on the basis of agricu ltural area, agricultural employment and a prosperity criterion (yet to be defined) to target specific rural needs, and Member States may use this additional funding to reinforce their rural deve lopment programmes.

The Review also proposes to st rengthen rural deve lopment by extending the scope of the accompanying measures (agri-environment, less favoured areas, afforestation and early re tirement) to include measures to encourage fa rmers to participate in quality assurance and certification schemes, provide support for producer groups and to provide funds to assist farmers to adapt to the ever increasing demands of community legislation relating to the environment, food safety and animal welfare. It is under this heading that grants will be made availab le to assist in the implementation of farm aud its. There will be further techn ical adaptations to the Rural Development Regulation including the provision o f addit ional animal welfare payments for schemes that go beyond a mandatory reference level in line with agri-environmental schemes.

Employment franchiseThe Review recognises that smaller farms can often be more labour intensive and often lack the support of new technologies and economies of scale. Accordingly, the Review proposes a scheme dependent on the employment situation on each farm. For up to two full-time annual work units, so called AWU, the franchise will be €5,000 with an additional €3,000 granted fo r each further AWU employed. The Review intends that this “will

ensure that the majority of farms will not be subject to modulation”. In spite of this, many of the UK farms will be.

After the application o f this franchise and modulation , the maximum sum paid to a farm will be €300,000. Direct aids beyond this amount will be capped and made available for transfer to the second pillar in the Member State concerned.

Lobby nowThe main political bat tle will occur when the Council comes to approve the draft regulations – so now is the time to lobby the European Commission while they are dra fting the new regulations.

The EU’s new Dutch Presidency p riority is to wrap up the EU enlargement talks by the end of this year, so these will progress while DG AGRI is drafting the new regulations. There is no fo rmal linkage between the Mid-Term Review proposals and enlargement. For example, Poland is positive about these reforms but has no legitimate expectation that they will be implemented and therefore can have no direct effect on the outcome. However, these reforms are designed to make enlargement easie r and there fore if Fischler’s hand is shaken by the support of the cand idate states, then equally his hand is politically strengthened by the compatibility of proposals with WTO requirements.

The immediate reactions have been somewhat predictab le with those against led by France and including Ire land and the Mediterranean Member States, whilst the net payers, led by Germany, include the UK, Netherlands and Sweden. The battle is just beginning – as always the devil will be in the detail of t he draft regulations. Watch this space!

Main points of the Mid-Term ReviewIN THE sectors within the Common Market organisations the Review proposes the following:–

CerealsIn line with Agenda 2000 the in tervention price will be reduced by the final 5% (of the 20% proposed in Agenda 2000) of the intervention price from €101.31 to €95.35 from 2004/05. Although this will be compensated for, compensation will not fully meet the reduction.

OilseedsNo specific measures are envisaged, with no need for any additional report as was suggested in Agenda 2000. But the Commission will follow market deve lopments closely.

BeefAgenda 2000 reduced the inte rvention price for bee f by 20% and replaced it with a basic price for priva te storage. The Review proposes the de-coupling o f headage payments and replacing them with a single income payment for fa rms based on historical entitlements. With re inforced cross compliance cond itions, the Review notes “this will reduce pressures towards intensive production”.

DairyUnder the current regime the system of milk quota remains valid until 2008. The Review proposes a continuation of th is system until 2015 but continuing the Agenda 2000 approach with a further price cut (15% for bu tter and 5% fo r milk products) and a 3% increase in quota

TimetableIt is intended that the proposed changes will come into force for the market year 2004/2005 which for cereals will mean from 1st July 2004. DG AGRI will now draw up draft regulations which, after approval by the Commission , will be presented – possibly in November for approval by the Council of Ministers, the various working parties and the European Parliament. The process may take f ive months or so but if the deadline is to be met, this must be completed by July 2004 so farmers know the rules for the marketing year 2004/05.

9

Trees and woodlands, despite being held in great af fection by the genera l pub lic, always end up as the estate or farms’ poor relation.

If matters had not been bad enough, the loss of schedule D Tax relief on fo restry expenditure following Nigel Lawson’s 1988 budget and the increasing volumes of timber coming over from eastern Europe following the break-up of the Soviet Union , have conspired to create a fairly gloomy picture for woodlands and forestry as a viable land use.

The forestry industry has seen prices collapse in real terms to the lowest leve l f or 50 or more years. To pu t matters into context, after felling and replanting one hectare of mature conife r, the grower will be lucky to be left with £2,000 in his pocket, even taking grant assistance into account. Not much of a return after a 50-year wait.

All this in a climate where ‘green is good’ and sustainable development is the order of t he day.

The value of woodlands to society was clearly recognised by government in the England Forestry Strategy published in 1988. This document set out programmes and priorit ies for the government’s support of forest in Eng land.

It recognises that forestry provides particular benefit to society in four major areas:–! Rural development;! Economic regeneration;! Recreation access and tourism;! Environment and conservation.

Looking a t these four areas in more detail:–

Rural DevelopmentThe focus here is on the role of new woodlands and how existing woodlands can be managed to

deliver more benefits to local economies by creating jobs both upstream and downstream of the forest industry.

Economic RegenerationThis highlights opportunities for woodlands to play a positive role in st rategic land use planning, including restoring former industrial land and creating a green setting for future urban and urban-fringe development.

Recreation Access and TourismThis programme focuses principally on the pub lic access to woodlands and includes an evaluation of opportunities for ensuring that woods and forests continue to be used for a wide range of recreational pursuit s as well as complimenting and support ing the local tourism industry.

Environment and ConservationThis programme recognises the importance of conserving and enhancing the character of our environment and cultural heritage is ident ified as being of great importance, together with the government’s requirement to deliver nature conservat ion, biodiversity and climate change objectives.

FORESTRY COMMISSIONThe Forestry Commission (FC) is the government agency responsible for the implementation of government policy on the forestry estate throughout the UK and thereby the Eng land Forestry Strategy (EFS). It is broken down into agencies, in particular Forest Enterprise , (responsible fo r the management of the government owned estate), Forest Research and the private woodland section, (principa lly involved in the administration of grants and licences).

The current vehicle fo r the de livery of the EFS is the Woodland Grant Scheme (WGS). This scheme encompasses all aspects of private woodland management, providing a five-year contract, which enshrines consents for felling and replanting, funding for new woodland crea tion and other operations associated with delivery of the EFS.

Woodland CreationFollowing changes in 2000, grants for woodland creation in England have now been made discretionary with two applica tion dates over the

year, 31st May and 31st October. Schemes are evaluated through a simple scoring system, which has been developed to now incorporate an element of regional identity.

Woodland creation grants are available for a areas of 0.25ha or over, with no maximum. Both conifers and broadleaves are covered and schemes will be funded with up to 20% open ground around planted areas, principally fo r biodiversity. Grant rates are curren tly fixed at £1,350/ha for broadleaves and £800/ha for conifers, with payments phased over f ive years. The initial payment is 70% payment on p lanting with follow-up 30% payment in Year 5, subject to adequate maintenance of the scheme. Additional supp lements a re availab le for planting on arable or improved grassland (£600/ha) or for providing public access, where there is an identifiable need (£950/ha). Additional locational supplements are available (generally £600/ha) to target plant ing in specific identified areas.

