Unleashing rural potential
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
I’ve seen many changes in my 30 years of living and working in the countryside, from government policy, consumer food buying habits and the rise of regenerative farming. And while several things have changed it has also felt like many aspects haven’t. Sometimes I’ve felt that the countryside is being deliberately kept like a museum. This was confirmed by a survey of CLA and Historic Houses members, the majority of whom, have to abandon investments due to planning rules and decisions. Plans that could bring better economic prosperity to rural areas. I can’t help thinking that there is also some connection here to one of the other stories below on the rise of rural homelessness.
There are various reasons why someone becomes homeless, but a lack of affordable housing and employment opportunities are to name but two. However, some progress on opening up rural opportunities has been made with the announcement last week (30 March) of the Government’s Nature Markets Framework. Farm and estates have craved certainty and trust in the burgeoning natural capital markets. A set of clear rules and standards in the framework will go along way to help the confidence of landowners and land managers. Tapping into environmental schemes is going to be ever more crucial. So there needs to be an acceptance that rural communities should be able to move with the times. Especially around contributing to reducing emissions, improving energy efficiency and suppling local housing and employment. I do believe that there so much potential for the rural sector to provide on the environmental, social and economic front – if only it is given the room and resources to do so. What do you think? MT
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 – Grain and oilseed prices bounce back
• Rural planning – Rules mean majority abort plans
• Rural homeless – Surge in numbers, more houses needed
• Climate change – UK agriculture not ready
• Local nature recovery – Impact of strategies
• Gamebird shoots – Welsh compulsory licensing consultation
• Water bills – Mitigating cost rises
• International news – Italy proposes to ban lab-grown meat
• Out and about – America’s cheap food policy
• Nature markets – Defra unveils its plan of action
• Farming rules – Defra makes them easier to find
• Biodiversity net gain – New metric launched
• The Wealth Report – 2023 edition out now
• Farmland Index – Agri-land 2022’s top-performing asset
• Staff Salaries Report – Rural wages benchmarked
• On the market – Australia and Africa calling
Commodity markets
Grain and seed prices bounce back
Russia’s geopolitical games once again shifted the markets last week with reports that it would interrupt Black Sea grain movements and planned state grain buying. These rumours haven’t materialised as yet, but helped bolster prices. Analysts are still bearish about prospects with large balance sheets that need to find a home, and Q2 demand is still subdued. Lamb prices continued to push upward, helped by the Ramadan festival and the upcoming Easter weekend MT
Talking Points
Rural planning – Rules mean majority abort plans
Almost three-quarters of rural businesses have abandoned investment plans due to the current planning procedures. More than a third spend over £20,000 on projects that are subsequently aborted and around 20% of businesses spend more than £50,000. These are the results of over 600 rural businesses surveyed by the Country Landowners Association (CLA) and Historic Houses. They report that 93% of respondents believe the planning rules hamper economic growth in rural communities. They give an example of an expanding plant nursery that needed a new dwelling for a manager to be on site. Despite favourable feedback, including from local residents, up to the outline application stage, councillors rejected it.
The CLA says that “in 2022 The All Party Parliamentary Group on the Rural Powerhouse published a major report on levelling up the rural economy. The report found an 18% productivity gap between the rural economy and the national average. A gap that, if reduced, could add £43bn to the UK economy.” MT
Rural homeless – Surge in numbers, more houses needed
The number of people sleeping rough in English rural areas has soared 24% in 2022 and a shortage of housing and employment are seen as part of the problem. According to the universities of Kent and Southampton, who conducted the research, this figure is an underestimate and hidden homelessness – sofa-surfing, squatting, living in unsuitable accommodation - is also an increasing issue. The researchers also highlight the discrepancy in homelessness prevention grants between urban and rural areas.
