UK rural property: Getting on top of greenwashing
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
A number of people I’ve spoken to have used the phrase “wild west” when describing the proliferation of nature-based offset and carbon credit schemes in the UK. A lack of regulation has made both sides of the equation nervous about participating in this nascent market for natural capital and nature-based solutions. Farmers and landowners are worried they might not get a fair deal and the funds with the cash to invest are wary of greenwashing accusations, especially when it comes to buying offsets. Although still lacking a lot of detail, the new standards from BSI discussed below will hopefully create a more robust and trusted market for natural capital, which the government sorely needs if it is to meet any of its ambitious biodiversity and net zero aspirations.
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
In this week's update:
• Commodities – Lamb, wheat and oil heading up
• Natural capital – BSI launches investment standard
• SFI – Some options capped
• Green spaces – New rural cash on offer
• Poultry – All flocks to list
• Livestock levies – Up in Scotland and Wales
• Borrowing – Base rate unchanged
• Scottish grouse – Wildlife Bill passes
• Overseas news – US solar boosts pollinators
• Next gen – Conference calling
• New Zealand – Sporting dairy farm for sale
• The Wealth Report – Out now
• 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
Lamb, wheat and oil heading up
Lamb prices continued to surge last week with new records being repeatedly set. Values are now just shy of 800p/kg for R3L carcasses, but higher grades have already exceeded that level. Lower levels of slaughtering, lighter animals and strong domestic and EU demand are helping to support prices. Meanwhile, wheat prices are also heading in the right direction again off the back of geo-political tensions, including an escalation of the conflict between Russia and Ukraine. The same tensions are also, sadly, pushing up oil prices.
Need to Know
Natural capital – BSI launches investment standard
The British Standards Institution (BSI) has just launched BSI Flex 701 the first version of its nature investment standards in conjunction with Defra. The move will hopefully help to develop a common set of principles and definitions for nature investments in the UK and avoid greenwashing accusations. Although not a British Standard per se yet, Flex 701 is an iterative process that provides requirements for the design and operation of high-integrity nature markets, including processes to generate, trade and store nature units. Feedback on the principles below can be submitted until May 1st. Further specific principles for carbon and biodiversity markets are expected later this year. For help getting involved in natural capital markets please get in touch with our specialist team.
Aims of BSI Flex 701:
- Establish an overarching framework to drive actions to create the conditions for consistency and high integrity across all nature markets
- Support high integrity of units traded in nature markets
- Support nature markets to deliver positive environmental outcomes
- Protect against the risks of activity in nature markets leading to negative, unintended consequences for the environment
- Act as a specification, and a basis for standards on specific aspects of nature markets, against which market participants can seek certification to signal their high integrity
- Support the provision of information from nature markets that deters, and/or helps detect, greenwashing
SFI – Some options capped
Hot off the press, Defra has just announced a 25% farm limit on the amount of land that can be put under six “limited area” Sustainable Farming Initiative (SFI) options. The cap is to ensure too much farmland isn’t taken out of food production, says Defra. The options are:
• IPM2: Flower-rich grass margins, blocks, or in-field strips
• AHL1: Pollen and nectar flower mix (which should be growing in blocks or strips in a land parcel)
• AHL2: Winter bird food on arable and horticultural land (which should be growing in blocks or strips in a land parcel)
• AHL3: Grassy field corners or blocks
• IGL1: Take improved grassland field corners or blocks out of management
• IGL2: Winter bird food on improved grassland
You can choose as many of these ‘limited area’ actions as you wish, but the total eligible area you enter into them must not be more than 25% of the total agricultural area of your farm. This does not apply to existing agreements or applications submitted before 26 March 2024. For more information on SFI please contact our Agri-consultancy team.