Capital grant payments fall outside the tax system. They are supplemented by income replacement payments on agricultural land, which are administered by the Department for Environment Food and Rural Affairs (DEFRA) through the Farm Woodland Premium Scheme (FWPS). This scheme is intimately linked to the WGS and is currently focused on providing environmental enhancement, landscape, habitat and biodiversity improvements on agricu ltural property. Eligibility is restricted to farmers running an agricultural business, either personally or through a manager. One important eligibility restriction relates to landlords who are not eligible for the scheme, except where they retain some responsibility for the management of the land, for example in the case of short-te rm grazing lets.

Land to be included in the scheme, has to have been in agricultu ral use for the last three years (includ ing set-side). There is a min imum area o f 1ha – although this can be aggregated between smaller plantings – and a maximum of 200ha per applicant. There are certain exclusions, in particular agro-forestry, Christmas trees and short-rotation coppice.

Payments through this scheme for income replacement are up to £300/ha/annum for 15 years where planting is predominantly b roadleaf. Land planted in the scheme can count toward set-aside obligations. Funding rate will be the lower of the FWPS or set-aside payments at the t ime of payment. The scheme carries an obligation to maintain the area as woodland for 30 years.

It is very difficult to generalise, but in the majority of cases, fixed gran t rates currently available reflect approximately 40-50% of the actua l cost of woodland establishment on agricu ltural land. Th is has resu lted in the deve lopment of a number of specific mechanisms for establishing new woodland in key target areas.

Trees and woodlands – headache or opportunityJohn Lockhart, Lockhart Garratt, Corby

10

Challenge FundsChallenge Funds are available for special projects with the aim of increasing forest cover by new plant ings in targeted areas of the country. One of the most long-standing projects has been for the creation o f new native woodland within the National Parks. There have a lso been other projects in the Lincolnshire Limewoods and the Leigh field Forest.

Whilst schemes for wood land to be entered into the Challenge Fund have to jump through the normal WGS hoops, applican ts are asked to put forward bids for funding which are then evalua ted by the Forestry Commission on a value for money basis. Simply speaking, applicants are asked “what they require to undertake the project”. Recent schemes have seen average b id prices in the region of £5,000/ha excluding the FWPS payments. Again , the Cha llenge Fund payments are tax-free. In real terms this probably represents about 70-80% of the actual cost o f undertaking the work.

The National ForestThe National Forest was created some 10 years ago to create, through working partnersh ips and community part icipation, a new two hundred square mile multi-purpose area, which is located in the counties of Sta ffordshire, Derbyshire and Leicestershire, (see map on page 12). Its key targets are as follows:–

! Creat ing a diverse landscape and wildlife habitat and enhancing biodiversity;

! Providing alternative productive uses for agricu ltural land ;

! Increasing public access to, and awareness of, the countryside;

! Creating new resources fo r education, sport, recreation and tourism;

! Stimulating economic enterprise and creating employment opportunities;

! Contributing to the UK’s home-grown sustainable timber supplies.

The principal vehicle the National Forest has used to establish wood lands on priva tely owned land, has been the National Forest Tender Scheme (NFTS). Contracts for Round 8 of the Tender Scheme have recently been awarded, and since its inception, the scheme has consistently provided in the region of four hundred hectares of new woodland creation each year within the forest area.

The Tender Scheme builds on the Challenge Fund principle. Applicants are asked to prepare detailed WGS and FWPS applications and agree details of additiona l work principally to deliver public benefit in line with the aims and objectives of the forest .

Having gone through the initial application process they are then asked to put forward a

competitive bid, which in practice includes all estab lishment costs, together with a supp lementary payment. Historically this has been seen as a reflection of the capital depreciation of the land through its conversion from agriculture to forest ry. As for other schemes, the tender scheme payments are tax-free . FWPS income replacement grants a re a lso available, subject to eligibility conditions in the usua l way.

Over the last few years the average bid price has been in the region of £7 ,500/ha. However, schemes are allowed to include up to 50% of unplanted land and in many cases this is not depreciated. The cost per hectare of actual woodland crea tion is probably more in the region of £9,000.

In practica l terms, the scheme gives owners and occup iers a proportion of capital value, while still retaining freeho ld ownership. In many cases this capital has been used to fund diversificat ion, or restructuring of farm businesses and family partnership.

The Tender Scheme has been very important. Now, for the first time, we have accura te information on the level of fund ing owners require to undertake large-scale new woodland creation, provid ing h igh quality public benefit.

Current ReviewThe mechanisms for new woodland creation currently the subject of a join t FC/DEFRA review, which is due to report to the FC and DEFRA in autumn 2002. The review seeks to deal with all aspects relating to new woodland creation in England, looking at policy in the wider con text which the present and any future government support for wood land creation must be seen. It aims to look at the rationale and philosophy for provid ing g rants to encourage woodland creation, the aims and object ives of the woodland creation grant schemes, ta rgeting, the potential f or

regionalisation, the availability of advice, partnership p rojects, extension services and the relationship be tween the WGS and the FWPS andother government schemes and incentives.

The review will also look at the opera tiona l and administrative issues seeing how these might be improved and streamlined to better deliver the policy objectives1.

EXISTING WOODLANDSWhilst new woodland creation is undoubtedly seen as the ‘Cinderella ’ in public eyes, especia lly if access is available and it is close to their po int of residence. This tends to leave the existing woodlands as someth ing of a ‘poor relation’, although the ir value to the community and the environment are undoubtedly huge and in many cases public perceptions of the impact of ‘management’ often seen as felling and destruction, are not always understood as positive and a mechan ism to secure their future sustainability.

Exist ing woodlands in England extend to some one million hectares, or thereabouts, with some 20% of this area encompassed within the government estate. Of the remaining eigh t hundred thousand hectares, some 50% are situated on existing farms and estates. As fo r new woodland creation, the main vehicle for government interface with the private sector remains the WGS. Through th is scheme consents are provided for th inning and felling operations and grant funding is secured for replanting including natural regeneration and management through Annual Management Grant (AMG) which is now only restricted to special status woodland and public access.

Supplementary to the WGS is the Woodland Improvement Grant (WIG). Th is scheme set up some five years ago, provides cap ital funding fo r woodland projects which would not be able to

11

proceed withou t additional financial assistance.It is divided into three projects:–! Project 1 – Public Recreation: Designed to

fund work such as the creation of paths, signs, car parks, disabled access etc. ;

! Project 2 – Undermanaged Woodlands: Funding is ava ilable for uneconomic work in small undermanaged woodlands such as felling, coppicing, management planning and fencing etc.;

! Project 3 – Biodiversity: This project supports work with principally biodiversity objectives, linking to local biodiversity action plans and habitat action plans. This is part icularly focused on ancient woodland which are now seen as the listed buildings of the UK forestry estate2.

Grants under the WIG scheme are paid a t 50% of agreed costs with up to £100,000 available per project for public recreation and biodiversity.

Forest PlansIn addition to the usual mechanism of the WGS we have seen a recent move to a more long-term strategic p lann ing with the introduction of Forest Plans. The aim is to encourage woodland estates and wood land groupings to draw together long-term management plans. Forest Plans provide consents for 10 years and strategic planning guidance for 20-plus years. The process involves early engagement with consu ltees. In the majority of cases this has proved to be an extremely

positive feature of the scheme. There is funding available for the plan preparation and significant flexibility with in the structure of the new plan to allow fo r developments and changes in direction of forestry policy, markets etc. It has also p rovided much easier access to discretionary funding.

