Starter farm initiative - tenant insights: review

Key Points

• To help address the lack the opportunities for new entrants to farming in Scotland, Forestry and Land Scotland made 9 Starter Farm Units available to new entrants between 2012 and 2015. These, together with a further Starter Farm Unit made available by the Scottish Government's Rural Payments and Inspection Division, formed part of a wider Scottish Government initiative operating under the auspices of the Farming Opportunities for New Entrants (FONE) Group. The wider FONE initiative aimed to increase opportunities for new entrants on publicly owned land.
• All starter units were part-time in nature and tenants were given 10-year leases, with a 3-year extension provided due to the landlord instigating a strategic review of their Starter Farms.
• This research provides an evaluation of the Starter Farm tenant's perception of the initiative to feedback to the Scottish Government and the FONE group. 8 of 10 tenants were interviewed following a semi-structured interview process in summer 2022.
• The application process for leases was competitive with 77 total applications for the leases. All tenants interviewed had agricultural work experience, but none had a family opportunity to enter a farming business through succession or partnership. For many, the first step on the farming ladder came prior to the tenancy through agricultural contracting / seasonal lets / farm management roles.
• The main objectives for taking on the tenancy were to run a farm business, have an opportunity for progression, and wanting to build a business and have security. Initial expectations had largely been met, except for the tenancy acting as a stepping stone to another lease / ownership. Many alluded to having greater personal satisfaction because of their starter farm experience than in their previous roles, although they may now carry more financial concerns.
• On average, the tenants reported initial expected capital needs of c. £39k but generally had to spend considerably more. Funds were secured from loans, savings, overdrafts, livestock markets, and in some instances family members. Tenants had generally built-up fixed assets they would form the basis of any future tenancy / ownership opportunities – breeding livestock, tractors, machinery and equipment.
• Not all tenants were eligible for the full range of agricultural support payments at the outset of their lease. This was perceived to put them at a disadvantage in the industry. Moreover some believed that agri-environment climate scheme opportunities have been limited due to 5-year commitments and application rounds falling within 5-years of the initial lease termination date.
• The tenants have generally improved their personal and business skills through their experiences from the starter farm – and other business activities they undertake. The skills reported to have developed the most as a result of the tenancy included financial management, leadership, decision making, business confidence, marketing, and business and personal resilience skills.
• Nearly all of interviewees reported that they were 'emotionally invested' in the starter farm, treating it as if it were their own. Many felt fully embedded in their local community through working and contract relationships with other local farmers, employing local people, children attending local schools, participating in and supporting local events, etc. That embeddedness (particularly where farm households are reliant on local off-farm income streams likely means that modern ties to part-time tenancies are stronger than historically where tenants may have been more mobile.
• Whilst, on average, there was relatively high scoring of landlord-tenant relationships some of the tenants reported the relationship had deteriorated over the duration of the tenancy. Many of the tenants suggested this was a consequence of changes in landlord personnel, and landlord communication style. Noting the potential for 'negativity bias' the tenants generally felt that their landlord had not been particularly helpful with capital investments and improvements to the holding / buildings.
• Whilst the strategic review 3-year extension to leases was generally well received the landlords were criticised for poor communications regarding lease terminations and rumours of possible tenancy extensions / recycling or sale of the units / that appeared to suggest different long-term opportunities amongst tenants. Specifically, clarity on the longer-term objectives of the landlord for the land was requested.
• As a result of the strategic review related extension all tenants had time left on their leases, one tenant had given notice (at time of interview) as they had taken on a larger unit.
• Only one tenant was confident that they would have been farming without the starter farm initiative and all tenants wanted to continue farming after their starter farm tenancy ends - one has now successfully moved up the farming ladder into a new tenancy. Half the tenants had applied for other tenancy opportunities, often being outbid on offered rents. There was an undertone that both the Scottish Government and the industry could do more to provide opportunities for the starter farmers – including through initiative like the land matching service.
• The majority of tenants would encourage other potential new entrants to take on a starter farm, and some even expressed that they would offer support to mentor new tenants – if the initiative was to continue.

Evidence to show if initiative objectives have been met

Attract and develop new talent

• The starter farms attracted much interest and were very desirable.
• Many tenants were technically not defined as new entrants in terms of CAP support, meaning they were ineligible for SRDP new entrant grants.
• Starter farms have provided a farming opportunity that many tenants may not have otherwise received.
• Only one tenant has moved on to the next step in their journey.
• There are many reasons why tenants are not actively looking for new tenancies and it is unclear what will happen at the end of their tenancies.
• There has been considerable development of a wide range of business and farming skills by all tenants
• Some tenants think that the success of the programme would depend on what happens next.
• Most tenants have greater personal satisfaction being a tenant farmer than in their previous roles.

Demonstrate the integration of farming and forestry in Scotland

• Whilst tenants were asked about their plans for forestry integration at the outset, it appears that there has been limited opportunity for tenants to plant and manage trees.
• Almost all farms demonstrate that integration of forestry and farming can occur in the widest sense – that is existing publicly owned farmland can be split and used as starter farms and forestry side-by-side. However, true integration would provide opportunities for the starter tenants to plant and manage those woodlands.
• The farms have demonstrated that part time agricultural holdings can be developed adjacent to afforestation sites.
• It would appear there was limited opportunity/ tenant desire to engage in woodland management activities on planted lands.
• There was a strong feeling from some tenants that some of the farms will ultimately be planted and not relet – and that would suggest lack of integrated land use from publicly owned land with afforestation potential.

Recycle the units every 10 years to provide further opportunities for new entrants

• All tenants received a 3-year lease extension due to the landlord undertaking a Strategic Review of their Starter Farms. This extension took place during the Covid pandemic meaning their lease period is extended to 13 years.
• There is no clear evidence that to show that starter farms will be re-let after the existing tenant's cycle-out.
• Most tenants believe tenancies will not be recycled, with farms being sold or planted with trees. Some see this as an opportunity to continue renting their house and (all/some) land.
• With the first starter farm tenant successfully progressing to the next step on the agricultural ladder (a new tenancy) there will be close scrutiny (at least by the remaining tenants) to see if the farm will be re-let to another new entrant.