UK rural: saving the environment is a partnership

Opinion

Attending the Nature Finance conference discussed below I, maybe rather naively, expected to hear answers on how the so-called' wall of private money' opportunities could be unlocked for land managers to recover nature in this country. There was plenty of enthusiasm and willingness from landowners to take up the funding and the private markets to offer it. But a fog persists. Landowners want clarity around issues such as tax and land values, and private markets want confidence in the additionality arising from their investment. Uncertainty around public funding and policies doesn't help farmers, such as with the interim habitat scheme announced by the Welsh government (see story below). Last week's publication of the 2023 State of Nature report highlighted that nature needs a hand to restore itself. The report partly blames agricultural management for nature's decline. But farmers are now willing to help the environment alongside feeding the world while often under financial strain. Policymakers need to provide the right frameworks and land use policies that deliver prosperity for farmers so they can deliver for people and the planet. Land managers and nature need clarity and confidence now more than ever 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 – Corn down, horn up
• Environment – State of Nature report gloomy
• Out and about 1 - Funding nature
• Out and about 2 – It's conference time
• Politics – Lib Dems promise more for farming
• Diversity – Agriculture scores badly
• Biodiversity – Net gain implementation delayed
• Habitat Grants – Welsh scheme opens with uncertainty
• Woodlands – Forestry Commission to change consultations
• Yorkshire gold – Compact farm for sale
• Farmland values – Prices remain stable in Q3
• Development land – market tumbles
• The Rural Report – Watch the videos
• Countryhouses – Prices weaken

Commodity markets

Corn down, horn up

As we enter the final quarter of the year commodity prices are heading in the right direction. The difference between the arable and livestock sectors though is the 12-month price change. Grain and oilseed values are well down on where they were this time last year – feed wheat was trading at almost £270/t back then – while beef, sheep and pig prices are all trending higher. The market outlook, however, looks volatile, particularly for arable crops where world markets are still being influenced by the events in the Black Sea and economic uncertainty around the world.

Meanwhile, sugarbeet growers are upset by British Sugar's latest offer to them. As reported in Farmers Weekly, the processor has made farmers a direct offer of £37.50/tonne for 2024/2025 contracts before agreeing the deal with the NFU's Sugar board. The offer is slightly down on the 2023/2024 price of £40/tonne. British Sugar says this reflects a drop in input prices AS.

Talking points

Environment – State of Nature report gloomy

In a comprehensive study conducted by conservation charities, the 2023 State of Nature report has highlighted the need for increased efforts in safeguarding wildlife across Britain. Examining a staggering ten thousand species of plants, mammals, insects, birds, and amphibians, the report delivers a sobering message: approximately one in six of these species is currently at risk of extinction.

Among the vulnerable species identified in the report, the turtle dove and the hazel dormouse stand out as particularly uncertain prospects for the future of UK wildlife. The authors underscore the fact that a combination of factors, including climate change, intensive farming practices, and pollution, is exerting significant pressure on the nation's biodiversity.

The report serves as a stark reminder that collaborative conservation action and initiatives are essential to protect and preserve the diverse British wildlife. It says that the situation cannot be overstated, as the decline of these species not only threatens the natural world but also has far-reaching consequences for ecosystems, farming businesses and our collective well-being. However, the report does provide encouragement that declines can be reversed based on decades of conservation examples and if agri-environmental schemes are rolled out wider. But it does also require clarity on some key issues for landowners in order to see greater adoption of the nature-based markets and schemes.

I’ve pulled together a more detailed note on the key findings. Do get in touch if you’d like a copy MT.

Out and about 1 – Funding nature 

Enabling private finance to fund nature restoration projects was the theme of Nature Finance UK last week in London, which I and a number of my colleagues attended. The conference attracted a surprisingly broad spectrum of delegates, from farmers and corporates to NGOs. Knight Frank's Head of Rural, James Farrell, drummed the opportunities that lie ahead for the rural sector and how it needs to receive a fair slice of the green finance cake. The investment banks expressed the need for more stringent standards and codes, as well as a demand for better evidence of "additionality". I certainly came away with plenty of food for thought, if not necessarily the answers MT.

