UK rural property: The politics of farming
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
With a general election looming and every by-election bringing worse news for Rishi Sunak, it was interesting that he took the time to become the first Prime Minister since Gordon Brown to address the NFU’s annual conference last week. The people I know who’ve met Mr Sunak in person rate him highly, and as an MP for a very rural constituency he’ll know all about farming issues, but I’m not sure he will have won over many of the conference delegates. Apparently, Lib Dem farming spokesman Tim Farron got a bigger applause, although having been well beaten by Reform at the recent Wellingborough and Kingswood by-elections his party also has its own problems to contend with. Tom Bradshaw, who took over as NFU president from the feisty Minette Batters at the conference, has certainly been thrown in at the deep end!
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Andrew Shirley Head of Rural Research
In this week's update:
• Commodities – Ukraine two years on
• Welsh farming – Consultation closing soon
• Twin cabs – Tax hit cancelled
• The uplands – Defra hid data
• Flooding – Nat cap solutions revealed
• Politics – Rishi reaches out
• Overseas news – Macron malaise
• Out & About – Question time
• Reading – Five a day
• Sold – Henges of the north reunited
• Fore! – Essex leisure opportunity
• The Wealth Report – Out soon
• Development land – Market stabilises.
• Farmland prices – 2023 ends on a high
• Country houses – 2023 better than expected
• The Rural Report – Watch the videos
Commodity markets
Commodities – Ukraine two years on
Russia invaded Ukraine on February 24th two years ago. Given there weren’t huge shifts in commodity prices over the past week I thought it would be interesting to look at where values are now, compared with the week after Putin’s tanks rolled over the border. Two things stand out to me. First, the UK’s farmers, especially arable producers, are at the mercy of global events. Second, even war can’t stop commerce. New routes have been found to get Ukraine’s much-needed harvest to the rest of the world and traders seem to be rarely talking about the Black Sea much these days. With the cap on domestic energy prices being lowered again last week by Ofgem, electricity and gas prices are also at their lowest since the invasion.
Need to Know
Welsh farming – Consultation closing soon
Farmers and landowners upset about the Welsh Assembly’s Sustainable Farming Scheme proposals, and let’s be honest that’s probably most of them judging by recent protests, have until March 7th to take part in a consultation regarding the controversial scheme. Battered by criticism of the proposals, which include a much-maligned 10% tree-planting target for all claimants, Welsh Rural Affairs Minister Lesley Griffiths said: “This is a genuine consultation and I fully expect to make some changes to the proposals as a result of the responses. We are listening and we will consider all responses.”
Twin cabs – Tax hit cancelled
Some good news for farms and estates using double-cab pickups as part of their businesses. In an earlier ruling HMRC had said all such vehicles with a payload of over one tonne would be treated like cars in terms of benefit-in-kind and tax allowance purposes from 1 July. However, following lobbying, that decision has now been reversed. Twin cabs with a load capacity of below one tonne will still, however, be treated like cars. Read HMRC’s full announcement.
Talking points
The uplands – Defra hid data
The Guardian newspaper is claiming that Defra buried some of its own research that showed how dire the future of upland farmers could be under its post-Brexit agricultural plans. Farmers in the uplands have long complained that many of the options available under the Sustainable Farming Initiative will not help them, especially those who occupy land under tenancies or grazing licences. Meeting minutes obtained under a Freedom of Information request reveal government officials admitted that upland farmers were falling into financial crisis and might go out of business. Officials also feared that when upland farmers saw the data showing how much money they would make they would sell up.
Flooding – Nat cap solutions revealed
Floods Minister Robbie Moore must have read my opinion piece last week where I called for more innovative farmland-based solutions to help mitigate the growing impact of flooding around the country. Last week Defra announced that 40 projects are set to receive £25 million of funding for natural flood management using the likes of tree planting and wetland creation. But given the financial cost of flooding this barely scratches the surface. Many of the projects are also in partnership with environmental charities who actively seek out funding opportunities. Much more should be done to involve farms and estates.
Politics – Rishi reaches out
Prime Minister Rishi Sunak tried to offer farmers a bit of an olive branch at the NFU’s conference last week by telling them he “had their back” during his speech. The first PM to speak at the event since Gordon Brown, Mr Sunak also announced a £220 million package of “extra” government grants including doubling the ELMs management payment to £2,000 and more money for the Farming Equipment and Technology fund. Farmers on X were quick to point out though that the cash was coming from Defra’s existing budget. For advice on grants please contact our funding guru Henry Clemons.
Overseas news – Macron malaise
Meanwhile in Paris over the weekend riot police were forced to take action to protect Sunak’s French counterpart Emmanuelle Macron as farmers got rowdy at France’s 60th International Agricultural Fair. The protestors are angry that President Macron is not, in their eyes, doing enough to address their complaints about red tape, low prices and a general lack of support for farmers. Given the EU is still spending well over €50 billion on its farmers each year something is clearly not working.
