Devon beef and dairy producer Winston Reed has seen the administrators called in at Cleave Farm, Templeton, near Tiverton – despite winning a four-year battle with Defra, which saw the parliamentary ombudsman uphold his complaint against the department.
Mr Reed is managing director of Reed Farms, which comprises five farms totalling 733ha. The core part of the business is dairy farming. The farm is under TB restrictions and was home to about 3,500 cattle, including beef animals, when the dispute with Defra started.
See also: Read the latest news on bovine TB
The conflict can be traced back to March 2010 when Mr Reed used Defra’s Whole Farm Approach website to successfully apply for an exemption from nitrogen vulnerable zone (NVZ) rules limiting the amount of slurry and manure he could apply to his land.
At the time the farm had been TB restricted for eight years and was heavily reliant on the exemption. The higher stocking levels that the derogation allowed enabled Mr Reed to keep cattle on the farm for longer – a vital consideration, he says, when TB restrictions meant he was unable to trade cattle as and when he liked.
“Without the derogation, we would have had to either find much more land or severely reduce cattle numbers,” says Mr Reed. “Derogations are essential for farm survival when there are TB restrictions in place because cattle are essentially marooned on the farm.”
The approval notice generated by the website informed Mr Reed his exemption would expire at the end of 2010. It added: “If you want a derogation for next year, you will have to submit another online derogation application for that year between 1 January 2011 and 31 March 2011.”
But when Mr Reed tried to renew the derogation in January 2011, he was told he had missed the deadline. Snow and bad weather meant the farm never received a letter the Environment Agency (EA) claims it sent the previous month stating the deadline was in fact 31 December 2010.
Missing the deadline plunged Mr Reed’s business into crisis. The 2010 derogation allowed him to spread manure containing 250kg/ha of nitrogen, rather than the NVZ limit of 170kg/ha. So he was now keeping 3,500 cattle – many more than the 2,300 cattle allowed with no derogation.
On the back of the derogation, Mr Reed had started a business rearing and selling TB-restricted bull calves on behalf of himself and other farmers. To do so, he had invested capital, recruited extra staff, converted farm buildings and purchased equipment.
“It is really difficult to sell TB-restricted cattle,” says Mr Reed. “We had a no-shoot policy and this business was a way of rearing and selling our Friesian bull calves rather than killing them. We were also rearing for other farmers who were finding it morally difficult to shoot their calves.”
A draft contract was drawn up with a beef processor and a major supermarket chain. By the end of 2010, the farm had grown to 3,443 cattle. As well as a 1,043-cow dairy herd, this comprised 814 calves under six months, plus a further 850 beef bulls and 734 heifers.
Renewing an NVZ derogation is usually a formality. But Mr Reed’s farm manager didn’t receive a reply when he told the EA that “we have no way of staying under the 170kg limit” and asked whether the agency would accept a late application.
The farm manager then emailed Defra for advice. Defra replied saying there was no provision for late applications. Defra added that if the farm was inspected, it was likely to be found in breach of the regulations – which could result in prosecution.
Mr Reed knew this was a real possibility. He had just been fined by the EA for contaminating a pond. EA officials already visited his farm more frequently than they did other holdings and the prospect of another prosecution made him “very nervous”.
Faced with breaching the law, Mr Reed took immediate steps to destock the farm and tried to spread slurry off the premises where he could. He pulled out of the supermarket deal and made his farm manager and staff he had recruited for the new business redundant.
He then started shooting the youngest bull calves. Mr Reed also killed and sold for beef some of the older lighter calves and was able to sell 1,000 cattle. He reduced his milk yields from 9,000 litres to 5,900 litres a cow to ensure his dairy herd fell within the lower bracket on the nitrogen tables.
It was hard going. But by the end of June 2011, the farm was down to about 2,300 animals and once again within the 170kg nitrogen limit.
The cost was more than financial. Mr Reed visited his doctor, who prescribed him anti-depressants, noting “at that time on that particular day he was quite bright, but he had some days when he just hid away in a dark room with poor appetite and sleep being disturbed”.
Mr Reed’s solicitors made a complaint against the EA, arguing that he had missed the 2011 deadline because he was provided with the wrong information. The EA replied saying it was not responsible because the application was via Defra’s Whole Farm Approach website.
The solicitors then wrote to Defra, alleging a loss of £609,000 as a result of the 2011 derogation refusal. Defra requested further details demonstrating the alleged maladministration before accepting that its website had indeed provided Mr Reed with “incorrect information”.
By September 2012, Mr Reed’s claim stood at £798,166.68. But while Defra accepted a mistake had been made, the department’s legal advisers said it should deny liability. They argued that Mr Reed would find it hard to demonstrate a link between the error and the loss alleged.
Three months later, however, Defra received further legal advice, which said there was no dispute maladministration had occurred and Defra’s error was an example of poor services that was likely to have serious consequences if not remedied.
Nonetheless, the dispute dragged on. Emails and letters pinged to and fro between Mr Reed, his solicitors and Defra. Finally, in March 2013, Defra concluded it had insufficient grounds to make a payment and wrote to Mr Reed rejecting his claim for compensation.
Incensed, Mr Reed persuaded his MP, Conservative Neil Parish to engage the parliamentary ombudsman to investigate Defra. The investigation took a further 18 months before the ombudsman finally upheld Mr Reed’s complaint on 16 December 2014.
“We are satisfied that Defra did not ‘get it right’ when providing information to applicants on their website and this amounted to maladministration,” said the ombudsman’s report. It was reasonable for Mr Reed to believe the website information was reliable, the document added.
The ombudsman rejected Mr Reed’s claim that Defra unduly delayed considering his compensation claim. But it said the department inadequately carried out its complaints process and failed to consider any injustice to Mr Reed caused by its maladministration.
The ombudsman also criticised Defra’s decision to await a legal challenge from Mr Reed. “We do not consider it reasonable for a customer to go to court to get a remedy for Defra’s maladministration,” it said.
Defra has now agreed to apologise to Mr Reed. It has also agreed to pay him compensation for his financial and non-financial losses. Exactly how much will be decided by an independent barrister, who will also determine when it should be paid.
But it may all be too little, too late. The farm business was placed into administration a month before the ombudsman finally found in Mr Reed’s favour. Unless compensation is forthcoming soon, Mr Reed says all remaining cattle will be sold too and Reed Farms will be wound up completely.