Covid 19 – Rural property and business update Monday 8th June

Commodity prices

Wheat markets remain weather and currency driven with rain across key European and Black Sea growing regions putting some downward pressure on prices. As lockdowns unwind across Europe and more motorists hit the road, increased biofuel demand is supporting the outlook for oilseed rape – 60% of the European crop goes into fuel. 

The outlook for UK malting barley looks uncertain. The loss of demand from the pub trade means maltsters used 28% less of the grain in April compared with the same period in 2019.

Wool prices are also taking a battering as the global garment trade remains at a standstill. British Wool has confirmed its average price was just 32p/kg for the 2019 clip (payments are part forward and part in arrears), compared with 60p/kg the year before.

For those buying early, fertiliser prices are down £50/t on last year. The dry weather is making arable farmers nervous of splashing the cash on too much nitrogen, but growing concerns about a no-deal Brexit, which could see tariffs imposed on imported fertiliser, may bring back upward pressure on prices.

Rural property market

Demand is strong in the rural sector with our farms and country property teams reporting a 50% hike in English viewings last week compared with the same period in 2019. That said, supply remains sparse in the farmland market – the amount of land advertised last week was down over 60% year on year - so potential buyers still have little to choose from.

In Scotland, movement restrictions mean the market remains closed with no formal indication of when it will reopen. James Denne, our man in Melrose, says 22 June looks like a possible option. James, however, does report strong interest in a stunning newly launched smallholding just over the border in Cumbria with an income stream from a holiday cottage. “It will be really interesting to see how much Covid-19 does encourage people to move to the country over the longer term, but the momentum is certainly there at the moment,” he says.

Countryside access

The ongoing relaxation of Covid-19 movement restrictions in England has led to a huge increase in the number of day trippers heading to the countryside – and an inevitable rise in tensions with landowners. One farmer wrapped a car parked in his farm gateway with bale wrap, while others have sprayed trespassing cars with manure. 

Those farmers blocking off rights of way during the pandemic have been reminded this is illegal, but with some members of the public seeming to have very little respect for other people’s land – fly-tipping and littering is on the rise leading to at least one animal choking to death on a plastic bag – tempers will continue to run high.

Public money for public goods

Now that we have left the EU and the cosy embrace of the Common Agricultural Policy, which has subsidised UK farmers to the tune of around £3 billion every year largely on an area-payment basis, all the chat is that estates and farms will be rewarded instead for the delivery of public goods, such as carbon sequestration and environmental benefits, with much of the money coming from the private sector.

Details of how such an approach might work have, however, been thin on the ground. But last week DEFRA revealed details of a pilot scheme working with the Environment Agency, Triodos Bank and the Esmée Fairbairn Foundation that will kick start four projects to restore habitats across England and encourage private-sector investment.

The four projects receiving funding are:

• Devon Wildlife Trust’s restoration of the Caen wetlands
• Rivers Trust’s work on natural flood management in the Wyre catchment in Lancashire
• NFU’s work to reduce nitrate pollution in Poole Harbour
• Moors for the Future Partnership’s restoration and conservation of peatlands in the Pennines

“This is the future and the opportunities for landowners prepared to embrace them are very exciting,” believes Tom Heathcote of our Agri-business team.

https://www.gov.uk/government/news/green-projects-given-support-to-attract-private-sector-investment?

Food standards and trade

As mentioned in previous updates, the government is under increasing pressure to ensure imported food meets the same standards as those applied to farmers here. The big bone of contention, of course, is the trade deal that is currently being negotiated with the US.

A recent report suggests Trade Minister Liz Truss is prepared to allow the import of food produced to different welfare standards, but would subject it to a tariff to protect UK producers whose costs of production are higher.

The word on the grapevine is that Ms Truss and the more reserved Defra minister George Eustace are at loggerheads over the issue and Prime Minister Boris Johnson is going to have to publicly back one or the other in the not-too-distant future.

For somebody keen to stay on the right side of public opinion, a petition by the NFU to guarantee no relaxing of standards on food imports may sway his judgement. At the time of writing it had garnered almost a million signatories.

In the meantime, the CLA is trying to bang heads together over the apparent impasse between UK and EU trade negotiators after the recent conclusion of the fourth round of free trade negotiations between the two parties. 

In a statement President Mark Bridgeman said: “It is of great concern to farmers in the UK, and I’m sure the European Union too, that these talks are making such limited progress.

“The EU sells £33 billion of agricultural products to the UK each year – almost £20 billion more than we sell to them - so the prime minister is absolutely right to have confidence in the value of our market.  But make no mistake, without a quality free trade agreement thousands of farmers both in the UK and the EU would go out of business, with all the devastation to lives and communities that go with it.

“We understand a degree of posturing is inevitable, but no one – on either side of the negotiating table – should forget what is at risk.  We strongly encourage both sides to return to the table as quickly as possible.”