The ends of the earth

‘No person will ever get into my blood as a place can … People and things pass away but not places.’

Daphne du Maurier’s words will resonate with those who consider themselves but temporary custodians of rural land, charged with its responsible stewardship, whether they be absolute owners, life tenants[1] or trustees. However, what does ‘responsible stewardship’ mean in the context of rural land?

The STEP report, Family Dialogues on the Responsible Stewardship of Wealth,[2] cites the Merriam-Webster definition of stewardship as ‘the careful and responsible management of something entrusted to one’s care’. This begs the question as to whom such a duty is owed. Is it to the next generation, to the wider public or, perhaps, to the environment? Is it possible to create a future for rural land that delivers for each of these stakeholders? In other words, is it possible for rural land to be managed to have a positive impact on the so-called ‘triple bottom line’ of profit, people and planet? Although the examples in this article are UK-related, these questions have a global application.

The triple bottom line

Profit

For most custodians of rural land, the number one priority is handing over a resilient business to the next generation. This means both generating income from the land and preserving its capital value.

In the UK, inheritance tax (IHT) is triggered at 40 per cent where property passes down to the next generation on death or every ten years (at up to 6 per cent) where property is held in a relevant property trust. Agricultural property relief (APR) is a valuable relief from IHT available on land used for agricultural purposes. The ability to preserve the capital value of rural land is often greatly dependent upon securing APR.

People

Rural land has the capacity to provide diverse benefits for society, whether that is through producing nutrient-dense food, granting the public access to nature or offering educational opportunities.

Restrictions brought in during the COVID-19 pandemic provided ample illustration of the benefits to mental and physical health of spending time connecting with nature, as well as inequalities in accessing green spaces.

Planet

Agriculture may be deemed responsible for roughly 10 per cent of the UK’s greenhouse gas emissions but it is unique in being the only land sector capable of naturally absorbing and storing carbon. Rural land is part of the solution to climate change and has the potential to reverse biodiversity loss. Although carbon sequestration and biodiversity gain can be achieved alongside farming, some landowners are considering more significant environmental interventions that would take land out of agricultural production altogether. The IHT risk inherent in this approach is discussed below.

Potential conflict?

The concept of the triple bottom line envisages the possibility of delivering on all three fronts simultaneously. The conflicts below illustrate potential barriers to achieving this.

Preservation of capital versus vironmental delivery

As noted above, APR only applies to land used for the purposes of agriculture. This has created a tension with the UK government’s move from acreage-based subsidies to environmental land management schemes, which reward farmers and landowners for delivering environmental benefits. The most ambitious of these require land to be removed from agricultural production (e.g., by rewilding or tree planting). Such land would fail to qualify for APR under current legislation. Although business property relief from IHT may provide an alternative in some cases, this would depend on the scheme structure and the extent of the land in question.

For many custodians of rural land, financial and environmental stewardship considerations are in conflict, resulting in an inertia that fails to address the UK’s net-zero ambitions.

The UK government acknowledged and responded to this tension in its Spring Budget of 6 March 2024. The Budget included a welcome announcement that the government will extend the existing scope of APR from 6 April 2025 to land managed under an environmental agreement with the UK government or other approved responsible bodies.

Farmers and landowners will want to proceed with caution prior to 6 April 2025 (and avoid heavy farm machinery or, better still, take out term life insurance) to ensure that investing in environmental initiatives now does not jeopardise long-term capital protection

Access to the countryside versus protection of wildlife

Although custodians of rural land will recognise the benefits of granting access to the countryside, the positive social impact should also be weighed against environmental considerations. For example, the Holkham National Nature Reserve in Norfolk has recognised the negative impact of walkers and dogs on ground-nesting birds and so placed restrictions on specific areas of Holkham Beach during the breeding season.

How the balance between public access and environmental protection is struck will be fact-dependent, but what is clear is that a comprehensive communication strategy is vital to educate the public and garner their support, rather than alienating them with ‘keep out’ signs.

Food

Perhaps the most contentious issue in relation to rural land is food production: how much land should be devoted to food production (versus environmental interventions)? Under what farming system? And what price is the consumer prepared to pay for produce?

The question of food security loomed large during the pandemic and has remained a concern as the war in Ukraine has continued. Empty supermarket shelves have prompted farming bodies to lobby the UK government to commit to a minimum level of self-sufficiency and improve vulnerable supply chains. However, food security is not limited to produce on the shelves. Such food needs to be affordable, which is all the more challenging in light of the UK’s continuing cost-of-living crisis, where input prices are increasing as consumers demand price reductions.

Food producers need to carefully consider their route to market (e.g., supermarket versus wholesaler versus direct-to-consumer) in the context of their farming system (e.g., intensive versus regenerative versus organic). For example, British pasture-fed, native-breed beef may be nutrient-dense and play a key role in improving habitats and biodiversity, but it will be unable to compete on price with imported meat produced to lower welfare standards and so would struggle to feed the nation. The appropriate route to market may therefore be direct-to-consumer, where a price premium can be achieved.

How can we move from conflict to harmony?

As this article focuses on rural land, it seems appropriate to take inspiration from nature in finding a path through the potential conflicts discussed above.

Embracing diversity

At a time of conflicting expectations as to the use of rural land, custodians of these places should ensure that they benefit from the breadth of perspectives and expertise available. The necessary team is likely to consist of the custodian and their trusted advisors, including a land agent, accountant and solicitor. Experts in specific fields will depend on the land use envisaged but may include ecologists (to establish a biodiversity baseline), marketing professionals (to assess route-to-market opportunities) and public bodies (Rural Payments Agency, local planning authorities, etc.). The next generation should also be encouraged to contribute to the vision for the land’s future, both to ensure buy-in and to provide an additional point of view.

Collaborating

Internal collaboration between custodians and their long-term and specialist advisors will be key to resolving potential conflicts and finding an appropriate way forward. Where land is tenanted, it will also be important for there to be collaboration between landlord and tenant to ensure these parties are working together in the interests of the land.

Looking externally, it may be possible to unlock more rewarding opportunities by collaborating with neighbours to deliver environmental projects at greater scale and share resources and expertise. The concept of collaboration should also be embraced in interacting with the public so that they are empowered to act as champions of the countryside and the many benefits it can offer.

Adapting to the environment

Custodians of rural land will need to assess the opportunities available against the land’s specific character and tailor a vision for its future accordingly.

Ultimately, by embracing diversity, seeking out opportunities to collaborate and adapting to one’s environment, custodians of rural land can demonstrate responsible stewardship to deliver against the triple bottom line, thereby enabling the place entrusted to their care to thrive for generations to come.