Galbraith Rural Matters Winter 2017

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Rural

ISSUE 4 WINTER 2017-18

MATTERS

Ecosystems services: New ways to make land earn its keep Big switch: Making the countryside electric-car friendly Land reform: More changes on the way Muirburn: Why it pays to follow the new code Sporting rates: A quantum of solace

Eucalyptus could be the answer Fast-growing trees could help to meet demand for biomass


WELCOME

CONTENTS

A time to embrace change

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WELCOME to Rural Matters, where we provide insight on the challenges and opportunities facing rural businesses.

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Brexit is, of course, the issue that looms large for those of us involved in rural businesses. We are all awaiting with bated breath the outcome of negotiations with the European Union.

Taking charge in the electric car revolution. Set your farmhouse free. Get to know the Muirburn Code.

8 Moorland: a burning question.

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It is, however, interesting to reflect on the initial positive impact to the rural economy, with commodities enjoying a rise in prices.

COVER STORY: Eucalyptus to the rescue.

Although there may be short term gains, there is continuing uncertainty over long-term effects. One thing is certain and that is – we will face change. Where there is change, there is opportunity. Embracing change and grasping these opportunities will be important to ensure the long-term prosperity of estate and farm businesses.

Land reform: More big changes on the way.

We hope to shine some light on what lies ahead and how rural businesses are constantly innovating. Please enjoy Rural Matters. Ian Hope Head of Rural

GALBRAITH is Scotland’s leading independent property consultancy. Drawing on a century of experience in land and property management, the firm is progressive and dynamic, employing 236 people in offices throughout Scotland. We provide a full range of property consulting services across the commercial, residential, rural and energy sectors.

12 14 Tenancy changes. Why grazing is good for grouse.

16 Sporting rates: A quantum of solace. Planning for A96 dualling.

18 Freeing up rural housing. Battery storage has a bright future.

20 Galloway's case for becoming a National Park.

22 A summer with Galbraith. Interview: Young Farmer of the Year James Fairlie.

Galbraith provides a personal service, listening to clients and delivering advice to suit their particular opportunities and circumstances. Follow us on Twitter: @Galbraith_Group @Galbraith_Rural Like us on Facebook: www.facebook.com/ GalbraithPropertyConsultancy See us on Instagram: www.instagram.com/GalbraithGroup Join us on LinkedIn: www.linkedin.com/company/galbraith

Rural Matters is produced by Galbraith and designed by George Gray Media & Design, St Andeux, France. © CKD Galbraith LLP.

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NO-ONE knows what a post-Brexit rural support scheme will look like for the UK or Scotland. The early signs suggest that budgets will be squeezed as politicians will have to justify spending on competing public sector services, such as hospitals, policing and schools, in addition to an increased enthusiasm for “green” farming and land management. This may not be welcomed by all producers and may make some enterprises less viable, but it may also lead to new opportunities both within grant and support schemes and for new revenue streams from private sector companies through the provision of goods and services which support their businesses through ecosystems services. The terminology may be new, but the concept of companies owning and leasing land or agreeing commercial terms with other land managers is not revolutionary. Think of the many companies which rely on the land to support their businesses, such as Highland Spring, which owns the Blackford Estate in order to manage the land and protect the quality of their water which eventually filters into the bottles available on supermarket shelves. Another area in which similar principles exist is the development of carbon trading through the brokerage of audited carbon credits. These allow polluting businesses, based anywhere in the world, to offset some of their emissions through the purchase of credits from carbon sinks such as peat bog restoration and newly


Ecosystems services: Opportunities on the horizon Gareth Taylor explores the potential to marry business needs, estate life and environmental responsibilities.

planted forestry. At Galbraith we have worked with several clients across Scotland who are engaged in this kind of activity. Other examples include land managers being paid to allow some of their land, in strategic places, to flood to increase lag times and prevent flooding of more economically valuable areas such as urban centres. It is often difficult to quantify the benefits of such services, but some market evidence is emerging and we see the potential for landowners and managers in some of the more remote, sensitive and ecologically diverse areas in the coming years. Commercial arrangements are usually contractual agreements known as Payments for Ecosystem Services (PES) which can vary in length from short-term specific projects (such as capital works) to long term agreements for carbon capture, in peat restoration for example. It is entirely possible to marry the aspirations of landowners and land managers with those in business who are looking for opportunities to achieve corporate social responsibility objectives, to mitigate carbon emissions or

environmental services which could directly or indirectly aid their business. The final, and most undervalued (or hard to value) aspect of ecosystem services is for the amenity, biodiversity and aesthetically pleasing benefits that Scotland’s landscapes provide to both tourists and those who live and work here. When deciding to invest in land, conservational landowners (such as National Trust for Scotland, or John Muir Trust) must put a price on “a view”, the biodiversity offered or on its historic significance. This is a subjective calculation, but the valuation of Natural Capital can be reached in part by assessing the tangible economic benefits listed above. Despite entering an uncertain period with the potential shake-up of rural support payments, new opportunities will emerge for those who have commercial acumen and are prepared to explore less traditional and not necessarily physical land uses. gareth.taylor@galbraithgroup.com 0131 240 6962

The terminology may be new, but the concept of companies owning and leasing land or agreeing commercial terms with other land managers is not revolutionary.

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Taking charge of electric car ownership in remote areas Could you become a charging point host? Willy Inglis assesses the reality of electric vehicle ownership in rural Scotland and the need for a structured network of charging points.