Out & About – Question time
An insightful Thursday evening was experienced by my former Rural Update co-author Mark Topliff who has now joined our Agri-consultancy team. Mark attended the latest Farmers Weekly Question Time event held at Rothamsted Research Institute where he heard from the likes of Defra minister Lord Benyon, Herts farmer and Lid Dem advisor Stuart Roberts, CLA president Victoria Vyvyan and consultant Charlie Ireland. “The panel was pressed on how the current and any future government needs to provide farming with some stability and consistency around funding and policy. All panel members agreed that producers and researchers need to be better at joining up to share ideas and solutions. But positivity around the industry was also required to showcase the opportunities for current and new farmers and attract more people and skills into farming. As always, lots of challenges raised that will require a multitude of approaches and solutions - we just need government and the industry to crack on with them,” says Mark.
Knowledge exchange
Reading – Five a day
I’ve gone all intellectual and belatedly joined a book club. Not any book club mind you, this is the Fieldwork book club that discusses titles related to food, farming and the countryside and asks the author along to a Zoom call to talk about their book. My first assignment was Avocado Anxiety by the writer and journalist Louise Gray who looks at some of the challenges and opportunities posed by the fruit and veg we eat. I have to confess I haven’t got as far as the avocados, but the banana chapter was pretty worrying. Dairy farmers often lament that milk is cheaper than water on supermarket shelves, so worth pondering perhaps that bananas generally cost less than an apple! The chapter on beans was a bit more encouraging and suggests plenty of opportunities for UK farmers to grow for human consumption rather than animal feed. Definitely worth a read.
Property News
Sold – Henges of the north reunited
One of the UK’s most important neolithic sites has been finally brought back together as a whole following the sale of the most northerly of the three Thornborough Henges to English Heritage. Dating from 3000 to 2500 BC, the seven-acre site in North Yorkshire has been reunited with two other henges, the first time they have been in combined ownership for at least 1,500 years. Knight Frank’s Claire Whitfield who helped handle the sale said: “Reuniting this remarkable ancient monument under single ownership is tremendously gratifying. The northern henge has been exceptionally well preserved by its previous owners and will be an outstanding addition to the nation's heritage assets now cared for by English Heritage.”
Fore! – Essex leisure opportunity
Our Bishop’s Stortford Rural Consultancy team has an exciting opportunity that could appeal to a rural entrepreneur looking to start a new leisure business on a former golf course. The team is renting 30 acres of irrigated land at Clays Lane, formerly the nine-hole Loughton Golf Course, which also includes a hardstanding car park and the footprint of a club house, restaurant, bar, pro shop and auxiliary storage that were demolished after a fire at the property in 2021. “The property offers a commercial opportunity for a long-term lease allowing for the development of a new business venture which could include the redevelopment of the existing building footprint,” says my colleague Henry McNeil Wilson, who is helping to handle the deal.
Our Latest Property Research
The Wealth Report – Out soon
The 2024 edition of The Wealth Report, Knight Frank’s leading piece of thought leadership on global wealth and property trends goes live next Wednesday (March 6th). This instalment of the report includes an article by yours truly on global farmland markets and how they are being influenced by ESG and Natural Capital. Sign up to get your copy as soon as it launches.
Development land – Market stabilises.
Newly released figures from the Knight Frank Residential Land Index show that England greenfield and urban brownfield values were flat in Q4 2023 compared with the previous quarter. Previously, urban brownfield values had fallen by 20% since the most recent peak of the market in the first quarter of 2022 up to Q3 last year, with greenfield down 17% during the same period. Greater economic confidence and a slowdown in the rise of build costs helped underpin values, says my colleague Anna Ward. Read her full report for more numbers and insight.
Farmland prices – 2023 ends on a high
The Q4 2023 instalment of the Knight Frank Farmland Index has now been published. The average value of bare agricultural land rose by 2% in the final quarter of the year to break the £9,000/acre barrier for the first time. Annual growth was 7%, which outperformed a number of other asset classes. Our research suggests values may flatten out this year, but supply remains limited and demand robust. Read the full report for more insight and analysis.
Country houses – 2023 better than expected
Kate Everett-Allen, our international residential research guru, has added the country homes market to her portfolio and has a bit of good news to report. “Prime country house prices declined by 5.8% in 2023. While this figure represented a sizable correction after two stellar years of growth, the rate of decline was lower than our forecast of -7% for the year. A growing sense that mortgage rates are at, or close to their peak, began to influence market sentiment towards the end of the quarter – a theme we expect to build this year. That’s not to say prices and sales volumes will bounce back strongly. Although the Bank of England opted to hold interest rates at 5.25% in December, the cost of borrowing remains at a 15-year high.” Read Kate’s full report.
The Rural Report – Watch the videos!
You've read the book, now watch the videos! To complement the thought-provoking articles contained within the 2023/2024 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.