The Environmental Farm Business Tenancy (eFBT) is a new form of Farm Business Tenancy recently launched by The Crown Estate. It is designed to incorporate environmental ambitions for both the landlord and the tenant. Insights from the first Tees Annual Farming Survey show that 93% of farmers are already engaged in conservation efforts on their land, with this being a significant trend with younger generations.
If it is appropriate for both the landowner and the tenant, the eFBT could become a powerful tool for transforming British farming. It offers a blueprint for balancing productivity with sustainability, and for redefining the role of landowners and tenants in shaping the future of agriculture.
Structure and purpose
The eFBT consists of three key documents:
- The legal Farm Business Tenancy agreement
- The Farm Green Book
- The Farm Partnership Book
Together, these documents provide a comprehensive framework for collaboration, covering areas such as diversification, environmental goals, and shared responsibilities.
A shift in tenancy aspirations
The eFBT represents a progressive evolution of traditional farm tenancy agreements, offering a 15-year term that prioritises long-term environmental stability without discounting the importance of profitable food production.
A standard FBT often restricts land use to agriculture and limits or prevents tenant engagement with environmental schemes. They are often short term and can limit the success of the tenant’s farming business, particularly in the difficult circumstances the sector finds itself in. In contrast, the eFBT:
- encourages tenants to dedicate at least 15% of their land to environmental improvements;
- aims to foster a shared commitment between landlords and tenants to make improvements such as boosting soil health and increasing biodiversity;
- supports a more sustainable approach to farming, with a strong emphasis on long-term ecological stewardship; and
- includes limited break clauses and a three-year open market rent review, providing tenants with the security needed to adopt sustainable methods
The eFBT has been created by The Crown Estate, whose position seems to be environmental sustainability with long term growth. The Crown Estate has even indicated a willingness to accept reduced rents to allow their tenants to achieve environmental objectives, although obviously not all landlords will be willing or able to do so.
Implications for farming
One of the major drawbacks of conventional FBTs is their tendency to encourage short-term planning. The agricultural sector currently faces numerous challenges including tax reform, policy uncertainty and rising input costs, alongside pressures on yield and the need to diversify to accommodate these challenges. As such, tenant farmers often lack the incentive or the security of tenure to invest in practices that may not deliver immediate returns.
Since sustainable farming methods typically require upfront investment and may temporarily reduce yields, they are often considered too risky for tenant farmers without long-term tenancy security. The eFBT aims to address this by providing a structure that supports nature recovery and positions environmental stewardship as a viable and essential part of modern farming.
Considerations for landowners
For landowners, the eFBT presents both opportunities and challenges. On the one hand, it offers a chance to contribute meaningfully to environmental goals and potentially access emerging green markets such as renewable energy and natural capital assets. On the other hand, it raises questions about productivity, financial viability, and long-term risk.
This movement is Crown Estate-led for now, and it may not be suitable for everyone. The rents from eFBTs will likely be lower due to the increased tenant obligations and investment requirements, and many landlords would likely prefer a stable and increased rent even if this potentially means less sustainable agricultural practices.
The success of this model will depend on several factors:
- Clear and consistent environmental monitoring
- Strong engagement from both parties
- A shift in mindset regarding land use and profitability
While the financial implications of reduced rent and increased tenant obligations may deter some landowners, the moral and strategic incentives are compelling. However, without clearer guidance on the Government’s environmental schemes and support mechanisms, the eFBT may only end up as an incentive to farm with The Crown Estate, rather than an indication of significant change for the market generally.
Looking ahead
The eFBT seems to be an honest attempt to change the current attitude of both parties for tenanted agricultural land. While its environmental ambitions are central, an important insight is fairness to tenants, positioning the relationship more like both parties going into business together rather than a traditional farm tenancy. This new tenancy model appears to be an acknowledgement that the farming landscape is going to change over the next couple of decades, and is an indication that larger institutional landowners want to lead the way.
Looking to explore an eFBT for your land?
Our agriculture and rural team can help you weigh up the opportunities and challenges, and make sure any tenancy agreement protects both your commercial interests and environmental ambitions.
Contact our specialist solicitors today for a confidential and no-obligation discussion.
