As Britian’s farmers grapple with disease, rising costs and red tape, agriculture is becoming a more challenging area of law.

Mad cow disease, avian flu, bluetongue and bovine tuberculosis (BTB) have all blighted livestock recently, while rising labour costs and a plethora of new domestic and EU legislation – encompassing employment, planning, animal welfare, pesticide regulation and subsidy reforms – have added red tape and extra costs to the farmers’ lot.

Duncan Sigournay, partner at Thring Townsend Lee & Pembertons’ (TTL&P) Bath office, says the 2007 foot and mouth outbreak also had a dramatic impact upon parts of the livestock industry.

The outbreak meant there was no export of lambs for six months, causing, says the National Farmers' Union (NFU), a collapse in the market price and a cost to the industry of more than £100m.

TTL&P is acting for the NFU in a compensation action against the government over the outbreak. The union claims the disease escaped from a government research centre, via a drainage system in disrepair after years of underinvestment by the government.

Sigournay says: ‘We were instructed soon after the outbreak in summer 2007. A number of the team are working on the matter almost exclusively, along with other supporting lawyers. In addition, advisers at the NFU and several barristers (including QCs) are involved in the case.’

If the NFU-backed case is successful, he adds, it may have a huge impact on the law relating to negligence.

The case is set to be fiercely opposed, with DEFRA officials staunchly relying on the long-established principle that ‘the government does not meet the costs of indirect or consequential losses, which must be borne by the industry’.

Geoff Whittaker, consultant and adviser to the Agricultural Law Association, says there is a lack of understanding of farming and rural life by those in positions of authority.

‘The country is administered largely by and for urban people and populations who have, to a large degree, lost touch with the role that the countryside plays in putting food on plates and the interdependency, both of features of the natural environment, and the natural and urban environments,’ he says.

He adds that the ongoing problem of BTB is a constant area of friction between farmers and the authorities.

In July, DEFRA announced that it would not issue any licences to farmers to allow badgers to be culled in a bid to curb BTB. DEFRA says that delivering an effective cull would be lengthy, difficult, costly, and would face public opposition. It plans instead to invest in developing usable cattle and badger vaccines.

Rural agenda

Rory Hutchings, head of the commercial division at Swansea-based solicitors John Collins & Partners, says: ‘The impact of the environmental agenda can be seen in the debate over culling badgers – it needs to be tried in areas to assess its effectiveness, but the government is reluctant to do this because of the political fallout that runs with the badger debate.’

Clients, he adds, are facing uncertain times at present. ‘Very recently, the emphasis in government policy was directed toward the environment and the countryside as a resource – rather than being required for food production. The push was for added-value niche products rather than higher-volume low-cost supply. That appears to have changed now and it is clear that there are real concerns to be addressed about food security.’ Despite a succession of body-blows for farmers, says Christopher Stephens, agricultural law specialist at solicitors Follett Stock in Cornwall, things have improved for farmers recently, with commodity prices rocketing and land prices largely unaffected by the credit crunch, which has decimated commercial and residential property prices.

‘Both land and commodity prices have risen dramatically over the past five years and, as a result, farmers and landowners are undertaking more transactions than ever. Often, farmers will be achieving incomes 200% or 300% higher than they would have done five years ago in respect of the same product, although this needs to be considered in light of the volatility in the input products markets. Nevertheless, they should now be seeing improved farm profitability. This has fuelled renewed interest in buying land, the principal resource of the industry.’

In Cornwall, he says, good quality agricultural land is fetching on average between £4,500 and £5,000 per acre and in other parts of the country this figure can be much higher. ‘In addition to generally buoyant land prices, we are also seeing that agricultural land is increasingly being acquired by fund managers and city investors as the stock market has collapsed,’ he adds.

Hutchings says there has been a positive effect on prices caused by factors like the development of China and India, and the consequent demand for grain and dairy products, as well as crops being used for biofuel rather than food, particularly in the US.

He adds, however, that increased prices at market are being outweighed by increased input costs such as fertiliser and diesel. ‘Input costs have risen dramatically and it is a challenge for many farmers to make money on the stock that is being sold. In that context, the price of petrol and related products is a real issue. Increased land values compared to low farming incomes have caused some to go out of farming and, in my view, have caused some disputes where partnerships have dissolved,’ he says.

Stephens agrees that several decades of poor performance by the industry has resulted in the next generation of farmers increasingly considering alternative career options.

Other farmers, however, have sought to diversify their businesses, he says, with the common choice for many being holiday or business lettings of ancillary buildings, primarily unused barns or grain stores.

‘While these often prove to be successful side-businesses and a welcome supplement to the income produced by the farm, they are fraught with difficulty with regard to inheritance tax and agricultural property relief,’ he says.

He explains that buildings are often employed for new uses without their owners receiving the benefit of legal or financial advice. ‘The impact of these changes is often only realised when a farmer dies, in which case it is too late and the relief will be lost.’

He says farmers are becoming increasingly ‘business savvy’ and risk-aware. ‘Consequently, they are coming to see advisers sooner and expect to receive specialist advice rather than the more general advice which was often provided by the "family" solicitor,’ he says.

Hutchings says agriculture is a challenging area of law which best suits those people who have an interest in farming and the countryside. ‘It is going to be a fast-developing area which combines regulatory expertise with environment law and European law as well as employment, contract, estate planning and litigation. I believe the future is multi-disciplinary teams providing specialist advice in all these fields. And, even better, we will not be expected to wear a suit.’

Policy reform

Rural practitioners, agrees Whittaker, are as busy as ever. He says: ‘At present, much of the work is policy-led – statute and regulatory law is, after all, a manifestation of political decisions: continuing changes in the Common Agricultural Policy (CAP) and problems with the authorities over its implementation; animal diseases and their consequences; and difficulties with the planning regime in the context of farm diversification and rural housing, among others.’

