UK rural property: We are what we eat
The Knight Frank Rural Property and Business Update – Our weekly dose of news, views and insight from the world of farming, food and landownership
10 minutes to read
Opinion
According to a new report from the United Nations, discussed below, the hidden cost to society of the world’s agrifood system is more than a startling US$10 trillion a year. The estimated US$2 trillion contribution of farming to things like climate change and environmental degradation is, of course, not to be sniffed at, but what particularly amazed me was the US$7 billion annual economic impact of unhealthy diets high in sugar and other over-processed rubbish. Farmers are already rightly upset that, as well as supplying cheap food, processors and retailers now seem anxious for them to deliver nature-based solutions at bargain prices so the upper end of the food chain can burnish its own eco-credentials. It adds insult to injury that farmers are often labelled as the villains of the foodchain when those beyond the farmgate are responsible for a lot more damage AS
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Andrew Shirley, Head of Rural Research; Mark Topliff, Rural Research Associate
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In this week's update:
• Commodity markets – Sugar shenanigans
• Agrifood system – The ten trillion $ cost of food
• Horticulture – Report paints bleak picture
• Net zero – Tree-hugging bank called out
• Trees – UK forests face catastrophe
• International – Kenyan tree-planting holiday
• Out and about – IAgrM conference
• King’s Speech – The main bills affecting rural clients
• Out and about – Trustee training
• Rothbury estate – A view to the future
• Development land – Prices still falling
• Country houses – Prices drop
• Farmland prices – Market at peak?
• The Rural Report – Watch the videos
Commodity markets
Sugar shenanigans
Another good example of a lack of equity in the foodchain is making such waves that the government has been forced to step in. The price paid by monopoly processor British Sugar for beet grown on British farms is usually set after negotiations with the NFU’s sugar board, but this year the refiner has caused ructions by offering a non-agreed price direct to growers after claiming talks with the NFU had broken down. But the £38/tonne offer for next season’s harvest is £2/tonne lower than the current contract price. After an appeal by NFU President Minette Batters, a Defra statement said: “There is a well-established process in place to agree the sugar beet price; designed to be independent between both parties, with government only acting as final arbitrator at the end of the process should no agreement be reached. It is very important that all parties involved now continue to follow that process and reach a mutually acceptable outcome.” AS
Talking points
Agrifood system – The ten trillion $ cost of food
The hidden damage caused by the food we eat and how we produce it equates to an eyewatering US$10 trillion every year, according to the recently released 2023 edition of The State of Food & Agriculture report produced by the Food & Agriculture Organisation of the United Nations (FAO). Interestingly, of the hidden costs, which are equivalent to around 10% of global GDP, more than 70% are driven by unhealthy diets, high in ultra-processed foods, fats and sugars, leading to obesity and non-communicable diseases, and causing labour productivity losses. Such losses are particularly high in high- and upper-middle-income countries, the report points out. One fifth of the total costs are environment-related, from greenhouse gas and nitrogen emissions, land-use change and water use. This is a problem that affects all countries, and the FAO says the scale is probably underestimated due to data limitations AS
Horticulture – Report paints bleak picture
In a pivotal moment for the £5 billion horticulture industry, specialising in fruits, vegetables, and ornamental plants, a House of Lords Horticultural Sector Committee report reveals the sector stands at a critical juncture. Witnesses reported how they felt the sector was undervalued by policymakers, posing a threat to UK food security and net-zero goals. Exacerbated by Brexit, the Covid-19 pandemic, and Ukraine's conflict, rising costs in fertilisers and energy have been said to have crippled UK growers. A dearth of new talent plagues the sector, relying heavily on seasonal migrant labour, often facing discrimination and exploitation.
While horticulture can combat climate change, adopting eco-friendly technologies hinges on robust research and development and a skilled labour pool. The report condemns supermarkets for prioritising cheap imports over domestic produce, urging the government to safeguard the industry's future with a strategic vision, educational initiatives, workforce strategies, and support for sustainable practices. It also says a thorough review of the supply chain and research landscape is urgently needed and provide the sector with a strategy to grow MT
Net zero – Tree-loving bank called out
Anybody who has seen the recent marketing and thought-leadership efforts of Lombard Odier will know the Swiss bank is firmly committed to the environment. The firm must therefore be a bit miffed that its involvement with NatureScot’s £2 billion tree-planting initiative, which aims to create as many as 185,000 hectares of new native Scottish woodland, is the latest net-zero initiative to attract accusations of greenwashing. Campaigners are riled that the bank, which will be selling the carbon credits from the project, still has investments in fossil-fuel businesses, some of which are using carbon credits to offset their emissions. They also claim the project will push up land values for farmers and prevent local communities benefiting financially from the natural capital on their doorsteps AS
Trees – UK forests face catastrophe
Planting the trees, however, may be the least of the project’s problems. Britain’s woodlands face such an array of challenges, including pests, diseases, extreme weather and forest fires that “catastrophic ecosystem collapse” within the next 50 years is the biggest issue facing our trees, according to a new academic study published in the journal Forestry. A former colleague closely involved with the forestry sector agrees that the problems are real and points out that those planting trees to claim carbon credits need to be aware of them. “If you’ve been paid to grow carbon, but the trees die you might be asked for the money back.” AS
International – Kenyan tree-planting holiday
Meanwhile, the government of Kenya has declared today (November 13th) a surprise last-minute national holiday so people can spend the day planting trees. President William Ruto, who took the reins of the East African country last year, has made the National Landscape and Ecosystem Restoration Programme, which includes an ambitious target of getting 15 billion new trees in the ground by 2032, a priority. Climate change is worsening droughts in the Horn of Africa, including Kenya, where rains have failed for five seasons in a row.