Rural local authorities receive 65% less funding per capita than urban authorities. Surveyed support workers say that the top three reasons for the increase in homelessness in the past five years are: a lack of affordable housing, the decline of social sector housing, and financial. The report authors recommend greater investment in rural social housing and a welfare system to cover the cost of rent. However, if current planning rules are preventing investment in rural development, it’s difficult to see how this recommendation can be easily implemented MT
Climate change – UK agriculture not ready
Another report and another damning assessment of the UK’s readiness for environmental change. This time it’s key infrastructure and the lack of sufficient policymaking to drive adaptation of buildings, water systems and transport networks to climate change – including agriculture and land use. The Climate Change Committee (CCC) has concluded that the UK’s food and land use systems are not well-adapted to environmental pressures because of climate change and this has been seen recently with the shortages of vegetables in supermarkets.
The CCC criticised the absence of a targeted strategy, associated targets and indicators to ensure that agriculture still is productive and profitable as the climate changes. A strategy was due earlier this year but is now overdue. The committee says that adaptation planning for forests and fisheries is more credible than for agriculture. However, the report acknowledges that the Government is taking steps to change farming payments to stop incentivising ecologically damaging, high-emission practices and promote nature restoration. There is, however, no clear estimate of how these changes may improve adaptation on a national scale MT
Local nature recovery – Impact of strategies
In last week’s Rural Update I mentioned Defra’s published response to the consultation on the preparation and content of local nature recovery strategies. But what is the potential impact on rural businesses? The local habitat maps contained in the strategies will likely provide the basis for the type of biodiversity gain sites prioritised within a local planning authority. This may determine which type of habitat a landowner or land manager may create and offer as an off-site biodiversity net gain for developments.
It isn’t precisely known how a habitat designation will impact what a landowner or land manager might want to do. However, the Defra response is that “delivery of the proposals set out in a local nature recovery strategy will not be directly required but will instead be encouraged by a combination of financial incentives, the support of local delivery partners and broad requirements on public bodies.” Therefore, it doesn’t appear the proposals in the strategies have regulatory teeth, but there will be a lot of encouragement which land managers may find inhibits their plans or operations but on the other hand, there may also be helpful funding to support them MT
Gamebird shoots – Welsh compulsory licensing consultation
All gamebird shoots in Wales will need to be licensed if the Welsh environmental regulator’s recommendation is approved. Natural Resources Wales (NRW) has launched a consultation on its proposed measures that would ban common pheasant and red-legged partridge being released except under license and subject to conditions and fees.
The NRW says “the available evidence shows that management activities carried out by the game shooting sector can deliver benefits for biodiversity, but that the release of gamebirds can also lead to harm, particularly where they happen in sensitive locations or at unsustainable levels.” The consultation opened on the 27 March and runs for 12 weeks MT
Water bills – Mitigating cost rises
Water bills will rise by the highest in 20 years as water companies announce increases in charges. Average domestic customer water bills will surge by 7.5% in England and Wales and 5% in Scotland, according to the industry body, Water UK. Water prices for business users will go up by 6.4% on average, says the comparison website aquaswitch.co.uk.
I have examined the potential impact for rural businesses and provide Knight Frank’s top three tips to reduce water costs in this article MT
International news – Italy proposes to ban lab-grown meat
The Italian nationalist government has taken the extraordinary move to propose a bill banning the production and use of lab-grown food and feed. If passed by parliament, the bill says that Italian industry will not be able to produce food or feed “from cell cultures or tissues derived from vertebrate animals”. Apparently, the aim is to protect the country’s agri-food heritage, according to the Italian agriculture minister. “Laboratory products in our opinion do not guarantee quality, well-being and the protection of our culture, our tradition,” says Minister Lollobrigida. Opponents to the bill believe it is an anti-scientific crusade against progress shutting down an innovative solution for healthy and environmentally friendly food systems MT
Out and about – America’s cheap food policy
It looks like the USA has no appetite to change its policy of encouraging cheap food production and the environment will have to be dealt with in other ways - Ross Murray, Knight Frank’s outgoing Rural Chairman discovered on a recent trip to the US. The study tour put into context Britain’s role in world markets and its competitiveness. Read more of Ross’ reflections and lessons learned in his article MT
Need to know
Nature Markets – Defra unveils its plan of action
Defra has launched its Nature Markets Framework, a much-needed set of principles that should help boost landowners and land managers’ confidence and trust in accessing public and private environmental and ecological funding opportunities. The framework will have a range of nature investment standards that will provide clear rules for how farmers and land managers can access payments from nature markets. It’s promised that it will clarify how different income streams may be combined so that farms and estates can maximise income from public and private funding. All this should also enable new markets to develop and emerging markets to scale up and operate with integrity.