ReviewAs in the case of new woodland creation, existing woodland and the support provided by the Forestry Commission is curren tly under review. Under the title of Sustaining England’s Woodlands a steering group has recently reported to the Forestry Commission with recommendations as to how their support for existing woodlands should be taken forward .

The report notes that woodlands deliver vast benefits to many part s of society, but stresses that the role tha t woodlands play in the de livery of government objectives must be promoted and woodlands brought to the fore, bo th regionally and nationally.

Currently 220,000ha o f private wood land are within forma l management schemes with the Forestry Commission. This is pub lic/priva te partnership on a grand scale, however, fund ing constraints mean that government is only able to secure access to less than 5% of the wood lands and to fund biod iversity improvements on less than 3% of the area.

With current resources in the region of £8m per annum, it would not be possib le for the

government to achieve what it needs to, to meet current targets, le t a lone what it would like to achieve to deliver improvements and take forward its sustainable development programme. In reporting, the steering group came up with a number of recommendations under the following key headings:–! Raising awareness, both amongst the general

public and within government;! Improving the markets for woodland products

and services to help woodlands pay fo r themselves in the future;

! To undertake a major re-assessment of grants in time for the England Rura l Development Plan review in 2003;

! To provide increased emphasis on advice and training and to work in partnerships with other organisations;

! To encourage the Forestry Commission to work more in partnership with associated organisations, such as the National Forest Company, to deliver wider objectives and secure additional funding .

The report is due to come out in the autumn and it is hoped that we will see changes filtering through early in 2003.

ConclusionsBoth new woodland creation and existing woodland have an importan t role to play in the way that we manage the environment in the UK.

With markets as depressed as many in the industry have seen them, and low curren t levels ofgrant funding, much of the management and woodland creation currently taking place is undertaken as a labour of love by much of the private sector. One has to question how long this can continue.

Many of us in the secto r believe that we are now finally seeing recognition of the real and substantial benefits that woodlands provide and are providing sensib le mechanisms to assist in taking their creative management forward. It is hoped that the current reviews will come up with some new and innovative solutions which may offer many new opportunities to farmers and landowners to ensure that trees and woodlands are seen as an integral part o f their business un its into the future.

1 Details of the review together with the England Forestry Strategy are available at the forestry Commission’s website www.forestry.gov.uk (this also provides links into the DEFRA s ite in relation to the current review)

2 Ancient woodlands are defined as those shown as being in ex istence for at least 400 years and as recorded on the 1600 Ordnance Survey sheets.

John Lockhart can be contacted on 01536 408840. He will rev isit the subject of trees and woodlands in the next issue.

12

The long-standing and widely-used range o f trading contracts issued by UKASTA (many of which are endorsed by NFU) all contain

provision that disputes shall be de termined by arbitration (a ‘Scott and Avery’ clause) thus precluding a disputant part y from seeking redress under the law. The arbitration process, including an appeal where provided for, has to be exhausted before a dissatisfied party may seek a legal judgement, but that application may be entered only where the arbitrator is thought to have erred in law.

From my viewpoint as a now we ll-seasoned arbitrato r specialising in agriculture and agricu ltural commodities, it is clear that when disputes arise in domestic agriculture too frequently the grower or his agent does not appreciate the rights available to them which are inherent in the UKASTA contracts, while of course their liabilities will quickly be pointed ou t to them by their opponents.

The fundamental premise tha t a contract is an agreement of terms between two parties who are free to agree whatever is suitab le to them both, seems to be missed and growers are slow to say – generally as sellers of their produce – clearly and unequivocally what they want contractua lly. On severa l occasions when sitting as an arbitrator I have heard a farmer seller say “But that’s not what I intended”, or “That’s not what was agreed”, yet the confirmation of the contract had been issued to the g rower and had been filed (probably behind the clock!) without the detail having been examined and any errors or omissions pointed out to the issuing merchant trader.

Something old, something newDespite the UKASTA contracts being well written and generally watertight – evidenced by the fewer than 10 arbitrations heard under those rules annually in recent years – they are not a ‘Buyers Tool’ as is so frequently a lleged. An air of dissatisfaction pervaded NFU, despite their regular involvement in meetings with UKASTA to consider the need for alterations or additions, so they embarked earlier this year on the preparation of an NFU Cereals Contract. It was a go lden opportunity, but NFU chose not to consult those parties so integral to the satisfactory sale o f the cereal products of the ir members. NFU now say that they did consu lt, bu t UKASTA, NABIM (the millers’ trade association) and MAGB (for the maltsters) all say that the con tract was issued fait

accompli , without any cross reference or consultation.

The new document was in part an incorporation of many of the terms in the UKASTA No.1 Seller to First Buyer, Grain and Pulses Contract, but there were new clauses which cut across the trading practices and trade rules which regulated our domestic business pattern to ensure that all parties – farmer sellers, merchant traders and the end buyers (be they consumers or export shippers) – shared common contractua l aspects, ensuring that a chain existed whereby everyone was obliged to meet certain common practices to ensure the timely movement, dete rmination of quality, advice of details, settlement of p roblems, of the contractua l goods.

Imposition of a new contract When the NFU Contract was issued it caused widespread angst among the trade, fo r there were impositions in this new contract which were simply not acceptable by most of the grain trade as the back-to-back provisions given by the UKASTA terms were not met by the NFU contract.

I will say, to ensure that I am not accused of being one-sided in this matter, there are provisions in the NFU contract which I applaud, and which as an independent practitioner I have been promoting for some time (latterly as a speaker on the topic of The Beneficial use of Contracts, and Dispute Resolution at the series of HGCA Market ing Seminars which have been presented around the country this year for farmer audiences), but that said, I feel the NFU have missed the chance to make this contract one

which met the approval and acceptance of the trade users before it was launched.

When I first expressed my doubts about the efficacy and practica l applicab ilit y of the NFU contract I was told by an NFU officer, “If it serves only to act as an aide memoire to our members when selling their produce we shall consider it to have been a worthwhile exercise”. There were immediate refusals to buy on the NFU terms by the majority o f the major grain traders, and by millers and maltsters, such were the impositions upon them by the ir adoption of the NFU terms.

Since harvest I have taken a straw poll of farmers, traders and consumer users to find if, and how much, the NFU contact has been used. Ifthe results a re to be believed – and I have no reason to doubt their veracity – the up take has been minimal. The lack of use has been exacerbated by the d readful price structure of the cereals market which has cut trad ing p rofits and consequently removed from traders any possible thought of buying on terms other than those which they know to of fer them an element of security from farm gate to flour mill, malting o r export shipping facility.

A curate�s eggThe NFU cereals contract runs to eight pages. Shortage of space here precludes me from being too detailed, so I will highligh t some of the po ints – both the good and no t so good.

It p rovides, at Clause B, that a seller may (providing the buyer agrees, as always in any contractual agreement) limit the distance from his farm to the place of delivery of his goods, but it does not specify if that distance is road miles or radial miles – and such detail might be crucial if a dispute arises over the issue.

