Tenants must seek advice on CAP tenancy clauses

The Tenant Farmers Association has urged all tenant farmers to take advice before agreeing to new clauses in tenancy agreements covering CAP reform.

TFA Adviser Katy Blagg said "We are beginning to see a wave of new clauses appearing in Farm Business Tenancies, rent review memoranda and other documents which are attempting to cover whatever might be agreed in the next reform of the Common Agricultural Policy."

"However, we are still some way off from knowing in any detail the future structure of CAP and the clauses which are being written are attempting to cover all eventualities.

"Obviously the clauses in circulation are principally attempting to protect the interests of landlords and the TFA is concerned that given the broad brush approach being taken, tenants may find that they are signing up to much more than they had anticipated".

"It is of the utmost importance that tenants take advice before signing up to any new clauses. How they might be interpreted in the future as opposed to now may be very different. Many agreements drawn up just prior to the last CAP reform in 2003 and before the introduction of the Single Payment Scheme in 2005 contain clauses which, given the way in which the reforms were finalised, are either unenforceable or have a very different impact than that intended," said Katy.

There is a significant amount of discussion about how farm businesses should prepare for CAP reform when it comes.

Many advisers and commentators are already advocating that businesses try to change to accommodate the new reforms.

“At this stage the TFA sees little point in trying to second-guess the eventual shape of the new CAP in order to adjust businesses to take advantage of the new rules. The draft proposals are already likely to see significant change particularly in those areas which are bringing the most concern. However, businesses do need to operate in the real world and it is not easy to provide a categorical answer to questions raised with regard to business change."

"Businesses which take on additional land, change partners or alter their trading status are likely to be protected if they retain their Single Business Identifier (SBI). There may be problems where businesses are splitting up or new businesses have been established unless we have the flexibility to allow these real-world changes to be accommodated, something for which the TFA is arguing," said Katy.