The Knight Frank Rural Property and Business Update – 30 November

In this week’s update:

• Commodity markets – Prices steady, but don’t forget China
• Trade and Brexit – The pragmatic and the frustrating
• Rural Report update – Join our webinar this week
• Shooting – Scottish grouse moors feel the heat
• HS2 – New recommendations may ease pain for landowners
• Tree planting – Inspiration for owners of tenanted farm portfolios
• Overseas news – Brussels food security plan upsets farmers
• Stop press - Government publishes sustainable farming roadmap

Commodity markets – prices steady, but don’t forget China

Reading through the latest market updates from AHDB this week, one caught my eye and reinforced my view that we need to keep a keen eye on global events, not just what’s happening in Europe, to predict where commodity markets might be heading. The report in question was looking at the recovery of the Chinese pig herd after it was devastated by African Swine Flu in 2018. In 2021 production is forecast to rebound by 9%, which AHDB predicts will lead to a 6% drop in exports to China. That’s around 300,000 tonnes of pork that will be looking for a new home. So far this year the UK has sent 130,000 tonnes of pig meat and offal to China, 45% of our total pork exports.

Trade and Brexit – The pragmatic and the frustrating

At the time of writing a no trade breakthrough with the EU had been announced - just how long can a deadline be stretched? But thankfully it has been confirmed that Canada is prepared to do business with the UK under the same terms as when we were in the EU.

And why wouldn’t they? £20 billion flows between us each year so it makes sense to continue the arrangement. Why this sense of pragmatism can’t be applied to our future relationship with the EU is deeply frustrating for farmers who need to plan their cropping and livestock systems well in advance.
The answer is, of course, that it goes beyond trade, but given that both parties lose out without a deal it would makes sense to sort out some of the other differences later.

Even with a trade deal the UK will be considered a “third country” when it comes to trading with Europe. As it stands there is currently no automatic provision for the import of things like minced meat or sausages, although frozen product is allowed. Shipments of perishable fresh dairy products like cream will also require an Export Health Certificate. Any ban would likely be reciprocated by the UK.

It’s two-way traffic and absolutely nothing will have changed in terms of the quality and standards of food being traded. No doubt blame can be apportioned in different ways, but this should have been sorted out a long time ago to avoid creating an extra level of unnecessary volatility for farmers on both sides of the Channel.

For advice on how to prepare your farming business for the post-Brexit future please contact our head of Agri-Business Consultancy Tom Heathcote

Rural Report update – Join our webinar this week for practical business advice

Talking of advice, Tom and a number of my other colleagues specialising in rural matters will be sharing their insight in our latest webinar Shaping the future of rural landowning businesses next week. You can listen to their views on planning, tax, landlord/tenant matters, renewable energy, farmland values and much more in a punchy 45-minute session on Tuesday morning, where you’ll also be able to put your own questions to our panel.

Sign up for the webinar

Photo by v2osk on Unsplash

Shooting – Scottish grouse moors feel the heat

For many landowners grouse moors are an intrinsic part of the upland landscape that also contribute significantly to the rural economy, but a lot of people don’t agree arguing that they aren’t good for the environment.

The Scottish government seems to side with the latter and has just announced that after considering the 58 proposals of the Werrity Report released last December it will bring forward legislation in the next parliamentary term to introduce a licencing system for sporting estates. The report had suggested a five-year period of self-regulation before licencing was introduced.

In response, Scottish Gamekeepers Association chairman Alex Hogg said he was concerned about "spurious" claims against licence holders by people seeking to end grouse shooting in Scotland.

"Ironically, those who lobbied so hard for licensing have no interest in seeing it being a success. For them, this was always a vehicle to agitate for a full ban. Scottish Parliament legislators should not be naive in thinking otherwise."

For advice on what this might mean for estate values in Scotland please contact our head of Scottish farm & estate sales Tom Stewart-Moore

HS2 – New recommendations may ease pain for landowners

Aside from the many environmental and economic arguments against the controversial £100 billion HS2 project, those property owners affected by it have had to endure a tortuously slow compensation process that has added to the pain of losing their homes or businesses.

However, Transport Minister Andrew Stephenson has just published a review of HS2 Ltd’s land and property purchase processes that will hopefully improve things.

Commenting on the announcement my colleague Jonathan Scott-Smith in our specialist compensation team says: “As one of the nine property practitioners who contributed to this review, I had been eagerly awaiting its publication. For me, the key outcome is a commitment to ‘put people and businesses impacted by HS2 at the forefront of what we do’. I hope that actually happens, as I have heard similar promises before.”

Read the review and Knight Frank’s full response

If you require help with any compensation or compulsory purchase issues please contact Jonathan or Tim Broomhead

Tree planting – Inspiration for owners of tenanted farm portfolios

It’s not often that I’d encourage readers to watch Country File, but if you are a landowner interested in planting trees a recent edition is worth a look.
One of our clients, the London Borough of Enfield, talks about their hugely ambitious tree-planting scheme, the city’s largest. My colleague James Shepherd of our Rural Asset Management team was pivotal in ensuring the success of the scheme by focusing on tenant engagement and crucial restructuring of agricultural tenancies to allow the borough the freedom to deliver the project.

Watch the interview (it’s about 17 minutes in)

Please contact James for advice on how to achieve your tree-planting aspirations while working with your tenants

Overseas news – Brussels food security plan upsets farmers

An audacious plan by politicians in Brussels raised by eyebrows when I spotted it on a political website last week.

Alain Maron, the city’s environment minister, says he wants to buy up large tracts of land as part of the region's Good Food Strategy, which says one third of the fresh fruit and vegetables being eaten by the Belgian capital’s 1.2 million residents should be produced in Brussels or its periphery by 2035.

It does, however, highlight the concerns people have about food security and sourcing local produce, and even energy, and suggests the potential for innovative partnerships between cities and farmers.

Read the full story

STOP PRESS

Defra has today published its eagerly anticipated “Path to Sustainable Farming” document. You can read the announcement here, but we’ll bring you more detailed analysis next week.

https://www.gov.uk/government/news/government-unveils-path-to-sustainable-farming-from-2021