The payment condition at Clause G is precise , in that it provides for a date by wh ich payment shall be made, and does no t leave it indeterminate as so of ten seen in a UKASTA confirmation. Provision is made at Clause 9 of the

Dispute resolution in agricultural commoditiesPeter Brown, Chartered Arbitrator, Aldeburgh

13

Schedu le for the payment of interest on late payment. A lawyer colleague who specialises in commodities tells me that this is likely to run fou l of the Restrictive Trade Practices legislation, as may Clause 7, The Extension of Delivery Period , for this dictates by how much a buyer shall pay an increase o f price for late collection or by extension of the delivery period. It is thought the NFU will have to reconsider the ir approach to these items.

Retention of samplesThere is a very good, but not quite sufficiently finished in detail, ‘Quality Grid’ in which buyer and seller may be specific about the details o f the specification on which cereals are bought and sold. There will be much disagreement about the analytical to lerances, for while the NFU claim they are supportable technically, t hey a re seeking to impose them on merchant buyers who have no recourse to such tolerances from their buyers – the feed manufacturers, millers, maltste rs and shippers who are the outlets for much of the UK cereal crop, and who the NFU failed to consult.

Clause 4.1 requires delivery samples “…to be retained for at least two months”. If receiver buyers won’t do this (and many say it is not practicable or possible to do so) what is to happen, and where will the liability lie if they do not?

In the ligh t of the practice over recent years to sell a large part of the UK cereal crop before

harvest, perhaps the most contentious issue relates to Clause 14, Force Majeure , which seeks to include the protection of ‘Crop Fa ilure’ under reasons why a contract shou ld no t be performed.

Why should a grower sell pre-harvest when he considers the price is right, only to be able to scuttle for cover under the NFU contract if for any reason he does not get a crop as big as he expected? The cynic in me asks, could a price rise a ffect the size of the se llers’ crop?

And what is the merchant to do who has in turn sold tha t p re-harvest purchase, when his buyer will ho ld him responsible for the delivery of the g rain and the performance o f the contract under UKASTA No.2 (Wholesale ) terms. When is a contract not a contract, or where is the applicability of the old adage “My word is my bond”?

I suggest this clause has to be redrafted if trade is to be conducted on the NFU cereals contract terms, let alone speculative p re-harvest business, in this fraught, marginally profitable cereals market.

Peter Brown will be happy to supply members with copies of the UKASTA No.1 Grains & Pulses Contract and the NFU Cereals Contract to compare at a cost of £6.00 for the two. Contact him at The Pightle, Saxmundham Road, Aldeburgh, Suffolk IP15 5PD, tel. 01728 454034.

Regulating farm saved seed in EuropeIsabelle Corbeel-Mercer, Avocat/Solicitor, London

The issue of farm saved seed in Europe brings to my mind the beautiful painting by Bruegel of a farmer sowing his land by

taking handfuls o f seeds from a side bag and spreading them around with a repetitive movement1. This ancient image echoes the ancestral right for the farmer to use his own farm saved seeds.

With the research and development of new variet ies of seeds which increases their nutritional potential and allows a greater volume of production, a new legitimate right has arisen: the intellectual p roperty right over p lant variety which was initially recognised in the In ternational Convention for the Protection of New Variet ies of Plants signed in 1961.

European Regulations 2100/94 and 1768/95 apply the principles laid down in the Convention. The protection of the intellectua l property right by a European licence is balanced by the authorisation for farmers to use the product of the harvest of protected varieties for propagation under certain conditions, among wh ich are equitable remuneration and the duty of information. The implementation of those Regulations in each European count ry is a strikingexample o f the wide discretion and interpretat ion left to the Member State. Every country seems to have created a particu lar system in accordance with the degree of pressure coming from the different participants.

Publication of agreementIn accordance with Art icle 14(3) of Council Regulation 2100/94 , the farmer has the obligation to pay an “equitable remuneration to the holder, which sha ll be sensibly lower than the amount charged for the licensed production of propagating material of the same varie ty in the same area”.

This cond ition does not apply to small farmers as de fined in the Regulations. Regu lation 1768/95 which implements Article 14(3) tends to p romote agreements between holders, breeders and farmers on the level of remuneration. Once an

14

agreement is reached at any level – national o r regional – in the Community it should be sent fo r publication to the Community Plan t Variety Of fice in Angers and would be used as a guideline fo r further agreements. Where no agreement can be reached, the remuneration to be paid is 50% of the amounts charged for the licensed production of propagating material 2.

So far only the German agreement has been notified to and published by the Community Plant Variety Office. In Germany remuneration is based on a sliding scale which increases or decreases depending on the amount of farm saved seed used by the farmer. For example, a farmer whose total seed usage comprises 85% farm saved seed and 15% certified seed would have to pay a farm saved seed royalty of 80% of the certified seed royalt y rate. However if more than 80% of a farmer’s tota l seed usage is certified seed then no farm saved seed royalty is payable and the breeders will give him a discount on the seed purchased.

The UK positionIn the UK, Section 9 of the Plant Variety Act 1997 implements the European Regulation and provides for a similar system of agreement to the European and an “equitable remuneration” is due for the use of farm saved seed. However the amendments introduced by Commission Regulation 2605/98 and relating to the 50% maximum have not been implemented in the UK.

No official agreement has been sent to Angers but agreements have been concluded between the British Society of Plants Breeders (BSPB) and the NFU for cereals, fields peas, beans, oilseed rape, linseed and triticale in the form of one remuneration rate per species. Disagreements still exist on remuneration for seed potatoes. DEFRA is not involved at all in the agreement process and actually refers enquiries to BSPB for any information.

In France, where farmers still represent a considerab le national power, no agreement whatsoever has been reached with the consequence that the Agriculture Ministry imposed a tax on the sale of agricultural products subject to licence, which is collected for the benefit of the National Holders and Breeders Group 3. As this implementation of the European Regulation appears fairly extraordinary, it is no surprise that a case is pend ing in front of the French Court to challenge this post-harvest tax. Indeed this tax does not respect the system imagined by the au thors of the the European Regulations and imposes the burden of the remuneration on every farmer, despite the European exemption for small farmers.

Provision of informationAnother condition laid down in Article 14(3) of

Regulation 2100/94 relates to the information that the farmers and suppliers have to give to the holders of licences about the ir use of the licensed variet ies; this is an essent ial corollary to the holders’ rights to remuneration. However this duty is not stra ightforward either. Two German cases are pending in front of the European Court of Justice in Luxembourg 4 for a p reliminary ruling .

At the origin of these cases is a request for information addressed to every sing le farmer, breeder and holder by the Saatgut-Treuhandverwaltungs GmbH (STV), an organisation comprising a large number of rights holders. More than 30,000 farmers and a large number of breeders refused to answer the questionnaire and 4,000 farmers have been sued in front the German courts. Those who lost their cases are now on appeal. The Oberlandesgericht of Frankfurt referred to the Court of Justice the question whether the ho lder has the right to request information from every farmer even if there is no evidence that a farmer has used his licensed variety.

In his opinion presented on 21st March 2002 Advocate General Colomer denied the ho lders such a right because in his view the holders only have a right against farmers who bought licensed seeds and because holders shou ld have other means to obtain this info rmation, for example in addressing a similar request fo r information to their own breeder-clien ts.

Belgian resistenceThe situation is also very tense in Belg ium where a simila r request for information from the Ministry of Agriculture and holders/breeders was sent to every seed processor. Some seed processors whose clients are farmers were reluctant to send their list of clients to the holders/breeders for different reasons: commercially, breeders are also competito rs as farmers can directly buy their seeds from them and legally, transmission of personal in format ion related to a third party can amount to a breach of p rivacy.