IN AN effort to support climate change mitigation and meet the First Minister Nicola Sturgeon’s targets to phase out all petrol and diesel vehicles in Scotland by 2032, much consideration has to be given to expanding the network of charging points for electric vehicles throughout the country, especially in rural areas. More people are buying electric vehicles as they become weaned off combustion engines. Four years ago, there were just 3,500 electric vehicles in the UK but as of August 2017, there are almost 113,000 and this is set to increase considerably. The advance of technology – in particular battery technology, as well as prices coming down and the mileage range going up, are all contributing factors in the number of electric vehicles being purchased. There are several types of vehicles on the market – from hybrids to fully electric – however, in the case of electric alone, 150 miles is the highest range you can expect from an average vehicle. It is therefore imperative that owners of electric cars have access to charging points to allow for a back-up charge when necessary, particularly in remote rural locations, to dispel the perception that electric vehicles are only suitable for short journeys in big cities. There are apps and websites, including www.zap-map.com or the Scottish Government’s chargeplacescotland.org, that

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indicate the location of electric vehicle charging points. A quick glance at eastern Scotland shows that charging points are few and far between, compared to more populated areas. On the west coast the situation is even worse. And it is not just the scarcity of charging stations that is a significant challenge – the charging capacity can vary considerably. Electric vehicles have many different charging features and can generally be divided into three categories: rapid, fast and slow. There are currently two types of charging units: Type 1 offering slow, fast and rapid charging, and Type 2 providing slow and fast charging only. There is no common standard at this stage, but it is likely over time that one industry standard will come to dominate. A fast charger takes between three and four hours and a slow charger between six and eight hours. A rapid charger can charge an electric vehicle to 80% in 30 minutes – still quite a long time if you are working to a schedule and need to cover many miles. Given the time taken to charge a car and the lack of charging points in rural areas, it’s important for charging points to be made available in popular countryside locations where people stop for a period of time. For example, Glamis Castle, Angus, is in the process of installing four rapid charge points. The castle is a five-star tourist attraction and currently


holds the silver award from Green Tourism for its excellence in championing sustainable tourism as well as supporting environmentally friendly initiatives. To further support the uptake of electric vehicles across Scotland, the Scottish Government has made grant funding available to help organisations become charging point hosts. Organisations may be eligible for grant support to install a charging point if they meet one or more of the following criteria: • Currently operate electric vehicles, or have firm plans to introduce electric vehicles in the near future; • Employ staff who drive electric vehicles and would benefit from charging at work; • Can make a charge point publicly accessible; • Located at a key strategic position for charging infrastructure; • Operate a large car park (50+ bays). Applications for grants are available from electricvehiclesscotland@est.org.uk. The Energy Saving Trust offers grants for both domestic and commercial charging points. Due to high demand for funding for commercial charging points, the availability of grants is currently on hold, but applications are still being received. It may also be possible to get some funding through the Office for Low Emission Vehicles (OLEV).

It is imperative that owners of electric cars have access to charging points, particularly in remote rural locations, to dispel the perception that electric vehicles are only suitable for short journeys in big cities.

Technology is advancing all the time and is currently tackling the two stumbling blocks for electric vehicles: quick charging and storage. If you think a range of 150 miles should be easily managed before stopping to recharge your battery, ask yourself why drivers need quite so many petrol stations throughout the country and if you would spend 30 minutes only partially filling your car. There will need to be a structured network of charging points throughout the countryside to support the uptake of electric vehicles and consideration needs to be given to this now.

willy.inglis@galbraithgroup.com 07920 273991

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Could you set your farm house free? Ian Hope and Lucie Howatson are advising clients on how to restructure their finances to free up capital and get the best deal for their rural business. THE issue of existing loan structures – and how they may be packaged to take advantage of low interest rates – is clearly being given close attention by land-based businesses. In addition, with the value of land rising exponentially over the last decade, many clients are looking to reassess the security which their banks currently hold. Despite the recent interest rate rise, the current Bank of England base rate of 0.50% continues the trend of very low interest rates, resulting in variable rate lending being an attractive proposition. Fixed rate money is also attractive and we have recently been successful in restructuring debt on 20 to 30-year fixed rate loans to as low as 3%. Naturally, breakage costs need to be factored into any existing fixed-term borrowing, but in some cases it has still proved worthwhile to restructure. By way of example, a £400,000 fixed rate loan based on 5% would have an annual interest payment of £20,000. However, restructuring at 3% would create a saving of £8,000 with an annual interest payment of £12,000. A further approach to revisiting the finance of a business is to undertake a revaluation of the property. With the price of agricultural land rising by around 149% over the past 10 years, a number of businesses have found their loan-to-value percentage incredibly low. With banks traditionally taking whole farms as security, there is a genuine need for a new assessment where this approach has previously been applied. A

ian.hope@galbraithgroup.com 01738 448145

revaluation of the land and an assessment of the loan-to-value percentage could permit land to be released from security under the current loan agreements, thus allowing businesses to hold assets that could be used as security for further loans, if required. To consider the increase in land values, a parcel of land in 2007 valued at £3,000 per acre could have a value in 2017 of around £8,000 per acre. Therefore, a £400,000 loan at 60% loan-tovalue requires £670,000 worth of security, which is equal to 225 acres when based on 2007 values. However, based on 2017 values, the required land for the same security would have dropped to nearer 85 acres. In the above scenario, this would have released approximately 140 acres from the security that the lender held. To put this into perspective and using the same example as above, the release of approximately 140 acres from the security holds a

A further approach to revisiting the finance of a business is to undertake a revaluation of the property. value of £1.12m based on current figures. This is a significant amount of capital to be tied up unnecessarily. It has been an eye-opening experience for clients who have chosen to undertake the exercise detailed above. As a result of this exercise, we have released security and been successful in achieving further loans for businesses to allow them to expand into new projects or build on their existing enterprises. Sometimes you don’t need to look beyond the farm gate to generate the capital needed to drive a business forward.

lucie.howatson@galbraithgroup.com 01738 456085

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Failure to abide by the new Muirburn Code could be costly in terms of lost subsidies, says Deirdre Stewart. THE muirburn season is underway, and with it we have a new code of practice, launched recently by Cabinet Secretary Roseanna Cunningham. The Muirburn Code guides anyone who plans to manage a moorland or upland area using either fire or cutting machinery. Fire, as an ancient and useful management tool, must be used so as to safeguard these rich and varied habitats. Scotland’s Moorland Forum was commissioned to review the code, to enable the Scottish Government to address specific strategic aims: • To support well-managed muirburn in recognition of the wider socio-economic and environmental benefits it can generate, • To minimise negative impacts on wildlife, landscapes and ecosystem services, • To minimise the risk of wildfires. The code has been at risk from not being widely enough used and implemented,


Muirburn: Why knowing the code is a wise move but perhaps if I were to stress the fact that it forms part of the General Agricultural and Environmental Conditions (GAEC), the standards to be achieved in order to receive full payment of public funding, including the Basic Payment Scheme, then I may have your attention. Failure to meet the standards can result in reduction or penalty upon support scheme payments. A breach of the Muirburn Code under GAEC could occur if poor practice results in an out-of-control fire, or damage to woodlands, adjoining land, march fences, etc.

