UK rural: politics needs the countryside
The Knight Frank Rural Property and Business Update – Our weekly dose of news, views and insight from the world of farming, food and landownership.
13 minutes to read
Opinion
The political conference season has well and truly started, and we are and will be discovering how much the political parties are tuned in to the needs of the rural community. Rishi kicked it off by throwing away the plan to continue HS2 phase two, much to the relief of farmers and landowners that would have been in its wake and even many environmentalists. But will the 100s of alternative projects announced mean an uncertain time for 100s of other land and property owners? One simple request from the countryside is for the government of the day to have the back of the farming community. Lobbying of late does seem to have created some useful pragmatic wins. But as Andrew writes below, some solidarity still seems to be amiss. However, this week, it's the turn of Labour, a party that is not traditionally strong in rural areas, so it will be interesting to see what Starmer and his team have to offer. But if it wants the opinion poll forecasts to materialise, it will need to find that connection with those who live and work in the countryside MT
Do get in touch if we can help you navigate through these interesting times. You can sign up to receive this weekly update directly to your email here.
Andrew Shirley, Head of Rural Research; Mark Topliff, Rural Research Associate
In this week's update:
• Commodity markets – Milk price pressures
• Politics 1 – SNP defeat puts Indyref2 in doubt
• Politics 2 – Tory ag solidarity missing
• Food prices – Inflation eases
• Rural broadband – Government plan improvements
• Farm labour – Industry absent from shortages list
• HS2 – What next for impacted landowners?
• Levy rates – AHDB propose significant increases
• Scotland – Agriculture Bill published
• Out and about – Jersey visit
• Yorkshire gold – Compact farm for sale
• Farmland prices – Market at peak?
• Development land – Market tumbles
• The Rural Report – Watch the videos
• Country houses – Prices weaken
Commodity markets
Milk price pressures
Those producing the white stuff may be coming under more strain. Some of the major milk processors have announced further cuts in the liquid milk prices paid to farmers. Muller will reduce November's price by 0.5p per litre, while First Milk says its price will drop by 0.85p per litre. Heading the pack is Freshways, who have said its price will reduce by 1p per litre. The changes will mean that many milk prices will range between 35 to 37p per litre, significantly down on the 50p per litre peaks seen last year.
With feed and other costs still high, Agri-consultant Sally Britton explains: "Farmers are having to really consider their cost base and where savings can be made. The drop in milk income means many have bought in short keep lambs and are even looking at the Sustainable Farming Incentive to help ends meet" MT
Talking points
Politics 1 – SNP defeat puts Indyref2 in doubt
It's dangerous to read too much into by-election results, but Labour's comfortable victory over the SNP in last week's Rutherglen and Hamilton West poll suggests that the SNP's hegemony of Scottish politics could be under threat. This would probably kick the prospect of another independence referendum even further into the future than it is already and perhaps give landowners a little more clarity about future land reform measures, assuming Scottish Labour doesn't diverge too much from the policies of its politicians south of the border AS
Politics 2 – Tory ag solidarity missing
Again, it is dangerous to put too much store in what politicians say on the fringes of party conferences, but the Conservatives definitely weren't singing from the same hymn sheet at their recent party conference. Although the government has come under criticism for some of the trade deals it has struck with the southern hemisphere's agricultural powerhouses like Australia, ministers have steadfastly refused to countenance the import of meat from animals treated using growth hormones, which are banned here. However, speaking at an event last week, MP Jacob Rees-Mogg said he would have no problem with the import of hormone-treated beef from Down Under. His comments infuriated the NFU's Minette Batters, who accused Mr Mogg of being "morally bankrupt". Ouch AS
Food prices – Inflation eases
Food prices in the UK have finally dropped after more than two years of steady increases. As reported by the British Retail Consortium, this decline comes as supermarkets engage in intense competition to win over customers. In September, monthly food price inflation dipped to -0.1%, a notable shift from August's 0.6% increase. While grocery prices still rose by 9.9% annually, it's the slowest growth rate since August 2022. The overall shop price inflation also eased, now standing at 6.2% annually, down from 6.9%. Shoppers can breathe a little easier with this small reprieve in their food bills MT
Rural broadband – Government plan improvements
As we have previously written in the Rural Update, good, reliable broadband access is essential for the effective operation of rural businesses. Now, 100,000 rural homes and businesses could receive further support to improve broadband connections under plans announced by Thérèse Coffey last week. The government have said that: "It is committed to ensuring rural communities have access to reliable gigabit-capable broadband connection across the UK, with a target of reaching 85% of premises by 2025 and to reach as close to 100% as soon as possible after." However, it also stressed that the most remote areas are unlikely to benefit due to their isolated location, low population density or limited existing telecom infrastructure.