Furthermore, as farmers themselves did not receive any request for information, seed processors’ clients wou ld be liable to pay the remuneration but no t the farmers who borrow the ir mach ines or who do not use their services.

However the processors eventually sent the information requested to the breeders after, probably illegally, being threatened by the Ministry with the revocation of their licence to process if they did not answer the questionnaire. At the beginning of the summer the breeders sent their bill to the farmers but quite a few refused to pay. No case has been yet introduced before the Courts bu t the subject is fairly hot.

In the UK, however, t he in formation du ty does not seem to be p roblematic and BSPB co llects its information from either farmers or seed

processors.The most drastic opposition to the European

Regulations is coming from an association called SPFEU (Seeds and Plants Farm in European Union), a French initiative which counts members from Belgium, Germany, Spain, France and the Netherlands. Their aim is the suppression of any remuneration for farm saved seed. Their position, which can be considered as extreme, is not necessarily without force as an argument as the Italian situation demonstrates.

Farm saved seed usage is very low in Italy and confined to wheat in the South of the country. Consequently most of the seeds are bought on the European market, in United States and Canada. Companies like Monsanto and Novartis have a st rong position especially as soya seed providers. Their power over the country’s fa rming is somewhat concerning as they try to impose on farmers and on the Italian Ministry of Agriculture the exclusive use of their genet ically modified products.

So the problems arising from the European system of remuneration for fa rm saved seeds are not only related to the farmers’ wealth. But in any event, if the usage of farm saved seed is not economically advantageous for the farmer, he will not bother with the extra work required to save theseeds. And the Italian problem will multiply in other Member Sta tes5.

Harmonisation by supervisionIdeally, the agreements should be supervised and the general situation assessed by the Community authorities in order to respect the balance between the usage of both kind of seeds which is what the European Regulation intended to achieve and what is expressed in Article 5(3 ) of the European Regu lation 1768/95: “The level of remuneration shall be considered to be sensib ly lower … if it does not exceed the one necessary to establish or to stabilize, as an economic factor determining the exten t to which use is made of the derogat ion, a reasonably balanced ratio between the use of licensed propagating material and the planting of the product of the harvest of the respective varie ties covered by a Community plant varie ty right.”

1 La Parabole du Semeur , Washington, National Gallery.

2 Artic le 5(5) of Commiss ion Regulation 1768/95 as amended by Artic le 1 of Commiss ion Regulation 2605/98

3 Arrêté du 1er août 2001 JO 199 du 29 août 2001 p.13816

4 C-305/00 Christian Schulin v Saatgut-Treuhandverwaltungs GmbH and C-182/01 Saatgut-Treuhandverwaltungs v Werner Jäger .

5 In Denmark and Finland more than 95% of seeds are certified.

15

The ALA Student/Training Section

Live & LearnLive & Learn

This article explores the basics of partnership law as it applies to farm businesses. It will deal with basic

partnerships and not the more specialised arrangements such as Limited Liability Partnerships or Limited Partnerships. The law is still to be found in the 1890 Partnership Act (“the 1890 Act”).

Partnerships are the most common business structure for farming businesses. They have advantages of informa lity. A partnership can be set up orally. They have a natu ral attraction in that on the surface at least they relate to that simplest of all business proposals, “let’s be partners”. The question, however, is whether the reality is quite as simp le and straightforward as the basic concept.

What is a partnership?S.1 of the 1890 Act defines partnership as “the relation which subsists between persons carrying on a business in common with a view o f profit.” A partnership formed for illegal purposes is void from the beginning as it confers no enforceable rights. There are issues of capacity wh ich re late to classes of individuals – the list crea tes some unlikely bedfellows as it consists of aliens, barristers, ecclesiastical persons, minors and persons of unsound mind. For the purposes of this article it is assumed that all partners are of full age, sound mind and able genera lly to take part in the partnership and there is not a barrister or bishop to be seen.

What is not a partnership?S.2 of the 1890 Act lists a number of arrangements which do not amount to partnership. Joint ownership does not o f itself create a partnership. Nor does the sharing of gross returns, which is why share farming arrangements can be structu red so that they are not partnerships. If parties are sharing g ross receip ts then they do not qualify as carrying on a business in common with a view of profit, as profit is the ultimate net figure for the business.

Another significant exception is that a contract

for the remuneration of an agent of a person engaged in a business by a share of the profits of the business does not o f itself make the servant or agent a partner in the business. It is based on this exception that a contracting agreement can be st ructured in such a way that the parties a re not partners. Although the cont ractor may be paid a bonus wh ich amounts to a share of p rofit his role is tha t of a contractor and he is not, without more, carrying on business toge ther with his principal. They each have a separate business.

The essentials of partnershipOnce a partnership is established, there is created a set of rights as between the individual partners themselves and a further set of rights as between the partners and the world at large.

S.5 of the 1890 Act p rovides that each partner is an agent of the firm for the purposes of the business of the partnership. The acts of a partner will bind the firm whether or not, as between the partners, the partner had authority to enter into the transaction in question.

The only two qualifica tions to th is are that the act must be in the normal course of the partnership business and the o ther contracting party must not be aware of the partner’s lack of authority. For example, if Black and Blue farm in partnership together and agree that ne ither will enter into a contract with value of more than £500 without the agreement of the other, and Black contracts to buy a combine harvester costing £100,000 in the name of the partnership, the partnership is liable.

S.9 of the 1890 Act compounds this provision by providing that every partner in the f irm is liable jointly with the other partners for all debts and obligations of the firm incurred while he is a partner. S.10 of the 1890 Act extends this rule to other wrongful behaviour and therefore when Blue runs the firm’s new combine into a neighbour’s greenhouse, demolishing it entirely, the partnership is liab le just as much as Blue. Partnership liability can even spill over onto persons who are not partners. If for example the wealthy Mrs. Black used to be a partner but,

having retired from the f irm, still allowed herself to be ca lled a partner so as to make it easier for the other two to obta in credit t hen she will be liable just as if she was a partner.

Every partnership carries with it genuine and potentially unlimited risk to the partners. In the past members of farming families have been made partners purely for the purpose of spreadingthe taxable income and with little regard to the commercia l realities. Th is was probably never particularly wise but now that times are hard and liabilities a very serious p rospect, nobody should join a partnership of any sort unless there is a really good commercial reason in the shape of their contribution to the business.

Partnership � the internal rightsand liabilitiesThe starting poin t to ascertain the scope of these rights and liabilities is the partnership agreement. In many cases the partnership agreement is rudimentary or non existent. If there is nothing to be found in the partnership agreement or to be deduced from the course of dealings and agreements of the partners then the 1890 Act will apply. The first subject covered by the 1890 Act is that of partnership property. It is often overlooked that if land is introduced as partnership p roperty then it no longer belongs to the individual: instead he will have partnership capital. This needs to be remembered when structuring a farmer’s will.

One of the most important things to be done when setting up a partnership is to establish what is and what is no t partnership property. S.20 of the 1890 Act provides that property o rigina lly brought into the partnership o r acquired on account of the firm is partnership property and must be applied by the partners exclusively for thepurposes of the partnersh ip. Sometimes the analysis of whether or not an asset is partnership property can be incredibly complex.