The code relates to all situations where muirburn can be expected to be used as a management tool, be it for grazing, conservation, deer, regenerating forestry or grouse moors. Consequently, the audience to whom the code is relevant is potentially larger than perceived. It will be regulated at different levels, be that through cross compliance, or statutory legislation applicable to the conservation of features, habitats and wildlife, and thus widely applicable across rural Scotland. It will stress the importance of protected species (both flora and fauna) and protected areas, such as designated sites (including scheduled ancient monuments). On some sites, muirburn may be an operation requiring consent from Scottish Natural Heritage. The code will be consistent with other rulings on our uplands (such as Less Favoured

In terms of administration, notification to neighbours of intention to practice muirburn remains part of the legal process and should be done at the start of each season. Proper consultation with Scottish Natural Heritage may be required for protected sites, or outof-season consent. For those submitting a Moorland Management Plan as part of an AECS application, it is important to understand that any plan is expected to provide benefits and enhancement of the moorland environment beyond what is simply good practice under the Muirburn Code. It is the intention that the new code will be the start of a wider process of discussion and collaboration to embrace a range of further issues, such as research, training, wildfire prevention, and working with the fire and rescue services.

Putting the code into practice as part of a moorland management scheme. s

The revised Muirburn Code is underpinned by much the same legislation as previously, but reinforced by the more recent Wildlife and Natural Environment Act. It will lay out all aspects to be considered when planning and using fire or cutting on moorland and upland areas. It will apply to unenclosed land, but also be relevant to lowland heaths and grassdominated unenclosed land. It covers all types of moorland vegetation, including gorse.

Area Support, and Deer Management), and therefore relevant to both our agricultural and sporting sectors.

It is essential that we become familiar with the code, wider planning on moorlands, implications for staff, equipment and resources, and above all safety and risk management. Many, if not all these aspects can involve close liaison with neighbouring land holdings and effective collaboration, something which is commonplace in the management of our Scottish landscape. The revised Muirburn Code can be found at http://muirburncode. org.uk/regulation/ introduction/

deirdre.stewart@galbraithgroup.com 01738 456085

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A burning question Deirdre Stewart outlines the complexities of managing a site with several designations and rare bird species.

ONE of the more interesting applications we have recently submitted to the AgriEnvironment Climate Scheme, was for our clients who own Cochrage Moor, part of Strone Estate near Bridge of Cally in Perthshire. A fundamental part of the application was the Moorland Management Plan. The 586 hectares of moorland form part of the much more extensive Forest of Cluny Site of Special Scientific Interest (SSSI). Cochrage is representative of the description for the wider area, being an area of moorland and grassland with open waters and woodlands, comprising mainly dry heath, with smaller areas of wet heath, blanket bog and spring fed flushes. The SSSI is important for its breeding hen harrier, osprey, short-eared owl, and black grouse. Part of the SSSI is designated as the Forest of Clunie Special Protection Area for the same species. Hen harriers nest in areas of deep heather, defending small nesting territories but foraging widely over the whole site. Hen harriers also winter on the site. Short-eared owl and merlin nest on moorland and share much of the same habitats as the hen harrier. Management planning on site had to reconcile the programme of regular swiping and muirburn, which had been implemented in the past, against the most recent Site Condition

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Monitoring which recorded the site as being unfavourable for breeding hen harrier and short-eared owl and favourable for breeding black grouse. Site designation records for the Forest of Clunie SSSI listed heather burning as a ‘pressure’ to all those species of importance on site, as well as overgrazing. Scottish Natural Heritage (SNH) raised concern over the previous amount of heather management on Cochrage Muir – both burning and swiping – and what pressure this was potentially having on listed species. Addressing this issue was the key point in agrienvironment climate schemes discussions with the estate, including a suspension of all heather management for the first three years followed by a reduction in the annual amount of cutting/ burning and identifying some ‘no management’ areas to allow heather to mature. On behalf of the estate, Galbraith also made reference to the RSPB’s breeding reports for the notable species in order to identify nesting

On behalf of the estate, Galbraith also made reference to the RSPB’s breeding reports for the notable species in order to identify nesting sites and no-burn zones.


sites and no-burn zones. Our application also considered, in conjunction with SNH, operations requiring consent under the SSSI designation, in particular those relating to scrub control, grazing regime and muirburn.

cover will be maintained in order to sustain a mosaic of different aged dwarf shrub heath, with suppressed areas permitted to recover, and areas of taller, older heather retained or encouraged within a balanced muirburn programme to provide potential nest sites for the harrier.

The site carried a legacy of historic funding arrangements for varying site features, some in stark contradiction to the situation prevailing today. We also had to take into account grazing prescriptions for a seasonal tenant, predator control, significant spruce regeneration from adjacent commercial forestry, the need for adequate stock fencing, ability to graze sheep or cattle, and regular public access along the Cateran Trail. The moorland management plan also needed to make careful reference to the Muirburn Code.

The plan aims to restore good moorland features where these are currently compromised (for example, by sitka regeneration, bracken encroachment, or predation of young birds), maintain habitat suitable for species of importance, and enhance opportunities for improved habitat, such as diverse habitat for populations of prey species, and heather conditions attractive for nesting. In addition to creating moorland management plans for our clients, we also have expertise in the production of specialised maps – as recommended in the best practice section of the Muirburn Code. For deer management planning, specialist mapping work, either at group or individual estate level, is also highly beneficial, proving particularly useful for habitat impact assessment work in conjunction with multiple mapping layers.

Delivering our clients’ expectations under such a range of management influences was not straightforward. Consultation with the relevant authorities was essential, and prescription of management measures complex, against a tight timescale and at all times remaining conscious of the competitive scoring system for applicants to the scheme. SNH stress the importance of early engagement with them for AECS applicants who want to include management of designated sites, peatlands and deer. The management proposed by the Moorland Management Plan is intended to benefit all designated features of the Special Proctection Areas by ensuring that the heather moorland is managed in a sustainable manner, providing a good quality area of heather with a good stock of prey species for the hen harrier. Heather

Moorland management needs to reconcile the needs of many species, including, from top, black grouse, hen harrier and short-eared owl.

The outcome of the application to the AEC Scheme is awaited. For more information on mapping or applications for SRDP funding schemes, please get in touch.

deirdre.stewart@galbraithgroup.com 01738 456085

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Eucalyptus comes to the Trial plantations of eucalyptus at Elderslie Estates offer the potential to benefit from the growing demand for energy from biomass. Paul Schofield and Anna Newman explain. FORESTRY has progressed on the Elderslie Estates in Renfrewshire since the First Statistical Account was produced in 1791.

