Rural property and business update – 2 November
Farmland prices remain firm for now as supply dwindles, but making the most of new environmental schemes and adopting better soil management techniques will become increasingly important when it comes to maintaining asset values post-Brexit.
Andrew Shirley, Head of Rural Research
7 minutes to read
Commodity markets
Wheat’s bull rally ended last week when rain in the key growing regions of the US and Russia allayed fears of poor germination for the 2021 harvest. As mentioned in earlier updates, speculators have been piling into the rising market, but some have now started to sell their positions causing prices to weaken slightly. Markets do, however, remain extremely sensitive so more volatility could lie ahead.
Agriculture Bill – Food standards guardian resigns as Commons votes on amendments
One might have expected the head of the Red Tractor scheme – a quality accreditation scheme for farmers - to be resigning in protest at the government’s perceived unwillingness to protect UK producers from sub-standard imports.
Instead, as the controversial Agriculture Bill heads to the Commons once more on 4 November, Red Tractor boss Baroness Lucy Neville-Rolfe has been forced to step down following strong industry criticism of her decision to vote against a series of farmer-friendly amendments to the bill when it passed through the Lords.
The amendments include measures to ensure that imported food meets the same animal and welfare standards that UK farmers have to adhere to.
Farming organisations such as the NFU are lobbying MPs in a last-ditch attempt to force the government to accept the amendments, which it has already rejected once. The Landworkers’ Alliance plans to place 1,000 pumpkins spelling SOS – Save our Standards - outside parliament.
As with much political discourse these days, a highly nuanced issue where both sides of the debate have put forward valid arguments has been polarised to the point where there seems to be no room for compromise or pragmatism.
One thing is clear, the government has a lot of work to do to gain the trust of a farming community that fears it will be sacrificed on the altar of post-Brexit trade deals with the likes of the US.
Follow the progress of the agriculture bill through parliament
Farmland market – Top prices achieved as supply slumps, but values highly variable
Barely 60,000 acres of land have been publicly advertised so far in 2020, according to the Farmers Weekly Land Tracker (set up in a different life by yours truly). That’s 35% down on last year, which itself set a record low in terms of acres launched.
The drop in volumes is perhaps unsurprising given the Covid-19 lockdown, but even during the Foot-and-Mouth crisis of 2001 when access to the countryside was also curtailed over 150,000 acres found their way to the public market.
Although a “fair amount” is happening off market, supply is still well down and, often in combination with rollover pressure, is helping push up prices in certain cases, says Mark Lawson of The Buying Solution who assists private individuals acquire land and estates.
“For the right farm in the right location, prices of up to £12,000/acre are being achieved. Farms hitting that sweet spot tend to be easily managed 1,000-acre+ arable units in areas such as the Cotswolds and Midlands,” he says.
“My clients are often self-made entrepreneurs looking to diversify their investment portfolios. Generally to make it worth their while they want to spend at least £10 million and prefer their land to be relatively close to where they live,” explains Mark.
But second-rate land in not-quite-so-desirable parts of the country is less in demand and in some cases is struggling to achieve over £7,000/acre, he says.
Read our Q3 Farmland Index update
Covid-19 – update on employment support and sporting issues
As the UK once again succumbs to the unwelcome grip of Covid-19 with multiple tiers of restrictions now in place across different regions, the Chancellor has announced a new package of employment support measures.
My colleague Georgie Veale in our Rural Asset Management team has produced a handy update that could be useful for rural businesses, particularly those in areas under the tightest restrictions.
Georgie also looks at what the various restrictions mean for shoots across the UK.
Read Georgie’s Covid-19 update
Planning – Where now for future of planning?
The consultation on the Planning for The Future White Paper closed last week (29 October) so the ball is now firmly in central government’s court to decide the next steps, writes Roland Brass of our planning team.
“We would anticipate further details to be published in the coming months, and that some consultation responses will become public.
“The reform suggestions were met with much anticipation in August, and their ambition was applauded. However, as the consultation period progressed many more concerns around the proposals were raised.
“An initial review of some draft responses from Local Authorities generally suggests that the objectives are commendable to simplify and speed up the planning system to provide more certainty. But the implementation of the proposals would not be so straightforward and would present numerous challenges.
“Significantly the proposals do not impact on existing Local Plan making and decision taking for planning applications. Therefore it is very much business as usual in the planning world for now.”
Please contact Roland if you need help with any planning issues or would like to discuss the potential impact of the proposed reforms on your business.
The environment part 1 – Government seeks Nature Recovery partners
Defra and Natural England have just announced details of their plans for a Nature Recovery Network (NRN) that will help restore and enhance England’s wildlife-rich places. “Our aim is to expand, improve and connect these places across our towns, cities and countryside.”
Partners are being sought to help achieve NRN’s targets that, by 2042, include:
- Restoring 75% of protected sites on land (including freshwaters) to favourable condition so nature can thrive
- Creating or restoring 500,000 hectares of additional wildlife-rich habitat outside of protected sites
- Recovering threatened and iconic animal and plant species by providing more, diverse and better connected habitats
- Supporting work to increase woodland cover
- Achieving a range of environmental, economic and social benefits, such as carbon capture, flood management, clean water, pollination and recreation
Mapping and data will play a key role in helping to implement NRN and I’ve already been having some fascinating conversations with our GIS team about how they’ve been using their databases to analyse water catchment areas to identify the best places for flood mitigation measures such as upper catchment tree planting.
Find out more about the Nature Recovery Network or contact Tom Heathcote for more ideas about how your farm and estate could benefit from the government’s renewed focus on the environment.
The environment part 2 – Carbon capture payments for regenerative farming
Being paid to sequester carbon via improved soil management techniques will be top of the Christmas list for many farmers and landowners.
Unfortunately no such model exists yet in the UK, but a newly launched scheme by a business called Soil Capital for farmers across the Channel that rewards those practising regenerative agriculture holds out hope of things to come.
My colleague Tom Heathcote, Head of our Agri-Consultancy team and a big advocate of regenerative agriculture, is certainly excited.
“To date the majority of carbon payments have focused on forestry so the successful launch of the first European carbon payment programme for farmers in France and Belgium is really exciting."
“It is based around regenerative agriculture of which one of the underlying objectives is to build up carbon in soil. Soil Capital is adding value to this carbon capture by offering economic incentives to farmers who want to move towards regenerative agriculture or who are already practising it.
“It is a simple programme that uses the Cool Farm Tool to assess the business and create an economic and environmental balance sheet. Protocols developed by Soil Capital assess the climatic impact of each farm and its operations which are verified by international ISO standards.
“Farmers receive carbon certificates corresponding to the results obtained by their practices. Soil Carbon has teamed up with the highly regarded South Pole to sell the credits and have already signed up some large businesses such as Cargill that have committed to purchasing the certificates.
“I look forward to this coming to the UK in the next few years.”
Find out more about the Soil Capital model or contact Tom for information on how regenerative agriculture could help your soil and profits.
Main photo by Lawrence Hookham on Unsplash