The case of Faulks v Faulks [1992] 15EG82 involved a partnership which was established before milk quota was introduced. After milk quota had been introduced and a substantial quantity of it was registered in the partnership name,

Three little words –“Let’s be partners”William Barr, Mills & Reeve, Cambridge

one of the two

partners died. The

partnership agreement stip-

ulated that all the partnership assets

would be realised and specifically addressed

the issue of the farm tenancy. It was vested in the

elder brother to hold ontrust for the partners for the

duration of the partnership. On the death of one partner the

partnership came to an end and thus the tenancy was no longer held on trust for the partnership. The milk quota was held to be inextricably linked to the tenancy; since the tenancy was not partnership p roperty nor was the milk quota .

With regard to farmland the existence of a tenancy may of ten make the situation clear. If land is let to the partnersh ip then the partnership will not be the owner of it. The tenancy will be a partnership asset but not the freehold.

Duties of partners inter seS.24 of the 1890 Act sets out a series of rules governing the du ties of the partners to each other.

Unless otherwise agreed all partners are entitled to share equa lly in the capital and profits of the business and must contribute equally towards the losses whether of capital or otherwise sustained by the firm. In the light of this it is critical in drafting any partnership agreement to set out as clearly as possible the ownership of the capital, the way in which profits are shared and the proportions in which losses are born. It should not be overlooked that under the 1890 Act capital profits are shared equally (in default of any other agreement) in just the same way as annual profits.

Every partner may take part in the management of the partnership business bu t no partner is en titled (without special agreement) to remuneration for his work. The only remuneration is the sharing o f profits.

Out with the old � in with the newNo new partner can be introduced without the consent o f all existing partners and conversely no majority of partners can expel a partner without a special provision in the agreement .

Ordinary matters of decision-making relating to the partnership business may be decided by a majority of the partners but no change may be

made in the nature of the business without the consent o f all partners.

Whilst the basic decision-making structure o f a partnership under the 1890 Act seems sensible and sound it can soon run into trouble unless backed up by further powers and provisions in the agreement. In family partnerships it is all too common for one partner to fall out with the others to such an extent that he or she is no longer on speaking terms. Nevertheless the dissident partner may remain in the partnership and will be able to block all resolutions which require unanimity such as the admission of a new partner or the adoption of a new partnership deed.

How long does a partnership last?The obvious answer is that it depends on the period for which it is established. Sometimes partnerships are established for a fixed term or even for a single venture. In most fa rming partnerships that is not the case. If t here is no partnership agreement or the subject is not covered in the partnership agreement then the partnership will continue until any partner gives notice to the others o f his intention to disso lve the partnership. If there is no fallback position as to what happens next then the partnership will indeed be dissolved – 1890 Act S.32.

DissolutionSubject to any agreement between the partners every partnership is d issolved by the death or bankruptcy of any of the partners. The position again is that without a partnership agreement which addresses the issue, the partnership will be dissolved on the death of any partner. That of course does not necessarily mean that the whole process o f winding up the business will swing into action because the others could agree to form a new partnership.

A well drafted partnership agreement will tackle th is issue and will provide rights for the remaining partners to continue the partnership business and a basis on which the share of the outgoing partner is paid.

In advising on the estab lishment of a farming partnership it is necessary to appreciate that the assets have a very high capital value compared with the income produced by them. If matters are to be structured so that the continuing partners can afford to pay out the share o f the outgoing partner without undue financial pressure , then they will have the righ t to buy that share over, say,10 years with a low rate of in terest on the balance. That however creates financial hardship for the outgoing partner or that person’s family. A choice has to be made. The partners have to understand the consequences of it and plan their remaining finances according ly.

The other practical point in this context is that it should be carefully stated whether a ll or any o f the partnersh ip assets are re -valued for these purposes. In the case of the partnership land there may be a very large diffe rence between book value and market value. Other assets such as milk quota may not even have a balance sheet value.

Partnership dissolutionWhilst this is a detailed and technica l subject in itself there are a few basic po ints wh ich should be understood because they are really only the corollary and consequence of the basic structure of partnersh ip law. If a partnership is being dissolved and all of its assets are sold then it is necessary to determine who has first claim on the funds.

The rules for distribut ion of assets on fina l settlement of accounts are set out in S.44 of the 1890 Act. Losses whether of capital or income must be paid firstly out of profits, next out of capital and finally if necessary by the partners individually in the proportion to which they were entitled to share profit s.

The apparent simplicity of the partnership makes it attractive for family farms. In most cases the structure works well but the chances of success are increased if the parties take the risks seriously and take care to structure the ir agreement to fit their circumstances.

17

First o f all, I must say how gratified I have been by the messages of support I have received since the last issue was published.

Many thanks to all of you who took the trouble to get in touch.

It is an honour and delight for me to have been appointed as ALA’s first Consultant and Adviser. Many of you will know that I have been a keen supporter of ALA since I first became aware of its existence. I believe it has a great deal to offer, both internally and externally, and an equal potential f or growth.

ALA was founded, of course, at the time of the UK’s entry into the EEC (as it then was) and in anticipation of the joys of the CAP to come, anticipation which has been fulf illed in spades. From the small group of practitioners – a ‘Gentlemen’s Club’ as Eleanor Pinfold put it – whose idea it was, it has grown to a membership of around 700, more than half of that growth having come since I jo ined the Council in 1997.

Primarily, of course, we exist for the benefit of our members, all you good folk at the coal face who look to us for support in the provision of information and, latterly and highly sign ificantly, training. There are a number of projects we have in mind to improve that service over the coming years.

ALA goes techTechnology provides us with the means to increase communication to and amongst members. I have recently f inished computerising the Directory. Over 95% of members now have access to e-ma il and will have received their copy electronically in .PDF format. I propose that futu re editions will distributed similarly. This means you can access the in format ion on screen, or print out a hard copy if you pre fer. The computerisation has the added benefit that updates can be much more frequent than hitherto , not to mention the enormous saving to be made on the cost of production.

In due course, I would also like to be able to create a database of your individual specia list areas of practice. This is important for a number of reasons, not least among which is that we are continually being asked to refer people to practitioners in a given locality with experience in so-and-so. As Eleanor has said many times, we will not refer one member over ano ther, but to be able to provide a handful of names to a caller, focused on the problem in which they are concerned, is a distinct advantage.

We have talked of this be fore, and some of

you were kind enough to respond. With the Directory was a simple fo rm which you can complete and return, electron ically or otherwise, to help us keep our records up to da te and expand this da tabase.

Additionally, the technology will enable me to circulate information to you more frequently than is possible in a quarterly Bulletin. For example, you can be made aware of consultation papers as they are produced and in time to make your own response or contribute to ALA’s ‘corporate ’ response. Urgent changes in regulat ions can also be promulga ted in the same way.

None of this is to suggest that those who have not yet ventured into cyberspace, o r who would sooner not do so , will be left behind. Technology will undoubtedly p rovide a quicker and simpler route, but those without will still rece ive the Directory and information updates in hard copy, albeit with a short delay to allow for printing time.

Viva The BulletinNor does it suggest that any less attention will be paid to The Bulletin – rather the reverse, in fact. You will not ice that this edition contains a selection of European regulat ions, much along the lines of our regular ba ttery of SIs. Th is will become a regular feature, because it is important that we all keep abreast of what is going on in Brussels, whether we like it or not , and in spite o f those who think it has nothing to do with them.

