Land reform gives one food for thought

With the independence referendum looming, the debate is hopefully on where we can have our questions answered logically and honestly by all parties.

I have been more on the side of the Yes vote, mainly due to the need, over years, to get away from UK-wide financial policies, interest rates and taxes being driven by what is happening in the seemingly, ever-frothing and internationally-driven business sector of London and the south -east. That area’s economy is at odds with real life in the rest of the UK (There are few housing bubbles anywhere else at present, so why do we need cooling off too?).

However, also looming, is the Scottish Land Reform Bill, partly driven by the SNP, but also supported by the regular class-war types such as the Labour party, Greens, etc. who relish breaking up the huge landed gentry estates and putting a limit on the amount of land owned by any one party. It does seem fairer at first glance.

However, at second glance and with a little bit of thought, it may well be that this system has provided, for many years, a very cheap source of farming land which may have underpinned cheap and affordable food prices for us all – though none of us would be able to notice that.

Recently, a landmark ruling, reported at length in the farming press and further afield, has been the rent review of local farm Roxburgh Mains. The farmer there mounted a legal challenge to the 2009 rent review for his farm.

It had been rented at £27,500 per annum (£43 per acre) since 1996 and the landlord, Roxburgh Estates, wanted to increase this to £36,000 per annum (£56 per acre). The farmer challenged this through the Scottish Land Court.

The sum of £43 per acre per annum is very cheap food-producing land – equal to 12p per acre per day. What can you buy for that, other than a kid’s lollipop?

The court decided that a fair market rent is now just under £49,000 per year (£75 per acre) for his 640-acre farm in a fertile area of the Borders producing acclaimed pedigree cattle and sheep (not a wind-swept, heather-covered hill where one sheep needs a few acres to itself).

The new rent of £75 per acre per year, divided by 365 days, equals 21p per acre per day. To put that into something we can all relate to, it means that a 10-acre food-producing field, on this farm, will be rented for £2.10 per day – the cost of a decent salad roll for lunch or 1.5 litres of diesel.

The updated farm rent offers slightly dearer food producing land. Land produces food. Food is another form of energy and while crops can feed animals and people, they can also be used to produce bio-diesel. Energy, the world over, is in feverish demand, with large businesses continually looking for cheaper sources. If land is too cheap, then it could produce cheap fuel instead of food, which would obviously push food prices up.

The upcoming Land Reform Bill, with its accompanying “right to buy”, is akin to Margaret Thatcher’s “right- to-buy” council houses. It enabled millions to buy their property for about £9,000 and to, a few years later, sell it on the open market for often more than £100,000 – the end to cheap and affordable housing.

Could this new bill, by opening up the market, be an end to cheap and affordable farming land?

In farming, there are currently swarms of keen-as-mustard, and highly educated in modern scientific farming methods, people, often in their 20s, desperate to get hold of either a farm tenancy or a way into farming.

The current barrier has always been that, due to the land tenancy system, there has been no way in. Farms have stayed in families for generations, farm rents have been fixed in a secret, non-transparent market, leading to very cheap food-producing land. These swarms of new entrants will probably get their chance with the Land Reform Bill if they can compete in the new market for land tenancies and purchases. In economics, more demand drives up prices. It would seem that the Land Reform Bill seeks to change this, make it politically appealing to all of us and while it seems fair, what will it deliver for the actual price of weekly shopping?

Going back to simplistic comparisons, as I said before, the new Roxburgh rent review sets a 10-acre field at a rent of £2.10 per day but, on an open market, all these swarms will surely want to pay much more than that just to gain entry into farming. For any new investor in land who, unlike the wealthy estate landowners, will probably have large mortgages to pay, there seems little likelihood that they would accept such lowly returns if they rent their land out.

Instead of £2.10 per day, what would happen if they wanted £5 per day – about the cost of a nice deli sandwich, a can of juice and a cake per day? Still not a lot for a biggish food- producing field. That would be £1,825 per year, or £182.50 per acre – a massive increase in the cost of food-producing land and, logically, a huge rise in the cost to us all at the supermarket.

I am not sure if this land reform will be rolled out across the rest of the United Kingdom.

But, in the short term, it seems to be running alongside the independence debate and while I am slanted towards the Yes vote, I still need more information on what this land reform sea change might mean for the actual cost of feeding our families?

There are plenty of informed MSPs and experts out there, so can you please answer the questions in my letter? If there is a debate anywhere on this subject, please let me know so I can attend.

James Purves