Farming agreements need to cater for multiple Brexit options

Tenancies and other farming agreements being drawn up will have to cater for possibilities under three successive support schemes, warned advisers.

This follows a Treasury announcement late last week that it would guarantee the current level of agricultural funding under Pillar 1 of the CAP until 2020.

The three schemes include the one in place today, the one that will be the transition scheme under the Treasury plan, and the post-2020 new approach to agricultural support, said Julie Robinson, a partner with solicitor Roythornes.

See also: Read all the latest news on the EU referendum result

Her advice includes making provision in new medium- and long-term farm business tenancies for both the transition scheme and any new support scheme after 2020. 

“From the landlord’s point of view, provisions should be put in place to ensure tenants take up payment entitlements that may be on offer when we leave the EU scheme and switch to the transitional scheme,” said Ms Robinson.

“Landlords will also want to protect their position with regard to post-2020 policies, although that is more difficult to nail down at this stage.

“Tenants will want to ensure that they have some flexibility for review, or even to terminate early, should support for the farming sector take a radically different form or not be available at all after 2020.”

One of the ideas mooted is a system of tradeable environmental credits and/or obligations.

With this is mind, parties to medium- and long-term arrangements such as tenancies, sharefarming and contracting agreements may want to think about the position they would take should this kind of system be introduced, said Ms Robinson.

“We are generally discouraging “good faith” side letters that leave things uncertain, and encourage parties to make provision for what will happen if X, Y or Z is introduced [or not] post-2020,” she said.

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