The broadband plan is part of consultations considering updating the Broadband Universal Service Obligation (USO), which already gives homeowners and businesses the legal right to request an affordable, decent broadband connection. Alongside this is also a consultation on how to improve connectivity for very hard to reach locations MT
Farm labour – Industry absent from shortages list
The recent release of the shortage occupation list by the Migration Advisory Committee (MAC) has left the agriculture and horticulture industries in the UK disappointed. The list, which recommends including certain occupations to address domestic workforce recruitment challenges, notably excludes any roles related to farming and horticulture.
Farmers in the UK have been grappling with labour shortages, exacerbated by post-Brexit changes, and the omission of their occupations from the shortage list is a significant setback. The National Farmers' Union (NFU) conducted a survey of 506 farmers to understand the impact of labour shortages on their businesses. Shockingly, 41% of respondents struggling to find and retain workers had to reduce their production levels, potentially impacting production.
Inclusion on the shortage occupation list would have provided more favourable migration conditions for these roles, aiming to attract a larger pool of applicants and alleviate labour shortages. NFU deputy president Tom Bradshaw expressed disappointment that the agricultural industry's evident labour shortages were not recognized, highlighting the difficulty farmers face in recruiting essential roles for their businesses MT
Need to Know
HS2 – What next for impacted landowners?
Last week, the Prime Minister finally confirmed that Phase two of the High Speed Two (HS2) train line from Handsacre, north of Lichfield, to Manchester would be scrapped. As a result, the Department for Transport (DfT) has confirmed that all work on Phase 2a will stop, including land acquisition. The Times reported that £634 million had already been spent on acquiring more than a thousand properties. However, the DfT said that "any property that is no longer required for HS2 will be sold, and a programme is being developed to do this".
But what does this mean for property owners subject to compulsory purchase? Law firm Michelmores see "a glimmer of hope for those land and property owners, who may be offered their land back." HS2 has a Land Disposal Policy, based on Crichel Down Rules, that sets out how land that was compulsorily acquired but is no longer required should be dealt with. This means former owners will be given the first opportunity to repurchase the property or land at its current market value. But it does require to have a Qualifying Interest, such as being a former freeholder of the whole or part of the property.
There is a possibility that the Secretary of State may decide not to offer back land. This may happen where works materially changed the character of the land; agricultural land has been severed; the site is required for environmental mitigation; former owners are not prepared to pay the market value, or land should be transferred to another Public Body.
Before this occurs, though, the safeguarding directions need to be removed - the planning rules stopping development on the route for anything else. Tim Broomhead, in Knight Frank's Compensation Department, explains that: "In property terms, this will mean that we won't be able to obtain Blight Notices for clients who have land affected by the scheme. They still may not be able to sell because of the footprint of the scheme." He continued: "It is unprecedented for a large scheme like HS2 to be cancelled after such a significant program of land acquisition. The return or sale of unneeded property from the HS2 project will throw up novel and potentially complex property and valuation issues not necessarily envisaged by the Critchel Down Rules. I predict that HS2 land disposals will take some considerable time to formulate and for the government to execute." Contact Tim Broomhead or Jonathan Scott-Smith for further advice if you are affected by the HS2 decision MT
Levy rates – AHDB propose significant increases
The Agriculture and Horticulture Development Board (AHDB) has unveiled plans to raise levy payments starting in the 2024/25 financial year due to a significant reduction in its spending power caused by escalating costs. This marks the first levy rate increase in over 12 years, with sectors like dairy and pork seeing no changes for over two decades. The proposals include increasing cattle rates from £4.05 to £5.06 per head and rising cereal grower rates from 46p per tonne to 58p. AHDB cited the current economic climate, with inflation eroding the levy's value by approximately 40%, as the driving factor behind this move. But critics say that the levy rate increases would be coming at a time when costs remain high, and commodity prices are falling, squeezing farming margins further.
