County farms in jeopardy as great century ends on sticky wicket

County council farms have, for the past 100 years, provided a valuable step on to the farming ladder for tenant farmers. But the worst recession since the 1930s has resulted in drastic cuts in government spending, and some councils are now selling off their estates to raise much needed capital.

Over the past 25 years, the amount of farmland managed by local authorities in England has dropped by 30%, to about 240,000 acres. Tenant numbers have fallen by almost 60%, to around 2900, over the same period. However, county farms still provide a valuable income to councils, yielding an operational surplus of £10.6m in the year to 31 March 2009. In addition, targeted sales of land for development have yielded a steady stream of capital for reinvestment.

Unfortunately, instead of reinvesting capital from small-scale disposals, some councils are now seeking to sell their farms to make up budget deficits in other areas. The Tenant Farmers’ Association claims this is short-sighted and potentially damaging to agriculture, the environment, and other benefits such as public access and education of schoolchildren.

TFA chief executive George Dunn said he wanted local authorities to use their farms in a more intelligent way by selling off small parcels of high value land for development or to neighbouring farms where they could be used more efficiently.

“With a more strategic approach to their estates, local authorities could benefit significantly in financial terms, continue to provide opportunities for those who want to farm and be a major driver of economic development.

“The private sector is not providing anything like sufficient opportunities for new entrants. Increasingly, holdings are of a size and capital requirement that would be unreachable for a new entrant,” said Mr Dunn.

As of March 2009, 39% of county farms in England were 50 acres or smaller, 31% were 50-100 acres, and 30% were more than 100 acres. “Without these starter units we will struggle to find the skills and talent for the future.”

Who is selling?

Somerset County Council recently announced that it had earmarked 35 of its 62 farms for disposal, as a result of the recession. The estate generates an income of up to £400,000 a year and is worth £40m-50m. Councillor David Huxtable said the council had no choice but to sell the farms, and would use the capital raised to help reduce its £350m debt. “To be brutally honest, I think all councils will be forced into this position, unless they have got much better balance sheets than us,” he said.

Gloucestershire, which the TFA had hailed as an example of careful estate management, was about to announce a consultation on the future of its 8515-acre estate, which houses 88 tenant farmers.

The council’s spokesman James Benham said: “All the services are going through considerable change at the moment following the government spending review. No final decision has been made.”

The same was true in east and west Cheshire, which were both reviewing the future of their farm estates following devolution from a single county last year.

In North Yorkshire, the local authority was steadily selling off its 48 farms. “The estate is quite fragmented and the farms are very small,” said the council’s spokeswoman Carol Wood. As each farm became vacant it would be reviewed to see if any part was worth amalgamating with a neighbouring unit and the remainder sold, she explained.

Lincolnshire had also decided to judge each of its 200 farms when they came to the end of their tenancies, said head of strategic asset management Jim Hogg. “A decision will then be taken on the best course of action. Our current policy is to achieve maximum capital receipts and revenue income, enhance the natural environment where possible and provide opportunities for people to farm.”

In Wales, the County Farms Estate had remained relatively stable over the past 10 years, at almost 44,000 acres. However, Denbighshire now planned to sell around 10% of its land to generate £5.5m over the next four years. A third of that capital would be reinvested in the estate, and holdings would be consolidated down from 31 to 20-25 main farms.

What is being kept?

In sharp contrast to those councils cashing-in their assets, some counties are publicly backing tenant farmers and integrating the farms with other services for maximum value.

Hampshire does not plan to dispose of any of its 65 farms, which cover about 5000 acres, said council leader Ken Thornber. “We believe they have a vital role in the local community.” The council is offering longer tenancies and improved progression opportunities, as well as possible apprenticeships, vocational training, and school visits. Land may be used for community use or affordable housing, but would be replaced by additional purchases to retain the estate size, he added.

Norfolk’s farms also had a positive future, said land agent Duncan Slade. With a target estate size of at least 16,000 acres, the council would release land for affordable housing schemes or development potential, he said, but would reinvest any capital raised in the estate, for a sustainable 4-5% return on capital, excluding sales.

“The council members also see the estate as a vehicle for delivering wider objectives such as footpaths and environmental schemes. We have a good partnership – we look at the council’s objectives and how the estate can deliver on that.”

Devon County Council dominated the headlines last year in a battle with tenants over contract terms and lack of investment. However, following a review in April, it has adopted a longer-term view with more flexible conditions. “The estate is integral to the county council in delivering its wider aims,” said the review group.

“If the county council did not provide this service there would be little prospect of new people entering farming.” By retaining the estate and selling high-value parcels, it could yield £101m over the next 50 years, without affecting the viability of the estate.

Neighbouring Cornwall also reaffirmed its commitment to county farms in April. Cabinet member Carolyn Rule said the estate would be held at about 11,000 acres, with a balance of 50% starter holdings and 50% progression farms. “County farms are the only consistent route of entry into agriculture for young people, and that underpins a vibrant agricultural community.”

Cambridgeshire, the largest county holding in England at 35,000 acres, produced an annual profit of £2.1m. Over the past decade the council had made targeted sales, averaging £3m a year, and would continue in a similar vein, said rural estate manager John MacMillan.

“The council is under pressure because of the spending review, but there are no plans to sell any more land than we had previously identified.”

Case study: Andrew Charlton, Norfolk tenant

Andrew has been a tenant at Poplar Farm, Kings Lynn, since 1999 – and had a Cambridgeshire holding for five years before that. He has converted the 233-acre farm to organic status, and specialises in growing organic cereals, adding value by supplying the local windmill with spelt, wheat, barley and rye.

“Norfolk County Council is as good a landlord as one could possibly wish for – but we’ve had our ups and downs. Just over a year ago it looked like Norfolk might go in the same direction as Somerset, but thankfully there has been a major change in strategy, and things are a lot brighter.

“County estates play a critical role in terms of niche markets, environmental stewardship, and as a nurturing facility for young talent within farming. I passionately hope there will be other young farmers to take on after me. There’s absolutely no reason that county council farms can’t be sustainable forever.”

Case study: Matthew Heal, Somerset tenant

Matthew is one of Somerset’s first tenants to face eviction following the council’s decision to sell more than half its farms. He has kept suckler cows at Pepper Hill Farm, Bridgwater, for almost eight years, but the farm will be sold when his tenancy expires in March 2012.

“The council is offering all the tenants the opportunity to buy their farms, but the valuations are way out of our league. I’ve written to all the agents asking if there’s anything else around to rent, but there is nothing coming up at the moment. I really don’t know what the future holds.”

The sale of the farm would also likely end its careful management under the Countryside Stewardship Scheme, and the 800 visits by schoolchildren that Mr Heal hosts each year. “Having these small farms is a must for the industry – we have to keep county council farms because there is no other way for a youngster to take on a viable farm.”