Main picture: Mark Crichton Maitland, owner of the Elderslie Estate. Above: Young eucalyptus await planting. Below: Newly-planted eucalyptus saplings are thoroughly drenched.

Originally there was a preference for the ‘Gentleman’s mixture’ of Scots’ pine, larch, beech, oak and ash. Monocultures of Sitka spruce followed in the early 20th century with impressive growth rates producing good quality spruce in a 30-year rotation. Now on its third, fourth or fifth rotation, the spruce is being adversely affected by conifer butt rot. Pine, larch and ash are not realistic options for a variety of reasons. The search for some radical alternatives to the post-agricultural landscape for grazing land, combined with a desire to tap into the renewable energy market, have led the estate to consider eucalyptus. Eucalyptus is very much an experimental crop in Scotland but potential benefits include excellent growth rates with rotations of 12 to 15 years providing three returns within the same timeframe as traditional forestry models. The primary market is the production of biomass for renewable energy, which has been playing an increasingly important role in the management and operations of the estate woodlands. The increase in demand for biomass has enabled the estate to undertake thinning of almost all of the appropriately aged commercial Sitka

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Spruce plantations and, excitingly, is enabling an on-going renovation of the Victorian policies surrounding the parkland of the impressive Houston House. Several varieties of frost-hardy eucalyptus species have been selected for trials on the estate to monitor growth and survival rates. Trials have been established in different soil types; one of these is in a low-lying part of the estate on wetter clay soils to allow an understanding of where the eucalyptus might grow profitably. The estate is located in an area at risk from wind damage. Experience elsewhere has shown that some traditionally-mounded plantations have been unstable which would prevent thinning. In order to understand the benefits and constraints of growing eucalyptus, half of the trees will be grown on mounds and the other half bare planted to see whether this has an effect on the rate of establishment. Research on growing eucalyptus has shown the importance of weed control to allow the saplings to get a good start. Trees planted in drought conditions in June last year were then blasted by drying east winds before being almost drowned by heavy rain. Despite this fairly tough introduction to their new Scottish home, the trees are now thriving.

anna.newman@galbraithgroup.com 01786 434604

paul.schofield@galbraithgroup.com 01738 456064


rescue

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Big changes still to come as land reform starts to bite Poppy Baggott outlines the law as it currently stands and expected developments in the near future. AFTER the initial excitement in 2015, the Land Reform (Scotland) Act 2016 no longer commands the front pages, but the wheels are still very much in motion. As elements of the Act become law, with others still waiting in the wings, a potted history of events so far and an update on what is to come may prove helpful. This article will touch on various parts of the Act which are now law, but the main focus will be on Part 10 which deals with agricultural holdings. Parts 2 and 3 of the Act, relating to the conception of a Scottish Land Commission, were implemented in April 2017. It is hoped that the commission, headed up by Andrew Thin, will continue to steer land reform on the path set by the Land Reform Review Group (LRRG) and the Agricultural Holdings Legislation Review group (AHLR). Bob MacIntosh, as Tenant Farming Commissioner, takes responsibility for preparing codes of practice on agricultural holdings, and ultimately for encouraging good relations between landlords and tenants. Part 6 of the Act, dealing with the reintroduction of non-domestic rates for shootings and deer forests, became law on April 1, 2017. The assessors have published practice notes on their

website www.saa.gov.uk/wp-content/ uploads/2017/09/Shooting-RightsDeer-Forests_R2017_MPC35.pdf, providing guidance for local assessors and ratepayers on how their property is valued. As regards Part 10 of the Act, December 23, 2016 saw those sections dealing with assignation and succession in relation to secure agricultural leases come into force. The gist of this is that the list of those who are eligible to be assigned the interest in a tenancy has been expanded considerably. Tenants can now assign to a relative such as the spouse or civil partner of a step-brother or sister. Landlords have a right to withhold consent to an assignation under ‘reasonable’ but fairly limited grounds. The landlord also has a right to acquire the tenant’s interest on the same terms that the assignee was to acquire the outgoing tenant’s interest, this being the case for 1991 Act tenancies and LDTs. On succession, provisions relating to 1991 Act tenancies, LDTs, MLDTs, and repairing leases (when they come into force) are now made uniform. Section 25 of the 1991 Act is repealed in its

The next few years will be pivotal for landowners making decisions on how their land should be used.

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entirety, in that it is no longer possible to serve a notice to quit on a successor where the tenant died after December 23, 2016. The rights under which landlords can object to a succession by bequest or intestate transfer are limited to the same as those relating to an assignation. The 2016 Act also puts an end to the ‘viable unit’ test in relation to the unit which is being inherited, thus sweeping away the possibility of a specific challenge based on the fact that the successor is already in occupation of an independent viable unit elsewhere. Also law from December 23, 2016 are new rules in connection with improvements carried out by landlords. There is now a notice regime required for any improvement which a landlord wishes to carry out as specified in Schedule 5 of the Act. There have been amendments to the procedural requirements under the 2003 Act in relation to non-agricultural activities. If landlords wish to object to a diversification, the onus is now on them to apply to the land court, reversing the previous system which placed this responsibility on the tenant. A landlord's ability to ask the tenant for further information has also been limited to only one request. This is designed to prevent landlords making


continued requests and indefinitely delaying the diversification. The amnesty on tenants’ improvements began on June 13, 2017, and relates only to improvements carried out prior to that date. If improvements have been carried out without consent, or notice served, then tenants are advised to make a list of these improvements and contact their landlord to discuss whether the improvements are acceptable and as such eligible for compensation at the end of a tenancy. It should be noted that the amnesty applies to 1991 Act tenancies, LDTs and SLDTs, and that no valuations need take place. Compensation is only payable at the end of the lease on the basis of value to an incoming tenant. So, while much has been done, further change is still afoot – see panel, right – and while this article comments on the current status of the Act, this is merely a snapshot, and change will be ongoing for some time. This article seeks to provide a technical update in a nutshell on the progression of land reform. While the focus and aim of land reform is to encourage transparency and ensure that all that Scotland has to offer is available to the majority, the next few years will be pivotal for landowners deciding how their land should be used. However, while we would be remiss not to preach caution, there will also be opportunities for those with initiative and a will to move with the changes rather than against them. Past experience suggests this applies to the large majority of Scotland’s landowners. poppy.baggott@galbraithgroup.com 01556 505346

Land Reform Part 10: What's in the pipeline? Pre-emptive Right to Buy The proposal to remove the requirement for a tenant of a secure tenancy to register a right to buy has yet to come into force, and so tenants are advised to continue to register and renew their pre-emptive registrations.