Farmers will have the opportunity to inquire about these proposals in the upcoming weeks. Approval from government ministers and devolved administrations is required, and the increased rates would fund services like marketing, exports, and independent research across the levy sectors MT
Scotland – Agriculture Bill published
The Scottish Agriculture and Rural Communities Bill has been launched, signalling how the government will back future farming and food production in Scotland. The Bill seeks to replace the existing Common Agricultural Policy legacy with a fresh support framework, emphasizing sustainable farming, harmonious coexistence with nature, and emission reduction. It introduces a payment framework encouraging low-carbon practices to improve sector resilience, efficiency, and profitability. Ministers will also be required to produce a code of practice for "sustainable and regenerative agriculture" along the lines that organic farmers operate.
The government says that this legislation is designed to be adaptive, allowing it to respond to evolving social, economic, and environmental changes. Cabinet Secretary Mairi Gougeon said Scotland's ambition is to lead in sustainable agriculture and assures that the Bill will provide flexibility to meet current and future challenges. NFU Scotland welcomed the Bill but expressed frustration at the lack of detail. They said that farmers and crofters need the Scottish government to use 2024 and 2025 as an effective, smooth transition for all agricultural businesses to hit the ground running from 2026 MT
Out and about – Jersey visit
It was great to be in Jersey again with some of my colleagues to help launch the latest edition of The Rural Report. It was interesting to hear the thoughts of some of the audience about farming on the island, famed for its melt-in-the-mouth spuds and big-eyed cows. Making money is proving increasingly difficult as costs rise and prices come under pressure. The number of holdings on the island has reduced dramatically, but a recent conference on regenerative agriculture held there offers potential new options for producers AS
On the market
Yorkshire gold – Compact farm for sale
Following a series of new releases from our London-based Farms & Estates team, my Yorkshire colleagues Zoe Coulson and Claire Whitfield have got into the act with the launch of Woodlands Farm near Ripon. The 165-acre – split roughly three ways between grass, arable and woodland – unit includes an attractive modern four-bed house with an agricultural occupancy condition and a range of modern buildings. Contact Claire or Zoe for more information. The guide price is £2.5 million AS
Cotswold stunner – Large farming estate launched
Anybody looking for an archetypal Cotswold farming estate will want to take a look at Stockwell Farm, near Cowley, Gloucestershire. Its almost 900 acres of rolling arable land, woodland and pasture come with a six-bedroomed main farmhouse plus attached secondary accommodation and party barn. There are a further seven traditional cottages and over 150,000 sq ft of modern farm buildings that offer significant development potential. There are also 13 stables for equine enthusiasts. Please contact Georgie Veale for more information. Available in two lots, the guide price for the whole is £18.5 million AS
Our Latest Property Research
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
Development land – market tumbles
The outlook for the UK economy weighed on the residential development land market in the second quarter of this year, leading to a slowdown in activity and a decline in land prices across the board, according to the latest instalment of Knight Frank's Residential Development Land Index.
My research colleague Oliver Knight says: "We've noted previously how the economics of developing new homes in England is challenging. A slower sales market, issues related to nutrient neutrality, biodiversity net gain, higher build costs and local plan failures have all forced housebuilders to rein in construction expectations. The result? Downward pressure on land values."
Average greenfield land prices fell by 6% on the quarter, taking the annual decline to almost 15%. Prices for brownfield land showed a similar trajectory, dropping 6% on a quarterly basis and 18% annually 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
Country houses – prices weaken
Country house prices came under pressure in the second quarter of the year, as the 'escape to the country' trend reset, and buyers re-calculated their budgets due to higher borrowing costs.
The average price of a property fell 2.6% in the second quarter, according to the Knight Frank Prime Country House Index (PCHI), compiled by my colleague Chris Druce. It was the largest quarterly fall since the global financial crisis in Q2 2008. It follows a decline of 0.5% in Q1.
It left country house prices down 4.2% since their peak in June 2022, although the average property is still worth 15% more than before the pandemic, which supported a surge in prices as people upgraded their homes and took advantage of a period of stamp duty savings.
Download the full report or contact Chris for more information AS