Defra says it will also develop a consistent approach for measuring emissions as part of the framework and, by 2024, set out how farmers and land managers will be supported to understand their emissions through carbon audits. There is still work to be done around developing regulations and market infrastructure to ensure good governance. But when the framework is fully implemented, it should provide an improved incentive for rural businesses to engage with public and private environmental schemes. For more detail on what the framework contains and means for landowners and land managers, see my indepth article MT
Farming rules – Defra makes them easier to find
Defra comes under a lot of fire, so it feels only right that they are congratulated when they do something that’s good. So, it was excellent to see that Defra has worked on making all the farming rules easier to find on its website. Working with land managers and advisers, Defra has pulled together on one webpage an easy-to-follow list of the regulatory areas in farming – such as ‘keep livestock’, ‘use pest control products’ and ‘manage and dispose of waste’. It then provides the relevant link to the rules that fall under each area MT
Defra rules for farmers and land managers.
Biodiversity net gain – New metric launched
Natural England has published the latest version of its biodiversity calculation tool – Metric 4.0. The metric is expected to become mandatory to calculate biodiversity as part of building development plans under the Town and Country Planning Act 1990. It replaces the previous Metric 3.1 version that some organisations have been using to implement biodiversity net gain (BNG) before it becomes a requirement for large sites from November 2023. I provide more detail on BNG in this guide MT
Knight Frank Research
The Wealth Report – 2023 edition is out now
Knight Frank’s leading piece of thought leadership on property and wealth trends was launched last week and includes an interview by me with one of Scotland’s pioneering rewilders, as well as some thoughts on why farmland could be one of this year’s most in-demand property investments. Download your copy to find out more.
Farmland Index – Agricultural land top-performing asset in 2022
As predicted, the latest results of the Knight Frank Farmland Index show that agricultural land as an investment beat inflation in 2022 and outperformed other asset classes, including mainstream house prices, luxury London house prices, the FTSE 100 share index and even gold. According to our index the average value of farmland rose by 13% over the year to hit over £21,000/ha, a record high. A shortage of supply and continued strong demand from a wide range of buyers underpinned the market. Download the full report for more facts and figures.
You can also hear some thoughts from my colleagues and me on the outlook for property markets in 2023 in the latest edition of Intelligence Talks, our research podcast.
Estate Staff Salaries Survey – Rural wages benchmarked
Just a reminder that the latest edition of the Knight Frank Estate Staff Salary Survey has recently been published. The report reveals the average salaries paid for a wide range of rural estate and farming roles and level of wage increases being offered by rural businesses. Also highlighted are the key employment issues facing the rural economy. Download your copy here or get in touch with Chris Terrett for more details.
On the market
Australia and Africa calling
Our global farmland team has just launched a couple of interesting investment opportunities. In Australia, broker Andrew Blake is selling Karakin Farm, near Lancelin, an 8,500 hectare arable and livestock unit, one of the largest private landholdings within 100km of Perth’s CBD. Expression of interest around AU$30 million have been received.
Meanwhile, Tanya Ware, our Head of Farm Sales in Zambia, is looking for buyers for Serenje Farm in the country’s Central Province. The 680-ha arable farm has excellent water access, with irrigation rights for 700 ha of land. Tanya is looking for offers of around US$1.36 million.
Image by Mark Topliff