The Knight Frank Rural Property and Business Update – 24 May

Defra Secretary George Eustice has been a busy chap. Last week he launched a plethora of reports and consultations covering trees, species reintroduction, and even an early retirement scheme for farmers. But it was his part in the Australian free trade agreement showdown that hit the headlines. Pitted against International Trade Secretary Lizz Truss, herself a former Defra head honcho, Eustice, backed by a battalion of farming organisations, demanded that British farmers should be protected from cheaper Australian imports. Boris Johnson looks set to let the money talk, arguing that a 15-year transition period is enough time for farmers here to prepare. To a certain extent he has a point.

The initial concern about FTAs was that the UK’s farmers would be forced to compete with lower quality food produced to poorer welfare and environmental standards. In terms of Australia the argument seems to be that farmers there are just bigger with lower costs. Without the spectre of chlorine-washed chickens to ignite a public furore the public may be less inclined to worry.

Please do get in touch with me or my colleagues mentioned below if you’d like to discuss any of the issues covered. We’d love to hear from you

Andrew Shirley, Head of Rural Research

In this week’s update:

• Commodity markets – Have grain markets peaked?
• International trade – Australia FTA proposal sparks controversy
• Farmer retirement – Lump sum BPS payoff planned
• Forestry – English tree action plan published
• Biodiversity – Species reintroduction taskforce announced
• Overseas news – Invasive species costs Africa’s farmers trillions

Commodity markets – Have grain markets peaked?

Better growing conditions in key grain-producing areas could take some of the heat out of grain markets, reckons trader Frontier. Yields in the US are set to rise, while European grain trade association, COCERAL, increased its wheat production estimates for the EU. It now forecasts a wheat crop of 131 million tonnes, up from its previous estimate of almost 127 million tonnes. Even oilseed markets could come under some pressure, although year-end stocks are likely to remain low. A combination of a favourable monsoon and high prices is reported to be raising Indian soybean plantings by 10% this year and the EU's largest rapeseed producer, Germany, is said to be on course for a 3.1% hike in production in 2021.

International trade – Australia FTA proposal sparks controversy

Farm leaders from across the UK have united to condemn a free trade deal with Australia that could be agreed as early as next month. Under the FTA agricultural commodities could be imported tariff free to the UK after a ten or 15-year transition period.

Such a deal would be seen as a betrayal of farmers by the government, warned NFU President Minette Batters, who claimed producers here would not be able to compete with Australia’s large-scale farming businesses.

Defra Minister George Eustice has reportedly clashed with Trade Secretary Liz Truss over the plans, but Boris Johnson is apparently backing Ms Truss.

Farmer retirement – Lump sum BPS payoff planned

Defra has just launched a long-awaited consultation on its plans to offer farmers a large slug of their remaining Basic Payment Scheme entitlements in one go if they sell their land or rent it to somebody else. It is hoped the move will encourage older farmers to retire creating new opportunities for more entrepreneurial and younger businesses.

The lump sum will likely be worth around 2.3 times of the claimant’s average annual BPS payment, but would be capped at £100,000.

Defra Secretary George Eustice said: “We need to address the twin challenges of helping new entrants fulfil their dream and gain access to land, while also helping an older generation retire with dignity.”

The consultation is also seeking views on how BPS payments can be delinked from land after 2024 when current support payments will already have been cut in half. The last year of payment will be 2027.

Forestry – English tree action plan published

The government has just released its England Trees Action Plan 2021 to 2024 that outlines how it plans to hit its ambitious tree-planting targets. It hopes to plant 7,000 hectares of trees per year by the end of this parliament, assisted by over £500 million of the £640 million Nature for Climate Fund.

Read the full action plan

Biodiversity – Species reintroduction taskforce announced

A new Species Reintroduction Taskforce, managed by Natural England, was announced last week by George Eustice. It will take forward work around the reintroduction of species that have been lost to England – such as wildcat – and the introduction of declining species like pine marten, dormice, corncrake, short-haired bumblebee and large blue butterfly into new areas to help populations recover. This could include the reintroduction of beavers in some parts of England. The government will publish a consultation this summer on its approach to this and the management of beavers in the wild.

Overseas news – Invasive species costs Africa’s farmers trillions

New research estimates that invasive alien species cost Africa’s farmers a staggering $3.66 trillion dollars every year in lost yields and increased costs. The hit for Nigeria, Africa’s most populous country, is about $1 trillion per year, according to the researchers from the Center for Agriculture and Bioscience International. They placed losses at $317 billion for the Democratic Republic of Congo, $248 billion for Niger and $229 billion for South Africa.