‘Farmers might still quit’ with 1.5% lease hike

Several farmers who face rising rents from private landowners for their agricultural leases, are still protesting that the government-mandated 1.5% of the value of the land, is still too much of a rental increase for them to sustain.

The State’s proposed reform was aimed to prevent agricultural leases from suffering an increase in rents equivalent to commercial, market prices but even according to lawyer Errol Cutajar, who has defended farmers facing eviction or landowner challenges to controlled rents in the past, this is still too much for the farmer.

“From my experience with farmers, the costs it takes to grow crops compared to any profit a farmer makes selling his agricultural product at the Pitkalija, is still not worth it. Raising rental prices this much would still be a burden for farmers,” Cutajar said.

The latest of Cutajar’s clients had leased a field from landowner for a paltry €24 in bi-annual rent, before a 2021 case that established an annual rental value of €800-€900. Cutajar said that even this apparently cheap rate, was a burden for farmers and their meagre profits.

In 2020, Malta’s agricultural leases regime was deemed unconstitutional for landowners who had their right to the peaceful enjoyment of their property breached.

In light of this, the government is now proposing two legal amendments as a stop-gap measure to address the unconstitutionality of the agricultural leases regime, in a bid to prevent farmers from being evicted.

Farmers whose farm is their only residence will be able to benefit from a rental benefit scheme from the Housing Authority, creating a distinction from other non-residential, arable lands.

This reform also permits landowners to take back residential agricultural structures, such as farmhouses, for their use should farmers have more than one residence. Should this happen, the farmer is still allowed to hold on to the field attached unless the owner proves to the agricultural board that the farmer does not need the land in question.

This aligns to the existing law which prevents owners from evicting farmers without any proof of need. Indeed, previous cases have ruled against unnecessary eviction attempts. “This again shows hope for a farmer who work cultivated fields, because in such cases, even when someone is recognised as a tenant instead of the existing one, they also have to abide with these conditions,” Cutajar said.

To prevent inheritance abuse, children of farmers will be allowed to acquire their parents’ lease for a period of eight years. A new agricultural leases authority will act as an intermediary, to have landowners sell any such agricultural land without heirs, to the authority or a farmer.

The proposed reform document says sustainable agricultural activity, together with a tax on agricultural land not used for agricultural purposes, can lead to greener zones in Malta.

The government could aid farmers through national funds and the EU’s Common Agricultural Policy. The EU forks out direct payments to guarantee food security, while rewarding farmer for public benefits not normally paid for by the market.

Landowners will be able to file a request to raise farming rents with the agricultural leases board, which will then obtain a valuation of the farm and crop conditions. The board will means-test farming tenants but rental increases, if approved, will be applied gradually, and not covered by any subsidy, which would otherwise be illegal state aid.

“In that sense, the reform proposes financial assistance to encourage activity and investment in the agricultural sector,” Cutajar said.