UK rural property: We need more trees
The Knight Frank Rural Property and Business Update – Our weekly dose of news, views and insight from the world of farming, food and landownership
12 minutes to read
Opinion
The right tree in the right place. It’s a phrase that is being increasingly used, including in this update a few times of late, I have to admit. But don’t tell anybody involved in the world of commercial timber. A number of speakers at least week’s Confor policy conference, which I attended, vented their spleen at its use, lambasting it as meaningless and vague. It touches a nerve because it is often used by those opposed to proposed commercial forestry plantations in the UK, which generally contain a high proportion of sitka spruce – a species much maligned by the public, but beloved by foresters for its fast, high-yielding and straight-growing habits. The UK won’t hit its net-zero tree-planting targets and become less reliant on imported timber without a lot of conifers going in the ground, but the UK timber industry clearly needs to do much more to win over its sceptics. A good start could be more research into other coniferous species to reduce the reliance on sitka. As my snap above (taken in Sweden) shows, coniferous woodlands can be attractive nature and community friendly places AS
Do get in touch if we can help you navigate through these interesting times. You can sign up to receive this weekly update direct to your email here
Andrew Shirley, Head of Rural Research; Mark Topliff, Rural Research Associate
In this week's update:
• Commodity markets – Better 2024 for milk
• Food – Veg sales hit 50-year low
• Regen ag – Initiative aims to unlock trillions of dollars
• Soil health – EFRA urges prioritising on par with air and water
• Out and about – Confor UK policy conference
• COP 28 – Timber pledge
• Overseas news – UAE vertical farm announced
• Cross compliance and BPS – Goodbye in England
• Farm labour – Earnings threshold rise for overseas workers
• Trees – Production grant schemes reopen
• Solar – More permitted development
• Land at Simonsbath – Rare piece of Exmoor for sale
• Development land – Prices still falling
• Country houses – Prices drop
• Farmland prices – Market at peak?
• The Rural Report – Watch the videos
Commodity markets
Commodities – Better 2024 for milk
The latest AHDB dairy update has a glimmer of good news for the UK’s dairy farmers, many of whom have spent much of 2023 selling their milk for below the cost of production. A drop in output since September and the possibility of strengthening global markets could help reverse the decline in prices, says analyst Susie Stannard. “Latest wholesale prices would indicate that milk prices could begin to move in a more positive direction in the first quarter of the new year, but the extent to which they might recover remains uncertain and much will depend on the recovery of global demand.” Meanwhile, diesel prices remain on a downwards trajectory as crude values hit five-month lows. Traders are sceptical that the recent production cuts announced by Opec+ will offset rising supply from oil producers outside the cartel and waning global demand AS
Talking points
Food – Veg sales hit 50-year low
Despite well-intentioned initiatives like 'Peas Please,' vegetable sales have plummeted to a 50-year low, as revealed by Defra data analysed by the Food Foundation. The cost-of-living crisis has exacerbated the situation, making it challenging for low-income families to afford nutritious food. While government statistics indicated a consistent but low vegetable sales rate over the past three decades, 2021 witnessed a sharp decline.
The latest data covering retail and out-of-home sectors disclosed a reduction from 182g to 154g per person per day. Kantar's findings also highlighted a drop below the recommended 20% vegetable share in the Eatwell Guide, averaging 6.8% over six years. Notably, households earning less than £10,000 annually allocated only 5.9% of their shopping basket to vegetables, contrasting with the 8.2% for those earning over £70,000 MT
Regen ag – Initiative aims to unlock trillions of dollars
The Agribusiness Task Force under the Sustainable Markets Initiative has recently published a first-of-its-kind framework to mobilise trillions of dollars in support of regenerative farming worldwide. Collaborating with major players like Mars, McCain Foods, McDonald's, PepsiCo, and Waitrose, the initiative aims to make regenerative farming financially viable and scalable. Focused on key regions such as India, the UK, and the US, the strategy addresses environmental challenges, with the current food system contributing 30% of human-produced greenhouse gas emissions.
The four-lever framework involves innovative funding models, standardised metrics, recommended policy changes, and plans to generate new revenue streams for farmers, including earning carbon credits. The Task Force asserts that regenerative farming is essential for the survival of global food supply chains and is actively implementing projects worldwide. If you’re interested in regen please read and watch here for more insight from our expert Melissa Walker MT
Soil health – EFRA urges prioritising on par with air and water
Last week the Environment, Food and Rural Affairs Committee (EFRA) published the findings of its inquiry into soil health.
The inquiry delves into combatting soil degradation, urging the government to prioritise soil health akin to water and air quality in policies. The report proposes statutory targets for soil health by 2028, aligning with existing water and air quality goals. Continuous monitoring, using agreed indicators and sustainable soil management definitions, is essential.