Modern Limited Duration Tenancies The regulations which will allow for the creation of Modern Limited Duration Tenancies come into force on November 30, 2017. Notable areas of change under an MLDT are that a tenant under this lease will be able to assign (subject to a limited right of objection by the landlord); an MLDT can be sub-let if the lease allows; and termination at the end of the lease requires a double notification from the landlord and only a single notice from the tenant.

Repairing leases It is hoped that the introduction of the repairing tenancy agreement will encourage the long-term letting of land which would require a significant amount of input from the landlord to bring it into a condition whereby it could be farmed in accordance with the rules of good husbandry. A repairing lease must be for a minimum term of 35 years, with the first five years designated as a ‘repairing period’ during which the tenant is exempt from liability to farm in accordance with the rules of good husbandry.

Sale where a landlord is in breach One of the more controversial areas of the Act relates to a tenant being able to apply to the Land Court for

an order of sale where the landlord is in breach of obligations which subsequently affect the tenants’ ability to farm. The breach must be material, and the landlord must have failed to comply with an earlier order to remedy.

Rent Although there are guidance notes issued on best practice for landlords carrying out rent reviews, there is as yet no new legislation in place under the 2016 Act. However, the Scottish Government has commissioned rent review testing work which is currently being carried out by Savills, Shepherd & Wedderburn and Watson Bell. It is hoped that this will inform how reviews are to be carried out in future. For now though, rent review notices served prior to the actual commencement of the new rules will continue to be governed by Section 13 of the 1991 Act or Section 9 of the 2003 Act, as appropriate.

Relinquishment It is thought that new rules relating to what is termed ‘relinquishment’ will come into force later this year. According to Bob MacIntosh’s guidance note, this area of the Act will make provision for tenants who wish to retire to realise the value of their secure tenancy when they relinquish it. Basically, the new provisions enable an existing tenant to relinquish a tenancy on payment by the landlord of compensation based on the value of the tenancy, or, where the landlord does not accept the tenant’s proposal to relinquish, the tenant can assign it for value to a new entrant to farming.

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What will the new tenancy regime mean for rural communities? Scottish Land & Estates’ Katy Dickson reviews the new Private Residential Tenancy. RENTED housing on farms and estates has been the cornerstone of rural communities for hundreds of years. Over that time legislation and policy has gradually changed, but have we ever seen so much change in such a short period of time as we have over the past few years? One of the key changes the sector currently faces is the new tenancy regime. From December 1, it will not be possible to create new Short Assured Tenancies. Instead landlords and tenants will enter into Private Residential Tenancies (PRTs) which offer tenants greater security

We cannot have the continuation of a slow legal system which repeatedly fails to enforce legislation robustly. of tenure. The tenancy will be open-ended and will last until a tenant wishes to leave or the landlord uses one or more of 18 grounds for eviction. Scottish Land & Estates lobbied hard for rural circumstances to be recognised in the new regime. The rural private rented sector does not have the same characteristics as the urban sector, and this is problematic when changes are not flexible enough to work successfully in all situations.

For example, under the new tenancy regime there is no ability to ask a tenant to leave when the property is required for a new or retiring employee. And although anti-social behaviour is listed as a ground for eviction, a landlord will have to prove anti-social behaviour has taken place to such an extent that the tenant should lose their home. This may be easy in cities or towns but may be very difficult in a remote location and could cause significant confrontation. Disputes under the new tenancy will be heard by the Housing and Property Chamber of the First Tier Tribunal. Once this is up and running we hope it will offer a quicker and fairer system delivered by housing experts. Considering the strength of the tenant’s position in the new tenancy, we cannot have the continuation of a slow legal system which repeatedly fails to enforce legislation robustly. There were missed opportunities for this change in regime to work for both landlords and tenants and to secure a continued, or even enhanced, supply of rural privately rented homes. As properties become vacant from December onwards the reactions and subsequent impacts on the market will become apparent. We just hope politicians’ minds are open to amendments if unintended consequences put rural businesses and communities at risk.

Katy Dickson is a senior policy officer at Scottish Land & Estates www.scottishlandandestates.co.uk

Page 14 | Rural Matters Winter 2017-18 | galbraithgroup.com


Sharing the benefits Philippa Cliff explains how landowners can profit from mutually beneficial arrangements with seasonal graziers. CASTLE GRANT MOOR near Grantownon-Spey is in a particularly beautiful area of Scotland on the edge of the Cairngorms National Park and principally comprises an upland grouse moor with smaller areas of improved lowland farmland.

flock. Our client pays for pour-on tick treatment for the grazier’s sheep flock as well as paying for louping ill vaccinations for breeding stock. Additional lambing ground is also rented close by to assist the sheep operation – this cost is apportioned between our client and the grazier.

Our client has leased the moor on a long-term basis. His principle interest is in falconry, but he also wishes to improve the grouse population on the moor during his tenure. Currently, just one of the three main beats is driven and it is hoped that over the coming years, a programme of management and improvement will see driven shooting become possible across the entire estate.

This agreement benefits both parties. Firstly, it reduces the financial outlay for our client; he does not have to purchase the stock in the first place, nor does he have to pay for labour to look after the sheep or feed/veterinary care. His investment is restricted to tick medications for the stock every year, but he gets the full benefit of having about 1,500 sheep on the hill, which attract a significant number of ticks.

In common with many grouse moors, measures are required to reduce the tick population in order to control the spread of the tick-borne disease, louping ill. Louping ill has a severe effect on grouse health, with a Game and Wildlife Conservation Trust study citing that 79% of grouse chicks infected with the disease die in both field and laboratory conditions. The potential for people to catch diseases such as Lyme disease (also spread by ticks) is one which our client takes seriously as the region is one of Scotland’s most popular destinations for hill walkers and public access is encouraged.