Out and about 2 – It's conference time

I haven't been invited to speak at any of the political parties' conferences that have just kicked off, but I did get to dust down my Power Point slides a few times last week. Once in person to the HSBC agricultural team's annual development event, and then virtually to the ICAEW Farming Conference. It was clear from many of the questions I received that there is a great deal of uncertainty about the next few years in terms of land values, tax and support for farmers AS.

Politics – Lib Dems promise more for farming

Talking of party conferences, the Lib Dems kicked off this year's season of political posturing with a promise to spend £1 billion more – albeit as yet uncosted - on Defra's Environmental Land Management Scheme if they win power at the next general election. That's a big if, but a year is a long time in politics; who knows we may end up with another coalition and having a farmer-friendly party in the mix would be helpful. Other measures backed by delegates included measures to ensure trade deals don't disadvantage UK farmers AS.

Diversity – Agriculture scores badly

A survey released last week has revealed that agriculture is one of the UK's least inclusive industries. The study by the Skillcast Group ranked industries on the following: Percentage-point difference between men/women in the workforce; % gender pay gap (median); estimated % of 16 to 24 year olds in the workforce; estimated % of people with disabilities in the workforce; % difference between ethnic minorities vs. white British in the workforce. All the numbers and sources are here. You can also read my interview with entrepreneur and campaigner Wilfred Emmanuel-Jones on why diversity matters in farming AS.

Need to know

Biodiversity – Net gain implementation delayed

In what seems to be a raft of delays being announced at the moment, the government says mandatory Biodiversity Net Gain will now come into force in January 2024. Originally planned to start in November 2023, it seems to have been delayed by the local planning authorities (LPAs) not being in a position with enough guidance and resources to enforce the law. However, the timetable for small sites remains April 2024, and Nationally Significant Infrastructure Projects remain planned for 2025.

November 2023 does remain the target to publish the statutory biodiversity metric, the developers' biodiversity gain plan template, a Habitat Management and Monitoring Plan template and a package of Biodiversity Net Gain guidance MT.

Habitat Grants – Welsh scheme opens with uncertainty

The Welsh government has announced that applications for the interim Habitat Wales Scheme are open from Friday, 29 September, with contracts set to commence in January 2024. The Habitat Wales Scheme is due to fill the gap until the Sustainable Farming Scheme (SFS) launches in 2025 and is meant to present an opportunity for farmers to preserve and expand habitat land under their management across Wales. Its aim is to introduce additional habitat land, not currently under paid management, into sustainable land management prior to start of SFS. It promises a payment per hectare of eligible habitat land, encompassing land previously managed in 2023. Eligibility extends to all farmers, including those participating in Glastir Advanced, Commons, and Organic programs.

But NFU Cymru has voiced its apprehension, citing a lack of "reassurances" that the Habitat Wales Scheme will match the income levels currently provided by Glastir. Also, the ambiguity around the level of funding that will be available for the scheme is described as "unsettling" by the union, particularly for farmers contemplating participation. Rural consultant, Eddie Holloway, echoes the sentiment from conversations he’s had with Welsh farmers and landlords. “The uncertainty around Welsh agricultural policy is putting the brakes on many businesses future plans. With potentially significant reductions in profit for farmers and pressure on rent values and tenancy renewals for landlords.” Contact Eddie Holloway if you are looking for advice around the impact of policy changes on your business MT.

Woodlands – Forestry Commission to change consultations

The Forestry Commission (FC) is to simplify evidence gathering for forestry proposals and to remove duplication in consultation requirements. This will help reduce the complexity and length of time it takes to apply for and get approval to plant and fell trees. The FC previously had to undertake a consultation on applications for woodland creation grants and felling licences, including via the Consultation Public Register. However, the move will not change the requirements from other environmental legislation and the good practice guidelines set out in the UK Forestry Standard.

The FC say that the future approach to consultation will follow a simple set of principles which includes: only undertake consultation once; only undertake consultation where further advice or information is required; ensure that the County Archaeologist is engaged; use a new dispute resolution process to escalate sustained objections.

The FC will roll out these changes in a gradual and structured way over the next few months, to ensure that FC staff, proposers, and the organisations the FC seek advice from, are confident in the new processes MT.

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 values – Prices remain stable in Q3

The preliminary results of our Farmland Index for Q3 2023 suggest that the market for agricultural land remains stable. Look out for full details in next week's update 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.