Food crisis, Rogue tractors, Green trustees

Newspapers all have their own agenda, so I’m not sure I’d put too much store in The Guardian’s warnings, discussed below, that a group of “hard right” Tory MPs plan to scrap the government’s new Environmental Land Management Scheme (Elms) before it even gets going properly. But it does, yet again, highlight how the debate on the role of the countryside is very much a political hot potato right now. Investment allowances are less headline grabbing, but the fact that the Treasury recognises UK businesses are not investing enough to improve productivity and wants to do something about is welcome news. A little more in the way of practical solutions to help businesses prosper, and ultimately be able to deliver more sustainable environmental benefits, might be more useful than grandiose targets and save-the-world schemes. Just make sure you know who is driving your tractor.

Please get in touch if we can help
Andrew Shirley, Head of Rural Research

In this week’s update:

• Commodity markets – Ag inflation hits record high
• Productivity and investment – Tax boost on the cards
• Charitable trusts – Court win opens up ESG investment options
• Environmental support – Elms under threat?
• Farm machinery – Hacking risk rises
• Overseas news – Food crisis deepens as India bans exports

Commodity markets – Ag inflation hits record high

After a hectic month, the commodity markets we track enjoyed a period of relative calm last week in terms of ex-farm prices. But wheat futures prices continued to strengthen with November 2022 values hitting £360/t at one point. New figures from consultant Andersons reveal the ongoing impact of the Ukraine war on farm input costs. The firm says input cost inflation hit almost 31% in April – a record. Meanwhile profits at Scandi fertiliser manufacturer Yara tripled in the first quarter of the year,

Capital allowances – Boost on the cards

In a bid to boost business investment and productivity in the UK, Chancellor Rishi Sunak is proposing a number of measures, including permanently increasing the annual investment allowance and introducing first-year allowances that would allow businesses to deduct a proportion of qualifying expenditure on plant and machinery in the year that it is incurred.

HM Treasury indicates that, according to OECD data, companies invest just 10% of GDP each year, compared with 14% in competitor countries. It acknowledges that the UK tax system does not reward investment as much as other countries do.

Charitable trusts – Legal case opens up ESG investment options

You might think that charities could invest their money how they want, but when trustees are involved that is not always the case given the strict investment criteria that often apply to trusts.

Based on a 30-year-old judgment, the “Bishop of Oxford case”, charity trustees should maximise the financial return on their investments and ought not take into account ethical or moral considerations that could cause financial detriment to the charity, except in "rare" circumstances where it conflicted with its purposes or work.

However, a recent court ruling by Justice Michael Green has widened the scope of those criteria. He said that charity trustees in England and Wales – who collectively hold more than £150 billion in long-term investments – can now prioritise the climate change outcomes of their investments even if this risks reducing financial returns.

Environmental support – Elms under threat?

An article in The Guardian caught my eye. It alleges that a number of “hard right” Tory MPs are pushing the government to scrap the new Environmental Land Management Scheme. MP Steve Baker, who runs the eurosceptic European Research Group and is a member of the Net Zero Scrutiny Group, which is pushing against the government’s net zero measures, said: “Food security should be as much a national priority as energy security. We must prioritise food security and food chain resilience – cutting unnecessary regulations and interventions, and consider refocusing our food chain functionality.”

What the critics of Elms want in its place was not revealed.

Farm machinery – Hacking risk rises

As if spiralling input costs due to the Ukraine crisis weren’t enough, cyber-crime experts are warning farmers that Russian hackers could attack their farm machinery in a bid to hit the West’s food supply chains.

“The idea of intelligent machines running farms is not science fiction. Large companies are already pioneering the next generation of autonomous ag-bots and decision support systems that will replace humans in the field,” said Dr Asaf Tzachor of the University of Cambridge’s Centre for the Study of Existential Risk (CSER).

“But so far no-one seems to have asked the question ‘are there any risks associated with a rapid deployment of agricultural AI?’” he added.

Overseas news – Food crisis deepens as India bans exports

You read about it here weeks ago, but now the mainstream media has cottoned on to just how severe the impact of Russia’s invasion of Ukraine and the blockading of its Black Sea ports will be on global food chains. India’s recent decision to ban wheat exports just adds to the pressure. Here are some sobering facts and figures from the likes of the FT, Economist and UN.

Food crisis in numbers

11.5 – Percentage of global vegetable oil market accounted for by Russia and Ukraine
25 – Countries that sourced over 30% of their fertiliser from Russia in 2021
26 - Countries currently restricting food exports, accounting for 15% of calories traded globally
28 – Percentage of world wheat exports accounted for by Russia and Ukraine
40 – Percentage of average sub-Saharan incomes spent on food
50 – Countries that depend on Russia or Ukraine or both for 30% of wheat imports
90 – Percentage of Ukraine grain exported by ship
500,000 – Tonnes of Ukrainian grain alleged to have been stolen by Russia
1 million+ - Number of possible global hunger deaths due to port blockades
20 million+ – Tonnes of Ukraine’s last harvest stuck in the country
193 million – Lives or livelihoods at immediate risk due to poor food access
400 million – People depending on Ukraine for food supplies

Photo by Chris Ensminger on Unsplash