From the grazier's point of view, he has access to free grazing, plus the opportunity to benefit from agricultural subsidies over the ground – in this case the grazier could potentially be eligible for LFASS (Less Favoured Area Support Scheme), SUSSS (Scottish Upland Sheep

A well-known management tool against the spread of tick-borne disease is the use of tick mops. These comprise a flock of sheep treated with pour-on medication against acaracides and commonly they are also vaccinated against louping ill. The sheep within the tick mop are therefore protected against tick-borne disease and the ticks are subsequently controlled before reaching grouse populations. The purchase and subsequent management of a tick mop can be costly and time consuming, requiring upfront capital to purchase the stock and specialist labour input from a shepherd. In a bid to reduce this investment, Galbraith worked with our client to enter into a sheep stocking agreement with a seasonal grazier. Under the terms of the agreement, a flock of about 1,500 sheep grazes the hill year round, with sheep becoming hefted to the hill over time, and gradually building acclimatisation and resistance to tickborne disease. Our client successively rents seasonal hill ground to a grazier, who provides the sheep and the labour to look after the

Falconry is our client's principal interest.

Support Scheme), as well as BPS (Basic Payment Scheme) and young farmer/new entrant grants. Land is in short supply and an arrangement such as this can allow farmers to expand their business with limited financial outlay. Galbraith continues to manage the agreement with the grazier on behalf of the client and has experience of the establishment of similar agreements on a variety of types of land. This type of arrangement typically represents an excellent opportunity for new entrants to agriculture, and for those without their own land holding or with a limited home operation.

philippa.cliff@galbraithgroup.com 01463 245361

galbraithgroup.com | Rural Matters Winter 2017-18 | Page 15


Quantum of solace on sporting rates Calum Innes outlines the approach governing the newly reintroduced sporting rates and the discounts allowable in some cases. AFTER an absence of more than 20 years, the confirmation of the reintroduction of sporting rates has been met with something of a mixed reception. The pros and cons are not for this article, but the announcement prompted wild speculation among landowners and agents as to the proposed methodology and the financial implications. The Assessor has quietly gone about his business and the time for speculation is at an end. By the time of publication the first valuation notices will have been issued. Galbraith has been fortunate to have been involved in liaison with the

Scottish Assessors Association on this matter and we can now report on the outcome of their analysis. The Assessor, having considered evidence gathered in the marketplace from examples of leased shootings, has developed a formulaic approach to valuation with a tiered rate per hectare being applied to the predominant land types which reflects their sporting potential. The rates that will be applied are: Land type

Rate/Ha

Deer forest/hill/moor

£2.00

Improved grassland

£3.50

Unimproved grassland

£4.00

Arable

£4.00

Woodlands/forestry

£5.00

Mixed types

£5.00

The valuation methodology provides scope for adjustment to reflect quantum which is the premise that as

The Assessor has developed a formulaic approach to valuation with a tiered rate per hectare being applied to the predominant land types which reflects their sporting potential.

Page 16 | Rural Matters Winter 2017-18 | galbraithgroup.com

area increases the corresponding value per unit of measurement decreases. For example, whilst a deer forest might attract an initial rate of £2.00/Ha, a deer forest in excess of 8,000 hectares would be eligible for a discount of 50% to reflect quantum. Of course, there will be circumstances where it is necessary to reflect particular disabilities affecting the subjects being valued, such as access, and it is acknowledged that allowances can be granted to reflect these, albeit it is suggested that they should not exceed 10%. There are circumstances in which there may be different parties holding separate shooting rights over a single landholding. For example, one party might hold the deer stalking rights while another may have or retain the general shooting rights. In these circumstances, there would be separate entries made in the roll. Finally, it is the existence of a ‘right to shoot’ that is being valued; whether such right is exercised is immaterial, albeit it is acknowledged that if shooting would be precluded by physical circumstances, such as being


located in a semi-urban environment, it may be reasonable to exclude such subjects from entry in the roll. The rateable value does not equate to rates payable and in the usual way the rates bill will be calculated by multiplying the rateable value by the poundage rate. Typically, this results in a payment of about 50% of the rateable value. Finally, and critically, the Small Business Bonus Scheme will apply. Currently 100% rates relief is available for those properties where the combined rateable value is less than £15,000. When applied to sporting rates, this means that if you own 1,000 hectares (c.2,500 acres) of mixed ground your rateable value will be in the order of £5,000 or alternatively if you have 10,000 hectares (c.25,000 acres) of grouse moor your rateable value would be in the order of £10,000. In either case, unless you have other rates liabilities you should be eligible for 100% relief, i.e. nothing to pay.

calum.innes@galbraithgroup.com 01738 456075

A96 dualling: Planning for the long-term viability of your business Dougal Lindsay explains why land and business owners in the North East should start seeking advice now in advance of the decision on the preferred route. THE consultation period for the Hardmuir to Fochabers stretch of the A96 Inverness to Aberdeen dualling project closed earlier this summer. Several different route options for the road were proposed by Transport Scotland and the preferred option is likely to be announced in 2018, following debate by ministers and officials over the coming months. Whichever route is selected, there will be a significant number of landowners, farmers, rural businesses and householders losing out as the authorities will eventually have to secure the necessary land to build the chosen scheme. In the meantime, land and business owners along the route can expect to be approached by Transport Scotland’s contractors to facilitate access for studies and exploratory investigations whilst the preferred option is worked up. Landowners and tenants can seek advice on crop loss and access arrangements at this stage and ordinarily their costs in doing this would be met by Transport Scotland. Slightly further west along the route, Galbraith is currently acting for a number of landowners affected by the first phase of the A96 dualling project

between Inverness and Hardmuir who have been served draft notices to acquire land along the route and where ground investigation works are being undertaken. Discussions are ongoing with Transport Scotland’s contractors over access for ground investigations. Recognising that the Government has a programme to improve the transport infrastructure around the country, we seek to negotiate the best outcome on our clients’ behalf from an early stage, be it for compensation for land taken or agreeing appropriate accommodation works. As a firm we have a proven track record offering advice to a number of landowners affected by similar schemes such as the A9 dualling project or the Aberdeen Western Peripheral (AWPR) route where we have acted for a number of clients and have managed to negotiate settlements that have included a new cattle float and handling facilities in addition to compensation where a farm was bisected by the road. Engaging at this stage of the process allows businesses and home-owners to ascertain from the outset what issues may lie ahead if a preferred route does cross their land and the consequential impact on their business. No two issues will be the same so sound advice is key to plan for the long-term viability of your business.

dougal.lindsay@galbraithgroup.com 01463 245380

galbraithgroup.com | Rural Matters Winter 2017-18 | Page 17


The shift

Most people would agree that unoccupied properties do little to benefit the owner or society at large.