He says the biggest purely agricultural change affecting farmers and their lawyers has been the fundamental reform of the CAP in 2005 and the introduction of the single-payment scheme. The scheme replaced 11 forms of subsidy with one annual payment, which is linked to land management instead of production. Farmers are entitled to payment provided environmental and agricultural conditions (cross compliance conditions) are met.

Whittaker says: ‘That has changed the mindset of farmers, whose decisions are now driven by markets and not by support payments. That, in turn, has meant that rural lawyers have not only had to get to grips with a totally new system of support payment administration but also with the sort of activities, agricultural and non-agricultural, that farmers might want to pursue on a purely commercial basis.’

Stephens says that although there were question marks raised over the efficiency of the introduction of the scheme in 2005, recent difficulties in obtaining payment now seem to have been largely resolved.

‘Farmers now have greater freedom to operate their businesses because the subsidy is no longer linked to production. The policy has, over recent years, encouraged "lifestyle farming" and the Office for National Statistics confirms that the number of farmers who claimed in 2005 rose from approximately 80,000 under the previous regime to approximately 120,000 under the current system,’ he says.

He adds, however, that the entitlements do pose difficulties for lawyers because they represent a chose in action and are not attached to the land in any way. ‘Consequently, it is essential when buying or selling agricultural land to make sure the transfer of the entitlements is specifically dealt with in the sale contract, since the subsidy can often be vital to farm viability,’ he says.

Hopefully, he adds, many of the problems posed by the single-payment scheme will not be experienced again when the CAP is revamped in 2013. ‘Teething problems are inevitable with any new legislation, but one hopes that similar problems will not be encountered the next time round.’

Out of practice

Sigournay says the single-payment scheme and the increase in regulation over the last few years has led to many solicitors ceasing to do agricultural work.

Mills & Reeve consultant William Barr agrees there has been a shrinkage in the number of those practising agricultural law. ‘The biggest London firms generally don’t do it anymore and small country solicitors are often not considered by agents recommending lawyers to be on top of the more technical aspects,’ he says. Agricultural law, he adds, is unlike many legal specialisms in that it is a range of diverse services to an industry.

‘Buying and selling farms is a big part of it but these transactions involve employment law (TUPE), specialist knowledge of subsidies and environment law if things have gone wrong in the past. There is a lot of work done relating to tax for farms, and also farm divorces now require ever more intense understanding of what happens on the farm,’ he says.

There are several proposals in the pipeline which may affect the way farmers want to structure their businesses, says Whittaker, and new obligations to be imposed at EU and national level which will affect the way they farm. ‘Tightening of the rules for the seasonal agricultural workers scheme and other economic considerations have led to labour shortages in the soft fruit sector. A new pesticide regulation proposed by the EU will affect growers and may reduce crop yields. Changes in England to the rules and designations of nitrate vulnerable zones will require livestock farmers to invest heavily in new equipment, which will have tax consequences,’ he says.

He adds that some of the recommendations of the Pitt Report on the 2007 floods may lead to rural land being required for flood protection of downstream settlements. ‘The issue of compensation will need to be addressed,’ he says.

With the increase in diversification, planning is also coming to the fore. ‘Farmers are having increasing struggles with local authorities to get permissions, and a new Planning Bill before Parliament is set to make changes to the system which will affect everyone,’ he says.

Stephens says that two issues of the moment for many property owners will be the Draft Marine Bill (DMB) and the proposed British Standard BS 8516 Recommendations for Tree Safety Inspection.

The DMB, he explains, is a product of the government’s 2005 rural manifesto, in which it committed itself to opening up large areas of the coast for access to the public. DEFRA statistics confirm that 30% of the coast has no access and the remaining 70% is often fragmented, with gaps in access.

He says: ‘The proposals in the draft bill are to create an access corridor along the entire 4,500km of the English coastline, plus "spreading room" where appropriate.’

Many landowners are unhappy with the proposals however and the draft bill confirms that they will not be paid compensation in respect of any land used in the scheme.

There are also concerns that walkers will stray from designated paths and this may affect farming practices. ‘It is hoped the upcoming joint committee report will recommend compensation, but the position is uncertain at present,’ he says.

DEFRA confirmed recently, however, that any land which has been disturbed by ploughing or drilling during the last 12 months will be excepted from this corridor. ‘Farmers should consider putting into production any land thought to be at risk and my advice would be to plough it now if in any doubt,’ he adds.

The new stricter tree safety proposals are for a ‘walk by’ inspection by the landowner at least once a year, a formal inspection by a ‘trained person’ every three years and an expert inspection at least every five years of all trees. The cost of routine inspection visits are estimated at around £70, with additional fees payable if defects are found.

‘The danger with these new proposals is that many landowners consider them disproportionate to the issue at hand and accordingly they may decide it is simply cheaper and easier to cut down trees which might at some point pose a risk to the public, rather than to take care of them. At a time when increased environmental awareness is high on the national agenda, the cutting down of trees in response to these increased obligations would be at odds with the government’s general position of environmental protection,’ he says.

Although most lawyers bemoan the increased regulation imposed on long-suffering farmers, this will doubtless result in more work for agricultural lawyers as they grapple with the new rules and get up to speed with new skills as farmers continue to diversify.

Says Stephens: ‘As the impact of global warming further takes hold – it has been suggested that the south-west will become the new ‘Bordeaux’ while southern France will become near-desert – there will be ever more diverse opportunities for farmers ranging from vineyards, cider and spring water production to campsites, farm shops and tourism. As property lawyers, we need to be live to the new issues faced by diversification of these types.’

Lucy Trevelyan is a freelance journalist