The 17th of August 2023 was a historic day for Wales with its first agriculture act becoming law; the Agriculture (Wales) Bill received Royal Assent and is now known as the Agriculture (Wales) Act 2023 (“the AWA 2023”).
We have long been waiting to discover how Wales would implement its own post-Brexit agricultural support scheme and update its landlord and tenant regime as the framework is contained in the Agriculture Act 2020 which was introduced in November 2020.
The AWA 2023 comprises six parts which provide the legislative framework for its future agricultural policy.
Whilst the AWA 2023 is similar to the Agriculture Act 2020, one of the most significant differences is in respect of its dispute resolution provision for agricultural tenants, which we will consider in more detail below.
Some of the key provisions of the AWA 2023 are summarised as follows:
Wales’s agricultural policy is based on Sustainable Land Management (“SLM”). It has four overarching objectives, which are set out in section 1 AWA 2023. They are to:
The Welsh Ministers are under a duty to ensure they exercise certain functions in a way they consider best contributes to achieving those objectives (section 2 AWA 2023).
They are required to prepare a statement which identifies the indicators that will be applied to measure progress to achieving the objectives, as well as the targets to measure progress. This must be published and put before the Senedd by 31 December 2025 (section 4 AWA 2023). In addition, the Welsh Ministers must prepare progress reports which will be an ongoing requirement (section 6 AWA 2023).
The answer to its delivery is through a single scheme which will be known as the Sustainable Farming Scheme (“SFS”).
It will be some time before the Welsh Government determine how they are going to implement SFS. They are due to publish a final consultation later in the year, which will look in more detail at the final proposals for SFS, the detailed plans for the transition period and stability payments, amongst other things.
A separate article will set out what we know so far about the Welsh Government’s proposals for the new SFS.
As the wind down from Basic Payment Scheme Payments (“BPS”) continues, the AWA 2023 permits Welsh Ministers to continue making agricultural support payments to farmers until 31 December 2024.
Thereafter, over a four-year transition period between 1 April 2025 and 31 March 2029, the Welsh Government will make a “stability payment” to those farmers who already claim BPS irrespective of whether they choose to enter into SFS. However, there is no certainty as to the amount available to farmers beyond the 2024 – 2025 financial year as its dependent on future funding settlements. Like, “delinked payments” in England, farmers can expect the stability payment to be reduced over the transition period.
As to existing Glastir contracts, the Welsh Government confirmed back in 2021 that Glastir Advanced, Commons and Organic contracts would be extended to the end of 2023, which means there will be a gap between 1 January 2024 and the introduction of SFS in 2025. To bridge the gap, the Welsh Government are introducing an interim agri-environment scheme to support the protection of habitats on agricultural land during this period.
The Welsh Government has ensured that both tenants of Agricultural Holdings Act 1986 (“AHA 1986”) tenancies and Agricultural Tenancies Act 1995 (“ATA 1995”) tenancies are provided with a dispute resolution mechanism, which will afford them the opportunity to override the terms of their tenancy agreements in certain circumstances.
Often tenancy agreements contain tenants’ covenants preventing them from entering into subsidy schemes and from carrying out certain activities, that will likely be required as part of entry into such scheme (for example creating new woodland). Tenants require landlords’ consent to enter into these schemes.
Chapter 4 (Section 24) AWA 2023 amends section 19A of the AHA 1986 to apply to Wales’s financial support scheme. Our previous article, Agriculture Act 2020: New power for AHA tenants to override tenancy restriction, looked at the mechanics of referring to arbitration or third party determination, disputes in respect of tenancy restrictions which prevent tenants from claiming subsidies or fulfilling statutory obligations.
Wales are leading the way in affording ATA 1995 tenants the same opportunity. A new clause 8A is to be inserted into the ATA 1995. Tenants are permitted to refer disputes concerning requests for consent or variation of the terms of a tenancy to arbitration.
Secondary legislation will bring into force Chapter 4 of the AWA 2023 in due course.
It will be interesting to see if there is a change in the tide in England given that DEFRA has already warned that it will legislate to allow ATA 1995 tenants to override these restrictions if landlords continue to control access to subsidy schemes.
Any landowners in England and Wales, who are currently negotiating new long term FBTs, should be aware that the Welsh provisions could come into force at any time and England could follow suit and pass new legislation, which could render any prohibition on the ability to enter into any subsidy schemes ineffective. Collaboration between the parties is going to be key.