A bright future for battery storage providers Battery storage is increasingly important to the electricity supply network and the rewards for landowners are potentially significant. Anneka Fraser outlines the technology.

AS the UK’s fossil fuel dependence shifts towards renewable energy, the National Grid is charged with ensuring that variable – and often intermittent – electricity generation meets consumer demand. This is known as balancing the network. Active Network Management (ANM) is the term coined to encompass the range of solutions used to balance the network, boost capacity and optimise the existing infrastructure. One solution is Enhanced Frequency Response (EFR). To date, the grid network has met consumer demand by paying generators to provide a frequency response service to either increase or decrease power output. This Firm Frequency Response (FFR) is rather slow with reaction times up to 30 seconds. EFR, however has a sub-second response time allowing National Grid greater control in periods of frequency deviation. By maintaining an average (grid) system frequency of 50hz (+/- 1) future stakeholder savings are estimated to be in the region of £200 million.

Page 18 | Rural Matters Winter 2017-18 | galbraithgroup.com

In 2016 under EFR the National Grid procured 200MW of additional capacity. Developers were invited to tender for four-year contracts of between 1MW and 50MW of grid capacity for various electricity storage technologies. The majority of tenders were secured by battery storage developers at an average of £9/MWh. This reflects the growing importance of batteries in ensuring reliable power supply across the grid. Storage technologies have advanced hugely in recent years, driven by demand for greater mobility – electric cars, airliners and mobile phones – and better static storage to match power generation with the needs of end users. The sums involved are large. In August, The Renewables Infrastructure Group (TRIG) agreed to buy a 20MW battery storage project at Broxburn, West Lothian, from the renewable energy company RES in a £20m investment. TRIG was attracted by a bespoke, bilateral four-year deal with National Grid and associated availability payments.


away from agricultural occupancy restrictions A more flexible planning consent can benefit both owners and occupants, says Lauren Springfield. REVISED approaches to rural occupancy could benefit many owners of farm housing, if they realise the possibility to negotiate with their local authority exists. In Scotland, housing in the countryside has long been a contentious issue with many authorities seeking to prevent sporadic development that may be judged detrimental to the rural environment. As a means of control, house consents are often granted with conditions that demand that occupancy is on the grounds of agricultural employment. Historically, to enforce this position, such conditions were often supported by a Section 75 legal agreement which places a restriction on the title of the property. Recently the Scottish Government has realised that such restrictions place a previously unidentified economic and social burden on rural communities. Scottish Planning Policy is clear that housing policies in rural areas should “set out the circumstances in which new housing outwith settlements

“The use of battery storage is becoming increasingly important in enabling grid networks to match fluctuations in the supply and demand of electricity and to stabilise power frequency,” said TRIG chairman Helen Mahy. “This becomes especially vital as the installed base of renewables generation increases.” It is expected that future auctions will be offering bigger contracts with no cap on capacity which, together with the National

As more renewable energy projects come online, the electricity generated will be less reliable by its very nature, and as a result the grid will be more reliant on battery storage to balance the network.

may be appropriate, avoiding use of occupancy restrictions”. The most obvious burden that a Section 75 agreement creates is that it restricts the ability of the property owner to obtain a standard residential mortgage, while also limiting the value of the property, due to the constrained pool of potential buyers. It can also make maintaining occupancy difficult without being exposed to the potential risk of enforcement action. Most people would agree that unoccupied properties do little to benefit the owner or society at large. The Galbraith planning team has now worked alongside our rural colleagues in successfully removing such restrictions in several areas of Scotland, ensuring the owners and occupants of these properties can benefit from a more flexible planning consent. If you have a property which you are finding difficult to refinance, or, for example, wish to use to underpin generational change on a farm, the planning team may well be able to assist you in varying your planning consent. lauren.springfield@galbraithgroup.com 01786 435040

Infrastructure Commission recognising the need for storage and the cost of batteries falling, signals a bright future – provided developers can secure appropriate sites. Battery storage sites are approximately 1-2 acres in size, are situated either next to substations or co-located next to renewable energy projects and crucially are in areas where the grid is constrained. The batteries soak up electricity generated in periods of excess and retain that energy until such time as demanded by the grid network. The battery technology is still in its relative infancy and batteries can only store 1-2 hours’ worth of electricity. Currently the grid only calls upon the stored energy for brief periods but, as more renewable energy projects come online, the electricity generated will be less reliable by its very nature, and as a result the grid will be more reliant on battery storage to balance the network. This is welcome news for landowners with suitable sites, and developers seeking a route to market. But anyone considering

the sale or lease of property for electricity storage use should examine closely the economic drivers and seek expert advice on revenue potential and valuation. As ever we are actively working to link developers and landowners to these desirable sites. We are undertaking site referencing, preparing feasibility studies, negotiating site leases, preparing planning applications, and negotiating heads of terms. It’s a fast-moving sector and our clients won’t be left behind.

anneka.fraser@galbraithgroup.com 0131 240 2280

galbraithgroup.com | Rural Matters Winter 2017-18 | Page 19


Could Galloway become Scotland's third National Park? The Galloway National Park Association sets out the case for creating a National Park.

SOME of Britain’s most iconic landscapes are National Parks. Places like the Cairngorms, Loch Lomond & The Trossachs, the Peak District and Pembrokeshire belong to this exclusive club. All of the UK’s 15 National Parks have common aims of enhancing and conserving the natural and cultural heritage of unique landscapes, using their resources sustainably and encouraging everyone to get out there, enjoy them and learn from them. However, only Scotland’s National Parks, of which there are two, have the specific aim of promoting sustainable economic and social development of the areas. Scottish National Parks are established under the National Parks (Scotland) Act 2000, which specifies how places qualify for National Park status, so could Galloway become Scotland’s third? The area has been recognised as a potential National Park in official reports such as the Ramsay Report (1947) and UNESCO declarations in 1976 and 2012, and those who live in or visit the area know their own part of the Galloway story. However, there is so much that remains undiscovered. A complex history has left a unique and enduring human story stretching back to the days of independence as the Kingdom of Galloway. As Scotland’s cradle of Christianity and the inspiration for artists and writers from the Glasgow Boys and Goldsworthy to Burns and Barrie, local people are deeply proud of this unique historic and cultural legacy, which has national and international significance.