Green spaces – New rural cash on offer
Community minded farmers and estate owners in England could be interested in getting involved with the government’s new £7m Community Green Spaces fund. Grants of up to £75,000 will be provided to help communities to plant fruits, vegetables and trees, creating orchards and kitchen gardens for all to access and enjoy. Landscaping projects could also create raised beds and improve areas to plant different flowers around village hall facilities and other community green spaces, making space for pollinators and nature to thrive. Funding will also be awarded to support the expansion of natural play facilities that encourage children to spend more time outdoors, in addition to projects that focus on improving access to green spaces such as new paths and seating. To make the spaces more accessible to disabled people, funding will also be available for the creation of disabled parking spaces. For advice on grants please contact our guru Henry Clemons.
Poultry – All flocks to list
Defra is proposing to amend its rules on registering poultry to include flocks of all sizes from this October. Currently, only flocks with 50 or more birds need to register, but Defra thinks it will be easier to help contain outbreaks of diseases like avian flu if smaller hobby farmers are registered too. A consultation on the proposals closes on May 31st.
Livestock levies – Up in Scotland and Wales
Livestock farmers north of the border will see the levies they pay to Quality Meat Scotland for its research and marketing activities rise by almost 7% from April 1st – the first hike in 13 years. The levy per head of cattle will be £4.49, per sheep £0.64 and per pig £1.09. In Wales, red meat levies rise in line with inflation and will go up by just over 4% this year. In England, AHDB announced a levy rise earlier in the year.
Borrowing – Base rate unchanged
The Bank of England unsurprisingly kept its base rate unchanged at 5.25% at its latest meeting last Thursday. According to my colleagues at Knight Frank Finance “lenders have some leeway to make rate reductions across their product ranges, though at this stage we expect cuts to be marginal. We'll need a larger, surprise fall in inflation in either of the next two monthly releases, or for the BoE to begin cutting the base rate, if we are to see more meaningful falls in mortgage rates.” Rural lending specialist Bradley Smith says: “With the prolonged higher rates, we have seen banks regularly lending at sub 2% margins on a large proportion of clients we have negotiated on behalf of over the past six months or so. With rate cuts on the horizon, now is a good time to negotiate your lending requirements.”
Talking points
Scottish grouse – Wildlife Bill passes
Scotland’s Wildlife and Muirburn Bill has just passed its final stages in the Scottish Parliament. The bill introduces a licencing scheme for land where red grouse are shot, bans the use of snares and glue traps to control vermin and requires year-round licences for muirburn, the controlled burning of vegetation. Scottish sporting bodies are concerned the licencing legislation could be applied to species other than red grouse in due course and reckon the bill could harm wildlife by making it harder to control predators like foxes.
Overseas news – US solar boosts pollinators
New research from the US has discovered that solar PV sites can make excellent homes for wildlife, in particular crucial pollinator species whose numbers have been declining rapidly. A five-year study focused on two arrays in Minnesota seeded with wildflower mixes found populations of bees, beetles, butterflies, moths, and more had surged. Native bee numbers were up 20-fold providing yield benefits to the crops of neighbouring soybean farmers. Perhaps solar farms in the UK would be more popular if this potential could be better harnessed.
Out and about
Next gen – Conference calling
If you’re a next-gen land manager or rural entrepreneur you’ll want to attend the CLA Next Generation Conference at Crumplebury on the Whitbourne Estate near Worcester. The event on May 1st and 2nd, sponsored by Knight Frank, will help provide guidance for those who have recently taken over the family business or will do so shortly.
Property News
New Zealand – Sporting dairy farm for sale
To celebrate 25 years of selling farms in New Zealand Knight Frank’s Kiwi partner Bayleys has just published a special edition of its Country magazine featuring 88 rural opportunities for sale. These include 433-hectare Braeside Dairies in the Manawatū district, home to 1,450 cows and arguably the country’s best dairy unit. Owned by the Whitelock family, which has provided a number of players for the All Blacks rugby team, it shows the power of the “White Stuff”. The closing date for tenders is May 29th.
Our Latest Property Research
The Wealth Report – Out now
The 2024 edition of The Wealth Report, Knight Frank’s leading piece of thought leadership on global wealth and property trends is out now. This instalment of the report includes the latest wealth creation data – spoiler, there are more rich people – and an article by yours truly on global farmland markets and how they are being influenced by ESG and Natural Capital. Download your copy.
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.