Retirement scheme, German solar farms, Countryside Code

It has been a long time coming, but now landowners and tenants have the details of the government’s Lump Sum Exit Scheme. The idea is to provide farmers looking to retire with the funds to do so and thereby provide new opportunities for younger farmers looking to buy or rent their first farm. More farms or land for sale would be fantastic, but I can’t see the scheme unlocking enough land to have any impact on farmland values. Will it encourage more older tenants to call it a day? £100,000 sounds tempting and it may just persuade those on the cusp to take the leap, but it’s hard to see it really shaking up the sector.

Do get in touch if we can help in any way
Andrew Shirley, Head of Rural Research

In this week’s update:

• Commodity markets – Global dairy supplies tight
• Retirement scheme – Defra announces details
• Countryside Code – Guidance revamped
• Rewilding – A nuanced perspective on our podcast
• The Rural Report – Sign up to watch our ground-breaking video
• Overseas news – Germany creates new solar farms

Commodity markets – Global dairy supplies tight

The Global Dairy Trade price index, based on the results of a twice-monthly global online auction of dairy products, reached US$4,630/t at the most recent event at the beginning of February - its highest point since March 2014 and a 4.1% jump from the previous auction on 18 January.

Prices for all milk products rose, but the main driver was a 5.8% increase in the price of whole milk powder (WMP). Skim milk powder (SMP) and butter values also saw strong increases from the previous auction, reaching five-year highs. Strong demand and tight supply are behind the rise.

According to the latest figures from Defra, the average UK farm-gate milk price is 34.12p/litre – a 12% hike on the year. However, consultant Nick Holt-Martyn of the Dairy Group says farmers need at least 37.5p/litre to stay in business.

Retirement scheme – Defra announces details

Farmers in England looking to retire will be able to claim up to £100,000 of their Basic Payment Scheme entitlements in advance in return for selling or leasing their land (for a minimum of five years) or giving up or passing on a tenancy.

The Lump Sum Exit Scheme, which is open to those who made their first BPS claim in 2018 or earlier, is due to open in April and the application period will run until the end of September. The payment will be based on the average direct payments made to the farmer for the 2019 to 2021 BPS years. This reference figure will be capped at £42,500 and multiplied by 2.35 to calculate the lump sum. Any land transfers required will need to be completed by the end of May 2024.

My colleague Zoe Smith in our Rural Consultancy team comments: “This provides landlords with the opportunity to start discussions with tenants who may not have a successor or are of an age in which retirement would be appropriate.”

She adds: “One of the biggest hurdles we find when talking to farmers about retirement is the idea of having to give up their homes. As part of the new scheme claimants can continue to live in their houses and keep up to five hectares of land plus any land that they plant with trees as part of a woodland creation scheme.”

Please get in touch if you would like to discuss how the scheme could benefit you

Countryside Code – Guidance for landowners and visitors revamped

Natural England and Natural Resources Wales have updated the Countryside Code.

The new recommendations include making rights of way more accessible, creating safer environments, and installing clear signage. The guidance also advises farmers and land managers on how to report cases of anti-social behaviour, fly tipping, littering and livestock worrying.
CLA President Mark Tufnell said: "Rather than pitting rural communities and visitors against each other, the guidance unites them by focusing on a shared appreciation of our countryside."

Rewilding – A nuanced perspective on our podcast

We have received some great feedback on our recent Knight Frank Intelligence Talks podcast where Tom Heathcote, Head of our Agri-Consultancy team, and I discuss rewilding and the government’s plans for landscape restoration and environmental support payments for landowners and farmers. If you haven’t tuned in yet have a listen to see if you agree with our thoughts on this increasingly controversial topic.

The latest edition of The Rural Report, our unique publication for rural landowners and their advisors, was launched with a video highlighting some of its key content around the topic of ESG. If you missed it, you can sign up to watch on demand at your leisure. It was a lot of fun making it and includes a thought provoking interview on diversity, with Wilfred Emmanuel-Jones AKA The Black Farmer. I think you’ll find it both entertaining and informative.

Sign up to watch The Rural Report launch video

Overseas news – Germany creates new solar farms

The German government is encouraging farmers to turn over up to 15% of their fields to solar panels in a bid to hit its renewable energy commitments. The country is aiming to produce 80% of its energy needs from renewables in under nine years, but in 2020, reports Bloomberg, managed only 45%. The new solar initiative could see 200 gigawatts of extra solar energy produced per year, compared with the current 60.

Photo by Jakob Cotton on Unsplash