Page 20 | Rural Matters Winter 2017-18 | galbraithgroup.com

Galloway is a place of world-class environments and beauty and as such is classed as a UNESCO Biosphere. It has a dedicated Forest Park as well as being Scotland’s first Dark Skies Park. The area is home to southern Scotland’s largest tract of wild uplands, a rich mosaic of farmland and amazing wildlife, so the potential to create a National Park is evident. Galloway National Park Association was set up in November 2016 to help to increase public and government awareness of the opportunities arising from the rich natural, cultural and historic assets of Galloway and the greater likelihood of exploiting these opportunities if they occur within a National Park. The association aims to place a National Park at the heart of a sustainable future for Galloway. The National Parks (Scotland) Act states that progress towards gaining National Park status is only possible if it is the real, demonstrable will of the grassroots communities involved. That will, backed up by technical arguments, should convince currently sceptical Scottish Ministers to start the process of designation that ends up creating a new National Park. The process is currently in the early stages. By the time of publication, discussion documents will have been made public. These will provide the first steps towards progress. However, at this stage, nothing is set in stone and a number of options are being brought forward on

A complex history has left a unique and enduring human story stretching back to the days of independence as the Kingdom of Galloway.


issues such as boundaries and planning so that everyone can have their say from the outset. Galloway National Park Association is a registered charity. If you have an interest in the future of Galloway visit www.gallowaynationalpark.org to learn more and find out how you can support various events and discussion meetings.

Galloway's contributions to Scots culture are many, from Galloway cattle to the cradle of Christianity in Scotland via natural wonders such as the River Cree and the Rhinns of Kells.

galbraithgroup.com | Rural Matters Winter 2017-18 | Page 21


On the crest of a wave Harry Graham reviews his summer placement as an intern with Galbraith. GROWING up in a predominantly rural area, I came across Galbraith several times at land management and rural business events and I was delighted when I was given the opportunity to participate in the firm’s summer internship scheme. I started my BSc in Urban Planning and Property Development at Heriot Watt University in 2014, which has a focus on the commercial side of the profession. However, my placement at Galbraith has had a much broader remit, from residential property valuation to understanding rural land use. From training days on the Galbraith Geographical Information System to helping out at the Royal Highland Show and assisting on a variety of valuations across Scotland, the experience and knowledge I have gained from this internship has been second to none. By the end of the first week it was clear that I would not be given a back-seat role. I assisted in the valuation of a large amenity holding in the small village of Kippen. I also helped to draft the particulars for a spectacular cottage on the shores of Loch Lomond. I was given the freedom to take on new tasks and learn new skills while being supported closely by others in the firm, which was an excellent opportunity for me to develop professionally. The sale of Doune Cottage, a ruined yet picturesque cottage situated on the east bank of Loch Lomond with expansive views over Ardlui, is one that I will always reflect on as I move forward with my career. Galbraith correctly predicted that this property would attract a significant amount of interest from all over the world. From the original visit to Loch Lomond to inspect the property all the way through to its sale at a closing date, I had first hand experience of all aspects of the process. I now know what goes on behind the scenes to ensure that a property is ready to be brought to market. The marketing of this property was testing at times and this allowed me to vastly improve my communication skills and problem-solving ability, while expanding my knowledge of Scottish valuation protocols and property legislation. Every task required me to use multiple skills in a variety of environments to solve different problems. My time as a Galbraith intern has clarified the direction I would like my future career to follow. When I first came across Galbraith many years ago I associated them with professionalism and dynamism; now I can also add friendliness to the list. I would encourage any budding land agents to give it a go.

Page 22 | Rural Matters Winter 2017-18 | galbraithgroup.com


|

I see big changes coming which will present huge opportunities for the next generation

|

Gareth Taylor talks to James Fairlie, the 2017 Farmer’s Weekly Young Farmer of the Year, about winning the award, anaerobic digesters and progressive farming. Congratulations on winning such a prestigious award, what does it mean to you? I take pride in what I do and I was delighted just to have been nominated. In farming you have to sacrifice so much, and the public perception of farming is so often inaccurate. How did you celebrate your win? Well, my whole family came to the award ceremony in London. We were probably the rowdiest table in the room! After I won, we had quite a few more drinks into the early hours… Tell us about your farm? The farm is Kirkton of Monkie, just outside Dundee and is a wholly arable farm. We have just started growing oats on contract and also grow about 380 acres of potatoes. I came into the business in 2013 and after a year or two proving myself, my dad gave me more control. I now also farm neighbouring land under a Contract Farming Agreement and took the big decision to diversify by installing an anaerobic digester on the farm. How does the anaerobic digester plant fit with your other enterprises? Starting off it was hard work and a steep learning curve, especially trying to project manage the construction whilst also on the tractor doing the ‘day job’. Now that it is up and running it fits really well into the existing business. We feed it with waste potatoes and take vegetable waste from a nearby processing plant. It’s good having a predictable income which isn’t subject to commodity prices. How does the Contract Farming Agreement work alongside your own farm? I was approached directly by my neighbour who was aware of what I was doing. I see it as an extension of the existing business and, like my farm, it’s based on trust, hard work and close relationships. I am very lucky, this type of land just doesn’t become available in Angus and with land values being what they are I couldn’t justify purchasing additional land myself. My long

James Fairlie celebrates his Young Farmer of the Year success with his girlfriend, Alex Barclay.

term goal is to be farming 3,000 acres by the time I’m 40. We’re obviously in uncertain times, what opportunities do you see for Scottish farming? After graduating from college I spent a number of years working in Australia. What amazed me there was the scale and attention to efficiencies. Their per hectare margins are far higher than in the UK. Economies of scale are always going to be key and I’m working hard to ensure that my farm will be able to stand up without subsidy. The average age of a UK farmer is, what, 65? I see big changes coming which will present huge opportunities for the next generation. You are obviously very forward-thinking and proactive, but what would you say to those who are just starting out in farming? Farming is tough. You have to be passionate and 100% committed, otherwise it just won’t work. That said, if you’ve got an idea then go with it, be prepared to get your fingers burnt. If you’re confident that it will work, and your sums add up, then be bold. It may be hard work, but farming will always reward you in the end.

gareth.taylor@galbraithgroup.com 0131 240 6962

galbraithgroup.com | Rural Matters Winter 2017-18 | Page 23


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