There is concern the race to achieve carbon net-zero is leading to the loss of productive agricultural land to forestry. Investors recognise land with planting potential as an excellent investment, which has had a distorting effect on land values.
To some extent, this is simply the operation of market forces. A landowner with an unprofitable farming business may well be tempted to sell land to a forestry investor and there are no restrictions on their ability to do so. It would require government intervention in a fundamental way to prevent the market operating like this.
The Scottish Land Commission (SLC) is undertaking a review of the rural land market to understand the influence of carbon and natural carbon in relation to land transactions. The keenly awaited report will be published in the spring.
Concerns have also been expressed on behalf of the tenanted sector that landlords might seek to terminate tenancies, or resume land from tenancies, for planting.
Tenants have a certain amount of protection against this. Under a secure tenancy, a landlord will only be able to resume a relatively small amount of land as the Land Court will not allow resumption if its effect is to materially prejudice the viability of the remainder of the farm. It is possible to bring a secure tenancy to an end with a notice to quit where planning permission exists over the whole of a farm for a non-agricultural purpose.
However, planning permission is not required for planting trees, therefore this route is unavailable to the landlord. In a fixed duration tenancy, the landlord does have a statutory right to resume part or the whole of the farm but, once again, this can only be for a nonagricultural purpose for which a landlord has obtained planning permission. That will not apply where a landlord wishes to plant trees.
The greater threat to the tenanted sector is that landlords will not let out agricultural land if it has forestry potential and they are looking to sell that land to a forestry investor.
Forestry and agriculture need not be at loggerheads, however. There are opportunities for both landowners and agricultural tenants to maximise productivity by adding value to unproductive land via woodland creation.
This has the potential to create a sustainable longterm income stream while providing benefits in respect of tax, livestock, crop productivity and the environment.
The Scottish Government is providing grant support for the creation of new woodlands and grants are available to landowners and agricultural tenants, subject to the tenant obtaining the landlord’s consent. A tenant can pursue a woodland creation scheme by following the diversification processes set out in the Agricultural Holdings (Scotland) Act 2003.
As is often the case, threats and opportunities loom large in tandem. It will be interesting to see if the government will reconsider its public policy objectives in light of the SLC report.
For more information please contact Hamish Lean, Head of Rural Property and Business, on 01224 621 166 or at email@example.com.
This article first appeared in the Press & Journal.