Environment minister Soipan Tuya said: “It is a moment for Kenyans to stand in solidarity in the defence of our environment, it’s a ‘hummingbird’ contribution day, all of us pulling together to fight back the climate change crisis.” Some local environmentalists, however, have questioned whether the initiative will lead to the right trees in the right places AS
Out and about – IAgrM conference
Melissa Walker from our Agri-consultancy team attended the Institute for Agricultural Management Farm Management conference last week. Unsurprisingly, Melissa reports that the environment was a hot topic with talks about climate change and its impact on the food system, regenerative agriculture, the role of technology including AI and gene editing and alongside perspectives from a farmer, a supply chain and an investor. In an interesting aside to the environmental talks, Will Jennings from Rabobank spoke about how current interest rates are now normal and that 0.5-1% was atypical, meaning that now people are having to consider the risks before borrowing a lot more, which should lead to better business decisions MT
Need to Know
King’s Speech – The main bills affecting rural clients
For the first time in over 70 years, a King delivered the government’s legislative programme for the year ahead. Among the 21 bills announced by King Charles III, four were of most relevance for rural landlords, tenants and farmers.
The Renters (Reform) Bill, currently navigating Parliament, aims to abolish 'no-fault evictions,' fortify landlord grounds for possession, and foster efficient dispute resolution. However, a delayed 'no-fault eviction' provision could trigger heated debates. The Leasehold and Freehold Bill, striving for fairness in the housing market, endeavours to make lease extension more affordable and eliminate new leasehold houses. Despite the likelihood of passing into law, complexities might delay it.
The Animal Welfare (Livestock Exports) Bill proposes a permanent ban on the export of animals for slaughter from Great Britain, with a 4/5 chance of enactment. Lastly, the Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Bill, securing the UK's membership in a free trade area, is highly likely to pass into law, promising benefits for dairy farmers and whisky producers. To read more on these bills read my article MT
Out and about – Trustee training
Along with a number of colleagues from our Rural Consultancy, Client Finance, Analytics and Viticulture teams I was delighted last week to take part in a joint event for trustees held with law firm Charles Russell Speechlys. What stood out to me was that, despite the value of the assets under their care, some trustees (not those who were in the room I hasten to add) have no professional training and are not aware of the full extent of their fiduciary responsibilities, which could even extend as far as ensuring trust beneficiaries sign a pre-nup before getting married. Please get in touch with my colleague Alastair Paul if you would like to receive our Trustees Checklist AS
On the market
Rothbury estate – A view to the future
The 9,500-acre Rothbury Estate in Northumberland has attracted a plethora of different potential buyers, many intrigued by its abundant natural capital offering, since it was launched earlier in the summer. This article, featuring my colleague Claire Whitfield, of our Rural Consultancy team helps explain some of the fascination with the historic estate that is being sold for the first time in 650 years AS
Our Latest Property Research
Development land – Prices still falling
The latest findings from our Residential Development Land Index show values are continuing to fall. “UK greenfield and urban brownfield values fell on average by 2.4% and 2% respectively in Q3 2023. In prime central London, land prices were flat during the quarter,” writes my colleague Anna Ward. “Average urban brownfield land values across England have now fallen by 20% since the most recent peak of the market in the first quarter of 2022 up to Q3 this year, with greenfield values down 17% during this period. But this quarter we have seen price falls start to moderate in nearly all areas,” adds Anna AS
Country houses – prices drop
The value of a home in the countryside is falling at the fastest rate since the global financial crisis, according to the latest instalment of the Knight Frank Prime Country House Index compiled by my colleague Chris Druce. In Q3 2023 average prices dropped by just over 2% taking the 12-month slide to over 8%. Despite the slump, values are still 12% higher than they were in June 2020. Chris says there is a bit of stalemate in the market as sellers cling to last year’s prices, while purchasers are angling for big discounts. Read the full report AS
Farmland prices – Market at peak?
The latest edition of The Knight Frank Farmland Index has now been published. The average value of bare agricultural land rose by 1% in the third quarter of the year to just shy of £9,000/acre. Annual growth was 8%, which outperformed a number of other asset classes (see chart). Our research suggests values may remain flat into 2024. Read the full report for more insight and analysis AS
The Rural Report – Watch the videos!
You've read the book, now watch the videos! To complement the thought-provoking articles contained within this year's edition of The Rural Report our whizzy Marketing team has also created a series of videos featuring many of the report's contributors. Head to our very own YouTube channel to discover more about biodiversity net gain and regenerative farming; find out how we are helping Guy Ritchie's Ashcombe Estate on its diversification journey; and read about the travails of an entrepreneurial Zimbabwean searching for a farm for his family. Plus, lots more AS