Another p roject, which I expect to have off the ground by the end of th is year, is a website. I am vastly encouraged by the support you have g iven for this idea. This will provide us with two significant features: first, through the ‘public area’ it will make our existence and abilities, ind ividually and collectively, known to a wider audience; secondly, in a ‘Member’s on ly’ section, it will provide a database of relevant news and information, and a ‘self-help’ forum in which you will be able to discuss issues and problems with your fellow members.

A wider purposeOn the wider fron t, ALA has another purpose. Want of time has until now limited the amount of external representation the Association has had with public organisations such as the Land Registry.

Dit to the contributions we have been able to make to the development and implementation of policy in Whitehall.

My being able to devote that time g ives us an opportunity to expand that representation and I

am actively looking at ways in which this can best be achieved.

There is a wealth of talent amongst the membership, and I would like to th ink that I can help provide a means whereby that talen t can be given a stronger voice, perhaps not so much in the construction of po licy – although there is undoubtedly a ro le for us there – as in its practical aspects. As was so succinct ly put by one o f our Founding Fathers: “We don’t think you should do this damn fool thing , but if you insist on doing it, you should not do it in this damn fool way”!

Enlargement � a bonus for you!As I said earlier, the membership has expanded considerab ly over the last few years. Yet there aremany more p ractitioners who might benefit from being members who, one suspects, do not even know of our existence. For example: we welcome our accountant and banker members, bu t those two professions are under-represented; and membership in the North-East in a ll pro fessions is surprisingly low considering the geography.

You can help by talking to your friends and colleagues. In fact, we’d be grate ful if you would: so much so that any member who introduces a new member who is accepted and pays a year’s subscription before 31st March 2003 will receive a bottle of wine with our compliments for each new member introduced. Stock the cellar for Christmas! If only one in three of you is ab le to recruit a new member, we will approach the 1,000 mark in fairly quick time.

It�s your ALA � use it!Change and development won’t happen overnight. Nor will they happen without input f rom you. I am sure that you will have ideas which will further the interests of the Association , and we are always looking for willing volunteers who have something to contribute.

ALA would be nothing without it s members, each and every one of you. We cannot be successful without your input and feedback. My ears are always open to what you have to say andI sha ll be delighted to hear from you at any time if you wish to suggest ideas for pro jects, or ways in which current p rojects may be better executed , or if you just want a jolly good moan. Please get in touch – YOUR ALA NEEDS YOU!

Geoff Whittaker

Geoff ’s Geottings

18

SI2002/890  =  The Contaminants in Food (England) Regulations 2002 – implements Commission Regulation 466/2001 – Commencement Date 18th June 2002SI2002/1354(W131)  =  The Sheep and Goats Identification and Movement (Interim Measures) (Revocation) (Wales) Regulations 2002 � revokes SIs 2002/274 & 811 (W30 & 91) – Commencement Date 15th May 2002SI2002/1357(W133)  =  The Sheep and Goats Identification and Movement (Interim Measures) (Wales) Order 2002 – Replaces the above – Commencement Date 15th May 2002 SI2002/1358(W134) = The Animal Gatherings (Interim Measures) (Wales) (Amendment) Order 2002 – amends SI2002/283(W34) – Commencement Date 15th May 2002SI2002/1387(W136) = The Products of Animal Origin (Third Country Imports) (Wales) Regulations 2002 – enforces Directive 92/118/EEC in Wales – Commencement Date 22nd May 2002SI2002/1416(W142)  =  The TSE (Wales) Regulations 2002 – implements Regulation (EC) No. 999/2001 in Wales – Commencement Date 27th May 2002SI2002/1460 = The Plant Protection Products (Amendment) (No.2) Regulations 2002 – further amends SI1995/887 and revokes SI2002/526 – Commencement Date 1st July 2002SI2002/1461  =  The Home-Grown Cereals Authority (Rate of Levy) Order 2002 – fixes rates of levy for year to 30th June 2003 – Commencement Date 1st July 2002SI2002/1472(W146) = The Animal By-Products (Identification) (Amendment) (Wales) Regulations 2002 – further amends SI1995/614 – Commencement Date 15th July 2002SI2002/1554(W152)  =  The Seeds (Fees) (Amendment) (Wales) Regulations 2002 – further amends SI1985/981 – Commencement Date 9th July 2002SI2002/1563 = The Seeds (Fees) (Amendment) (England) Regulations 2002 – further amends SI1985/981 (NB: amendments do not mirror the Welsh) – Commencement Date 23rd July 2002SI2002/1614  =  The Food and Animal Feedingstuffs (Products of Animal Origin from China) (Emergency Control) (England) Regulations 2002 – prohibits importation of stated

products from China – Commencement Date 20th June 2002SI2002/1619  =  The Animal By-Products (Identification) (Amendment) (England) Regulations 2002 – further amends SI1995/614 in England only – Commencement Date 15th July 2002SI2002/1646 = The Welfare of Farmed Animals (England) (Amendment) Regulations 2002 – amends SI2000/1870 – Commencement Date reg.2(3) 1st January 2003; reg. 3 1st January 2011; all others 25th June 2002SI2002/1677 = The Plant Breeders� Rights (Fees) (Amendment) Order 2002 – further amends SI1998/1021 by increasing fees – Commencement Date 23rd July 2002SI2002/1710 = The Access to the Countryside (Provisional and Conclusive Maps) (England) Regulations 2002 – regulates compilation and provision of maps under CRoW Act – Commencement Date 29th July 2002SI2002/1726(W161) = The Food (Figs, Hazelnuts and Pistachios from Turkey) (Emergency Control) (Amendment) (Wales) Regulations 2002 – amends SI2002/821(W97) – Commencement Date 5th July 2002SI2002/1728(W162) = The Food (Peanuts from China) (Emergency Control) (Amendment) Regulations 2002 – amends SI2002/820(W96) – Commencement Date 5th July 2002SI2002/1730(W164)  = The Environmental Protection (Restriction on Use of Lead Shot) (Wales) Regulations 2002 – replaces SI2001/4003(W331) – Commencement Date 1st September 2002SI2002/1769  =  The Housing (Right to Buy) (Designated Rural Areas and Designated Regions) (England) Order 2002 – designates Ribble Valley as a rural area under Housing Act 1985 – Commencement Date 6th August 2002SI2002/1797(W172)  =  The Feeding Stuffs (Amendment) (Wales) Regulations 2002 – further amends SI2001/343(W15) – Commencement Date 5th August 2002SI2002/1798(W173)  =  The Food and Animal Feedingstuffs (Products of Animal Origin from China) (Emergency Control) (Wales) Regulations 2002 – Welsh equivalent of SI2002/1614 (q.v. ) – Commencement Date 12th July 2002SI2002/1805(W175)  =  The Plant Health (Amendment) (Wales) Order 2002 – further

amends SI1993/1320 in Wales – Commencement Date 6th August 2002

SI2002/1870(W183)  =  The Seeds (Fees) (Amendment) (Wales) (No.2) Regulations) 2002 – further amends SI1985/981 by increasing fees (NB: amendments do not mirror the English) – Commencement Date 23rd July 2002

