Rural lands reform: light at the end of the tunnel for Maltese farmers

Maltese farmers are seeing the light at the end of the tunnel in their fight to retain agricultural land free from private speculation, with important amendment Bills for agricultural leases now being proposed for legislation.

The first to join the chorus of approval is agriculturalist Malcolm Borg, deputy director of the MCAST department of agricultural, and a founder of Għaqda Bdiewa Attivi (GħBA), who said the proposed laws are prioritising Malta’s food production. “At last, a policy is underway to ensure the main raw material needed by genuine and active farmers to harvest the nation’s food supply,” Borg told MaltaToday.

For the past two years, Borg and Għaqda Bdiewa Attivi has been pushing the government to address anomalies within the existing agriculture leases law, since a landmark case declared that Malta’s price and tenure controls on private agricultural land leased out to farmers, breached owners’ rights to their property. The decision led to a flood of over 100 eviction cases that, left unaddressed, would have sacked farmers from the lands they tended to and the crops they grow.

Now a proposed reform is defining the status of farmers, distinguishing between active farmers, hobby farmers, and newcomers seeking to start on this career. “There has always been a spectrum of farmers, but the clearest distinction is that of commercial farmers and non-commercial farmers. I would define commercial farmers as those who produce their products for me and you to buy,” Borg says.

While hobbyists could still be harvesting agricultural products for their own families, technically they are not providing for the national food supply.

Enriching the nation’s food supply, to complement Malta’s food imports, had always been the the government’s original intention. The situation in the past two years – namely the COVID-19 pandemic and Russia’s invasion of Ukraine – have only further highlighted the importance of securing the national food supply.

However, it would have been discriminatory for part-timers not to be included in this bill, as some part-time farmers tend to work and produce agricultural products as much as any full-time farmer.

With a stop-gap measure to address issues raised by the Constitutional Court, landowners will now have the right to lay down conditions on agricultural leases but a separate authority will safeguard private agricultural land within established rural zones, and operate a ‘cadastre’ register for administration of such land.

The reform will create green zones which can be excluded entirely from potential speculative development. Also proposed are tax measures to incentivise agricultural land acquisition, by exempting farmers leasing agricultural land from inheritance tax; fiscal incentives for landowners who lease their rural lands to farmers; and taxing agricultural land that is not used for agricultural purposes.

The rental price of fields will also not be increasing by more than 1.5% of the land valuation. Agricultural land will start to be valued as agricultural land and not at the market price, like other commercial lands in the area; and residential farms will be considered as pre-1995 leases, so rent subsidies will apply to them according to the latest amendments to the protected leases law.

“At last, a policy is underway to ensure the main raw material needed by genuine and active farmers to harvest the nation’s food supply.” Malcolm Borg

Potential farmers fear no land to cultivate

Borg thinks the proposals will clear up an assortment of issues plaguing Maltese agriculture. Good governance of agricultural land will help better manage fields according to the demands of active farmers, be they new or veterans. Borg adds that it’s the new farmers who are facing the most difficulty when searching for land. Younger farmers, whose ancestors already owned land, could easily keep cultivating that land.

On the other hand, new farmers can come armed with a diploma or degree, yet have no land to cultivate on the other. “At MCAST, I met several students each year who admit that even though they would love to enrol in an agricultural course, they won’t. They feared that once they graduate and open their own enterprise, they would not find fields to till. They always ask, ‘where would I start?’ And as right as they were, I never knew how to answer them.”

Now the government is proposing the creation of an authority to operate a ‘cadastre’ register that will record sales, rentals, and use of private agricultural land, as well as acquiring land offered for sale so that this is later allocated to active farmers.

Borg says this would allow the State to pass agricultural land to a genuine and active farmer and also give the option of guiding possible new students into the field – literally. “Until then, Għaqda Bdiewa Attivi will keep monitoring the process which binds together land prices and the proper definition of an ‘active farmer’ with insurance of agricultural land which is only worked for agricultural purposes.”

What changed for farmers

Years ago, a law to protect farmers technically prevented owners from evicting the farmer unless there was proof that the owner needs that land, justifiably. Leases could not have their rates raised, in a bid to prevent owners from indiscriminately raising the price to force the eviction of the farmer. This law also gave the right the farmer to pass the lease on to his son or daughter.

All changed in November 2020, when a Constitutional Court judgement declared that the law breached owners’ rights to the peaceful enjoyment of their property.

This led to agricultural leases being negotiated according to current market rates, which are dependent on the demand for the land for recreational purposes. This resulted in market prices that were not within the budget of any farmer.

That is why the reform proposes a fair rent price after considering the land’s value. This would depend on several factors, such as adequate access to water, the road, any buildings on the property and more.

The same authority will appoint experts in different sectors, representatives of competent authorities and other interested stakeholders, to its board, to ensure rents do not exceed 1.5% of the land’s free value in the open market per year – a measure that would ensure the farmer’s peace of mind while leasing rates stay as stable for them as possible.

“I met MCAST students who would love to enrol in an agricultural course, but they fear that once they raduate and open their own enterprise, they would not find fields to till”

Explained: the 2020 judgement

The case concerned a 5,000sq.m parcel of land and farmhouse, in Żabbar, acquired in 1982 by J & C Properties, along with another four properties, for Lm26,000 (€51,000) back then. The land was leased to Nazzareno Pulis, at an annual rent of €58.23, remaining so leased until today.

The owners filed a claim that their rights were being breached because they were not being afforded adequate compensation. The first court upheld that claim, awarding the company €100,000 in damages.

The State Advocate appealed but the Constitutional Court rejected the arguments put forward, save for that concerning the awarded damages, effectively slashing the sum to €22,000.

While such restrictions on ownership rights had been intended for “social purposes”, the Court asked whether the owner was receiving adequate and proportionate compensation. Under the current regime, the owner could only claim back his land for farming purposes or to develop the site, save for other instances where shortcomings were proved on the part of the lessee.

This meant that if the owner did not intend to farm the land or lacked the capital to develop it, he could not claim his property back unless the lessee agreed in writing to the termination of the lease.

The Court, therefore, ruled that the lessees could no longer avail themselves of the law to renew the lease. Whether any eviction follows, will fall within the competence of the ordinary courts.

Influx of ‘recreational’ landowners

A new reality has dominated the market as of late. You simply search for fields on Facebook Marketplace and many fields come up being sold at inflated prices, usually targeting buyers who want private fields for recreational purposes.

The demand has increased, and owners are seeing this as an opportunity to put more money in their pockets. This could only be one of many reasons why farmers are being evicted from the lands they cultivate.

Nonetheless, there are currently around 7,500 farmers around Malta, with most not owning their own land.

For this reason, the reform is proposing that together with existing tax measures, new incentives are created for agricultural land tenure and acquisition.

The white paper is proposing exemptions from inheritance tax if the land is leased to the farmer, fiscal incentives for landowners who lease their land to farmers and tax on agricultural land that requires to be cultivated and which is not being used for agricultural purposes.