What Is an Agricultural Lease?

Division 3 of Part X of the Land Act 1996 is only two sections long, but the second of them is the one that ends agricultural leases.

Section 87 — the grant

Three discretions in one sentence: whether to grant, for how long, and over how much land. All are exercised by the Minister, normally on a Land Board recommendation.

“Agricultural purpose” is defined in section 2 to include a purpose of dairying, horticulture or mixed farming. The word “includes” makes that list illustrative rather than exhaustive.

Section 88 — minimum improvement conditions

“Shall” — this is mandatory. Every agricultural lease carries improvement conditions, and they are the heart of the bargain: the State grants land at agricultural rent on the footing that it will actually be developed and farmed.

The conditions typically fix what must be done (clearing, planting, fencing, buildings, water), to what value or extent, and by when. Under section 81, the time for fulfilling them runs from the date of gazettal of the successful applicant — not from the date you receive the title.

Proving you have complied

Compliance is a question of fact, and the burden of persuading the Department falls on the lessee. Keep:

• Dated photographs of clearing, planting, fencing and buildings;
• Invoices and receipts for materials, contractors and stock;
• Records of area planted and of yields;
• Correspondence with the Department, including any inspection reports;
• Evidence of events outside your control — drought, flood, disputes over access — if you will need to ask for more time.

At the end of the term

An agricultural lease is a lease, not ownership. At expiry the land reverts to the State. Two things then matter:

• whether a further lease is available — a lessee applying for a further lease is one of the grounds on which land may be exempted from advertisement under section 69(2)(c); and
• whether you are paid for your improvements — governed by Part XIII.

Check also whether the land has been reserved from further lease under section 49, which would signal that no renewal is intended.

Agricultural land that is customary land

An agricultural lease is a lease of Government land. Where the land is customary land, an agricultural project needs a different route — either acquisition by the State and then a lease, or the lease-leaseback mechanism producing a special agricultural and business lease.

An agreement with customary landowners to farm their land, without one of those routes, runs into section 132 — which makes a contract to lease or otherwise dispose of customary land, otherwise than to citizens in accordance with custom, void.