SI2002/1890  =  The Agricultural or Forestry Tractors and Tractor Components (Type Approval) (Amendment) Regulations 2002 – further amends SI1988/1567 – Commencement Date 12th August 2002

SI2002/1891  =  The Agricultural or Forestry Tractors (Emission of Gaseous and Particulate Pollutants) Regulations 2002 – prescribes emission limits for tractor engines – Commencement Date 12th August 2002

SI2002/1898(W199) = The Welfare of Farmed Animals (Wales) (Amendment) Regulations 2002 – amends SI2001/2682(W223) – Commencement Date 6th August 2002

SI2002/1912(C58)  =  The Commonhold and Leasehold Reform Act 2002 (Commencement No.1, Savings and Transitional Provisions) (England) Order 2002 – brings into force stated provisions of C&LR Act 2002 – Commencement Date 17th July 2002

SI2002/1922 = The Food (Control of Irradiation) (Amendment) (England) Regulations 2002 – further amends SI1990/2490 – Commencement Date 14th August 2002

SI2002/1923  =  The Contaminants in Food (England) (Amendment) Regulations 2002 – amends SI2002/890 (q.v.) – Commencement Date 24th July 2002

SI2002/1925 = The Agricultural Holdings (Units of Production) (England) Order 2002 – net annual income from agriculture – Commencement Date 12th September 2002

SI2002/2102 = The Environmental Protection (Restriction on Use of Lead Shot) (England) (Amendment) Regulations 2002 – amends SI1999/2170 – Commencement Date 1st September 2002

SI2002/2227 = The Long Residential Tenancies (Principal Forms) (Amendment) (England) Regulations 2002 – amends SI1997/3008 – Commencement Date 30th September 2002

19

STATUTORY INSTRUMENTSto 31st August 2002

Commission Regulation 1188/2002 – fixes exchange rate for sugar beet marketing year2001/02Commission Regulation 1252/2002 – provisional authorisation of a new feedstuff additiveCommission Regulation 1255/2002 – fixes export refunds in the milk sectorCommission Regulation 1282/2002 – amends Annexes to Council Directive 92/65 concerning health requirements for import of animals, semen, ova and embryos

Commission Decision 2002/530 – prolongs protection measures concerning CSF in Spain

Commission Decision 2002/531 – approving measures in Germany for eradication of CSF

Commission Decision 2002/537 – concerning protection measures relating to Newcastle disease in Australia

Council Decision 2002/550 – permits UK to apply differentiated rate of excise duty on biodiesel fuels

Council Directive 2002/54 on the marketing of beet seed

Council Directive 2002/55 on the marketing of vegetable seed

Council Directive 2002/56 on the marketing of seed potatoes

Parliament and Council Directive 2002/44 on health and safety requirements regarding workers’ exposure to vibration

BRUSSELS UPDATEto 31st August 2002

Forthcoming events ...MASTER CLASS18th October 2002ArbitrationMontcalm Hotel, London

REGIONAL MEETINGS8th November 2002South West RegionSouthgate Hotel, Exeter

November 2002 (TBC)South East RegionMacfarlanes, London

November 2002 (TBC)East Midlands RegionLincoln

DINNER26th November 2002The Farmers Club, London

JOINT MEETINGWITH CAAV18th March 2003Partnership mattersBirmingham

Further regional meetings are be ing a rranged for 2003 in Cambridge, Newcastle and Oxford, as is a Master Class on land-related issues.

Please contact Alan Brakefield for informationon all meetings.

European Countryside MovementSeminar, Brussels, 27th June 2002

Five years previously (coincidentally to the day), the Mouvement Européen de la Ruralité (MER) was founded, a collaboration of o rganisations it describes as “interna tiona l NGOs bound by a charter on shared objectives for a dynamic countryside”. It currently comprises

11 such group ings, including the well-known COPA and COGECA, the CEDR and such associa tions as the European Centre of Landowners (CEPI), t he Federation of Field Sports Associations (FACE) and the European Council for Villages and Small Towns (EUROGITES).

The Seminar in June had been ca lled to d iscuss spa tial cohesion in the EU, and was addressed by senior officials at DG AGRI and DG REGIO, the Vice-President of the European Parliament Committee on Agricultu re and Rura l Development and the Chairman of the equivalent section in the European Economic and Social Committee.

Somewhat paradoxica lly, it was said that although the term ‘spatial cohesion’ does not ye t have a concrete definition , it is a concept that is at the core of all rura l areas’ expectations. Th is is easier to comprehend if one remembers tha t ‘cohesion’, in Euro-speak, means the bringing up o f the poor to the standards of the bette r-o ff. The spa tial element refers, in this con text , to the interests of the rural areas as compared to those of the towns and cities.

What is clear – although this is not new – is that the Second Pillar of the CAP, the rural deve lopment arm, is and will be of increasing importance. It is seen as a means to negate intensive farming, increase bio-diversity and promote ‘multifunctionality’ and food safety. The proposed increases in modulation (see Richard Barker’s article on page 8) will provide funds which are intended to bolste r those already in place in that respect.

The schemes available under the Rural Development Regulation (1257/99) together with LEADER+ are financed by the EU to the tune o f €7.5bn per annum. If they are co-financed by Member States (a big ‘if’ so far as the UK government is concerned), this would make availab le €15bn per annum across the EU.

The debate was lively and although space does not permit a full report, this is clearly a sub ject to which the MER will return increasingly in the debate on the Mid-Term Review and, especially, on the next Financial Perspective for the CAP beginning in 2006. To borrow Richard Barker’s closing words, watch this space! GDW

H.M. Land RegistryCustomer User Panel, 9th July 2002

We have referred before to the Land Registry’s Customer User Panel (Issues 27 & 28). This meeting provided another opportunity for an exchange of views on performance and policy. The agenda aga in included the usual report on application in take numbers and turnaround times for

both simp le and complex app lications.While the de legates – primarily f rom the solicitors’ profession – expressed general approval with the

speed at which simple app lica tions were processed, continued concern was voiced a t the length of t ime first registrations were taking. I made the point that this was especially so with large-sca le rural applications – knowing the amount of time one takes in one’s own off ice to settle the title gives one the ability to criticise the Registry when it takes many more times longer. I would appreciate hearing from members with their experiences so that I have further ammunition for the next meeting.

The Registry moved the discussion to the electronic payment of fees, an issue wh ich will be o f increasing importance with the advent of e-conveyancing. Their proposal to require Direct Deb its from practitioners’ client accounts rece ived an unsurprisingly hostile reaction amount ing to a ve to. My suggestion that fees be collected on the key account was no t greeted enthusiastically because of its cashflow effect, but the Registry was left in no doubt that it needs to come up with a middle way.

ON A related top ic, the Registry recently issued a consultation paper on the broad princip les and general system of e-conveyancing. ALA has responded, broadly supportive o f the concept, but with some reservations on certain issues, and an exhortation to increase efforts to bring all ru ral land on to the register to improve the process. If you would like a copy o f the response, please let me know. GDW

IN THE last issue we ment ioned the possibility of arranging a visit to our counterpart association in Denmark in the Spring of next year.

Plans are develop ing. It would be of help to know how many members are interested in making the trip (subject, obviously, to all the usual caveats). If you would be interested, please let meknow as soon as possible. GDW

WIN!with ALA

There is a bottle of wine for any member who introduces a new member between now

and 31st March 2003 – contact Alan Brakefield

for details