The committee urges government funding for widespread soil testing through Environmental Land Management (ELM) schemes, industry collaboration on metrics and sustainable farming definitions by 2024 and aims for 90% of farmers in ELM schemes by 2040. Emphasizing profitable and sustainable farming, the report recommends addressing supply chain demands and ensuring attractive rates for soil improvement measures. Additionally, by 2035, a regulatory framework is proposed to prevent soil degradation across sectors, including construction and planning, given that soil waste constitutes 58% of landfill tonnage MT
Out and about – Confor UK policy conference
It was fascinating to listen to the speakers at last Thursday’s Confor conference discussing the theme Green growth: Why wood is the missing low-carbon link. My main takeaway from the conference was industry frustration that the UK is falling well behind the tree-planting targets set by the government as part of its net-zero strategy with not much on the horizon to suggest a step change any time soon. In England, just over 3,000 hectares of woodland were planted in 2022, only a third of the levels required. Taking into account storm damage and other factors, there has actually been a net loss of woodland over the past 10 years, pointed out Confor CE Stuart Goodall. Changes to the additionality rules for the Woodland Carbon Code could also make the scheme less attractive, delegates were told. Emma Kerr, Carbon Manager at Scottish Woodlands Ltd, said investors might have to choose between carbon or timber. Adjustments made to one scheme she was involved with under the new rules would see potential timber production drop by almost 50%, she pointed out. On a more positive note, Naomi Matthiessen, Defra’s tree and forestry policy specialist said the government’s eagerly awaited grey squirrel and deer management strategies would be released soon AS
Woodland – National Wood Strategy launched
A highlight of the Confor UK policy conference discussed above was the launch of The National Wood Strategy, created by the England Forest and Wood Based Industry Leadership Group with representation from DEFRA, the Forestry Commission and Forestry England. The six-point strategy charts “a path towards a sustainable forest products industry in England” and includes exceeding the statutory government target of 16.5% woodland cover by 2050 with an increased focus on commercial timber production to reduce the UK’s reliance on imports (we are currently the world’s third largest importer) AS
COP 28 – Timber pledge
Talking of trees, a group of seventeen countries, including the UK, under the auspices of The International Sustainable Forestry Coalition (ISFC), released a statement backing COP28's stance in supporting the need to substantially increase the use of timber in construction as a vital decarbonization strategy: “Recognizing that wood from sustainably managed forests provides climate solutions within the construction sector, we commit to, by 2030, advancing policies and approaches that support low-carbon construction and increase the use of wood from sustainably managed forests in the built environment. Such policies and approaches will result in reduced GHG emissions, and an increase in stored carbon.”
Overseas news – UAE vertical farm announced
Staying in Dubai, the ReFarm consortium has just announced it will be building a “GigaFarm” to boost the country’s food security and decarbonize its food industry. Vertical farming specialist Intelligent Growth Solutions will provide the infrastructure for the farm, which will grow two billion plants a year, replacing 1% of the emirate’s fresh produce imports.
The indoor farm’s vertical towers will be combined with five other complementary technologies to create a closed-loop circular waste-to-value system, capable of recycling more than 50,000 tonnes of food waste each year AS
Need to Know
Cross compliance and BPS – Goodbye in England
Cross compliance used to keep many a farmer awake at night as meeting its rules was needed to receive Basic Payment Scheme (BPS) money. Well, at midnight 31 December 2023, cross compliance will come to an end. This will happen because most of the cross-compliance rules are now part of English domestic law where they will be enforced by existing regulators covering the environment, animal and plant health, animal welfare and public health.
Also ceasing at the end of year is the Basic Payment Scheme (BPS). This will be replaced by delinked payments – removing the link between payments and the land. This means you will not need land or entitlements to receive them and have none of the associated paperwork to complete. Anyone currently receiving BPS 2023 payments will automatically receive delinked payments from 2024 to 2027, when they are due to end. The payments will still decrease each year in line with the planned progressive reductions - as has been applied to BPS payments since 2021 MT
Farm labour – Earnings threshold rise for overseas workers
The government has announced plans to increase the minimum earnings threshold by 50% in a bid to cut net migration to the UK. Home Secretary James Cleverly said last week that he wants to raise the level from £26,200 to £38,700. He also said that the government will end the rules that allow companies to pay workers 20% less than the rate for jobs on the shortage occupation list. This will include replacing it with a new immigration salary list.
Certain agricultural sectors rely heavily on foreign workers, such as dairy and pig units as well as horticulture, who are the main users of the Seasonal Worker scheme. The new plans won’t affect that scheme which allows up to 55,000 temporary workers to travel to the UK. But farms that have no choice but to employ foreign workers on a full-time basis will be hard hit by these salary rises MT
Trees – Production grant schemes reopen
Seems I can’t stop talking about trees this week. Two schemes designed to increase the quantity, quality, diversity and biosecurity of England’s trees and seeds supply have just reopened for applications. £2.8 million is up for grabs under the Seed Sourcing Grant and Tree Production Capital Grants. The Tree Production Capital Grant supports efforts to build nursery capacity and grow trees and seed supply chains for the long-term. The Seed Sourcing Grant helps boost domestic tree seed production. Due to shortages of seed globally, the government says it is vital to improve not only the quantity but also the quality, diversity, and biosecurity of our seed supply AS
Solar – More permitted development
The government has just announced new permitted development rights that will make it easier for homeowners and businesses to install roof-mounted solar panels. The move includes scrapping the 1MW limit for panels on commercial buildings and removing the requirement for homes with flat roofs to apply for planning permission. Read full details here AS
On the market
Land at Simonsbath – Rare piece of Exmoor for sale
Our Farms & Estates and Bristol team are selling approximately 390 acres of pasture, improvable grazing land and moorland in Exmoor National Park near Simonsbath, Somerset. The land is in a private location, and offers opportunities for existing traditional farming as well as for natural capital and nature recovery. The guide price is £1.77 million. Contact Will Matthews or John Williams for further information MT
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
Get exclusive market analysis, news and data from our research team, straight to your inbox.
Subscribe here