Covid 19 – Rural property and business update

Commodity prices

Prices for the main agricultural commodities remained stable last week, although beef prices could come under pressure as the throughput of Irish abattoirs starts to pick up again. Slaughtering rates on the Emerald Isle during the Covid lockdown slumped by as much as 25% a week creating a significant backlog.

Agricultural Property Relief - a top concern for The Rural Report webinar guests

A few broadband issues aside, our initial series of webinars to help launch The Rural Report have been a great success. With audience participation a key part of the events, it has been fascinating to see which issues are of most concern.

Worries about the potential removal of Agricultural Property Relief (APR) have featured consistently throughout the series. My colleague and rural valuations guru Alice Huxley has put together a handy note for anybody concerned about the implications. It includes a few top tips to help mitigate against nasty Inheritance Tax surprises.

If you missed it, you can watch a recording of the webinar, which featured Tom Heathcote, our Head of Agri-Consultancy; Alice, Clive Hopkins, who runs Knight Frank’s Farms & Estates team, and myself.

To read all the articles online or request a copy of The Rural Report, which is packed full of insight, thought-provoking opinions and advice, please head to www.knightfrank.co.uk/ruralreport

Trade and food standards – the government will listen if we shout loud enough

It took one footballer to persuade the government to backtrack on its plan to scrap school lunch vouchers over the summer holidays, but it needed a million signatories to an NFU petition for it to acknowledge industry concerns about the standard of imported food.
However, better late than never. Trade minister Liz Truss agreed last week to create a Trade and Agriculture Commission that would look at the implications of any trade deals on the food and farming sector.

The commission’s findings will, however, be advisory only, fuelling concerns that it will lack the clout to have any real influence.
Meanwhile, EU and UK negotiators have been locked in talks over a potential free trade agreement that will kick in once the Brexit transition period runs out at the end of the year. Apparently there are still significant areas of disagreement, but enough progress to suggest a deal is possible.

Bloomberg reports that officials are beginning to coalesce around a general “landing zone” that could form the basis of an agreement on trade and other areas of cooperation.

he FT interprets comments from the EU’s chief dealmaker Michel Barnier as an indication he is ready to accept Britain’s rejection of the European Court of Justice.

If you do one thing in July - have your say on future environmental payments

As the current system of direct agricultural support payments – which let’s be honest has propped up many farming businesses for decades - begins to disappear it is vital that individual farms and estates make their voice heard regarding its replacement.

Defra has just relaunched its initial consultation on how the proposed Environmental Land Management scheme could work. Given that over 60% of the UK’s total income from farming (TIFF) was made up of support payments in 2019, the importance of grabbing the opportunity to shape this process cannot be overstated.

As Philip Clarke, Executive Editor of Farmers Weekly, points out in his leader column this week, the majority of the 43,000 contributors to the last big Defra consultation, which guided its Health & Harmony blueprint for agriculture, were from non-farming lobby groups and their supporters. Hardly surprising then, that farmers didn’t feel it reflected their views.

As mentioned above, the government listens to those who shout the most and public access and environmental lobby groups have very loud voices. You can contribute to the consultation via a dedicated page on Defra’s website. It closes on 31 July.

The rural property market – how are farms and country houses performing?
According to the latest results from the Knight Frank Farmland Index, which tracks the average value of bare agricultural land in England and Wales, prices remained stable at just under £7,000/acre in the second quarter of the year.

Although supply is gradually increasing and demand is strong, a lack of completed deals since the Covid lockdown was eased means it is very difficult to predict where prices are heading. The next quarter’s index results will be eagerly awaited. Read the full index update for more details.

In Scotland, where the farmland market reopened just last week, it is even harder to gauge values. But the initial sighs are encouraging reports my agency colleague James Denne, who sells farms and rural properties either side of the border.

You can read about the latest farms and estates that Knight Frank is selling here.

The desire to own a place, a very expensive place, in the country is also highlighted by the Q2 results of our Country House Index.

Homes valued at £5 million-plus saw the strongest price growth of any property type in the UK in the three months to June, due to interest in country living and the ability of buyers in higher-price brackets to transact, says fellow Knight Frank researcher Chris Druce.

The Rural Report – listen to some of our key findings and interviewees

We have just released the first podcast in our Intelligence Talks series dedicated to the The Rural Report. In this instalment Tom Heathcote, our Head of Agri-consultancy, talks to Roy Cox of the Blenheim Estate and agroecologist Ed Brown of Hutchinsons about the 5Cs: Carbon, (natural) Capital, Community, Communications and Cooperation.

Grab a coffee and head to your favourite podcast service to listen to their fascinating chat.

Listen on Spotify

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Photo by Colin Watts on Unsplash