Groundswell, spud spat, compensation concerns

As a first time visitor it was fantastic to soak up the energy and enthusiasm on display at Groundswell last week. The show started off as a niche event for those interested in regenerative agriculture. Now it attracts large kit manufactures and farm business advisors, but still remains true to its ethos of trying to farm in conjunction with nature. I enjoyed many thought-provoking presentations from those who believe we can farm in a way that remains profitable, but doesn’t damage the environment. Their balloon, however, was cruelly burst by the environmentalist George Monbiot who lambasted extensive grass-fed livestock production as a waste of land that should be left to entirely revert to nature, while humans feast on food produced from lab-produced microbial proteins. “There might be no more damaging farm product than organic, pasture-fed beef”, says Monbiot in his latest book Regenesis. While much of the book makes sense, his talk left me with a nagging sense of a future rural dystopia.

Please get in touch if we can help

Andrew Shirley, Head of Rural Research

In this week’s update:
• Commodity markets – Grain slide continues
• Compulsory purchase – Compensation values to be capped
• Residential rentals – Reform white paper launched
• The Rural Report 2022 – Watch this year’s launch webinar
• Regen ag – New profit numbers revealed
• Campsites – PD rules to be reviewed
• Overseas news – Bill Gates spud spat

Commodity markets – Grain slide continues

Chaotic is probably the best way to describe commodity markets at the moment. Both cereal and oilseeds markets have been pared back sharply despite any resumption of significant Black Sea exports looking unlikely in the near future. Harvest prospects in several key grain producing areas have also been scaled back. Not long ago, for example, India was predicting a record 106-million-tonne harvest that would have replaced some of the locked-down Ukrainian grain, but now forecasts are for a 20-year low meaning the country will be back on the world market to make up its own shortfall. Gloomy economic forecasts seem to be the main driver behind the bear run, but prices could quickly bounce back. Prepare for volatility! Meanwhile, dairy processor Freshways has become the first milk buyer to say it hopes to pay farmers 50p/litre for their milk.

Compulsory purchase – Compensation values to be capped

Proposed changes to the compulsory purchase system could see affected landowners receiving lower levels of compensation for their land than if it were sold on the open market. Under the proposals, payments will not take into account “hope value” based on future development potential.

Jonathan Scott-Smith of our Compensation team says: “These proposals cut across the long established and fundamental principles of financial equivalence. We already have a system that restricts compensation for the value of the land being taken to the amount that would have be obtained if the land was sold on the open market and the scheme didn’t exist. The government is seeking to restrict that further.

“In many cases someone having their land taken against their wishes would receive less compensation than someone in a similar situation who is selling their land on the open market. The compensation code is already too complicated and needs an overall reform to make it simpler and fairer to everyone. These proposals appear to do just the opposite.”

Residential rentals – Reform white paper launched

The government has just launched a white paper on how it plans to reform the private rented sector in advance of the Renters Reform Bill, which was one of the headline bits of legislation announced in the recent Queen’s Speech.

Although some fear that the additional rights provided to tenants will make it more difficult for landlords to get rid of problematic occupants, the dire quality of much of the UK’s rented stock made change inevitable. My Rural Asset Management colleague and self-declared legislation wonk Jess Waddington shares her views below:

“The Renters Reform Bill promises significant and long lasting change to the private rented sector. The headline item is that the Bill proposes to ban section 21 ‘no fault’ evictions, providing renters with more secure tenancies.

“However, if you look a little deeper, the bill promises additional grounds for landlords’ to recover possession, improves the court and dispute resolution offerings especially in relation to rent arrears and allows for increased flexibility for tenants through proposed ‘deposit passports’ and periodic tenancies from the outset.

“In short, it promises to level up the playing field between the landlord and tenant, improving the quality of the housing stock, and hopefully resulting in a fairer private rented sector which should benefit both parties.”

For more information on what the bill might mean for you please get in touch with Jess.

The Rural Report 2022 – Watch this year’s launch webinar

The launch webinar for this year’s edition of The Rural Report is now available to watch on demand. Please head to the report’s dedicated website where you can also request a copy of the report. Highlights include an interview with Jake Fiennes whose new book Land Healer has just been published.

Regen ag – New profit numbers revealed

The farm business consultant Andersons hosted a stand at this year’s Groundswell event adding a serious economic perspective to an event that is often described – a little lazily I feel – as the Glastonbury of farming.

Although the firm’s Richard King notes that reliable profit figures for regenerative farming systems are still hard to come by, new model farm figures compiled by Andersons show the potential for well-managed businesses to outperform.

Based on budgets for the 2023 farming year, the model shows that high-performing regen systems could deliver a business margin of £547/ha compared with £442/ha for an equivalent standard farming business. However, a lower performing regen outfit might achieve just £205/ha.

“Regenerative systems usually require a higher level of management ability. If you are not making profit under the existing system then ditching the plough is unlikely to be enough to turn things around,” warns Richard. Businesses should also be prepared for a significant drop in margins during the transition period from conventional to regen systems, he adds.

Sustainable Farming Incentive – Open for business soon

Defra Minister George Eustace was also in attendance at Groundswell and used the opportunity to announce the opening date for applications to the new Sustainable Farming Incentive (SFI). The scheme has been criticised for its relatively meagre payment rates, but Defra is hoping that quarterly cheques and no set application windows or deadlines will add to its allure. The level of take up will be a barometer for the success of Defra’s three-tiered Environmental Land Management Scheme that replaces former EU subsidies.

SFI opens on June 30th. Please contact Tom Heathcote our Head of Agri-Consultancy if you need any advice.

Campsites – PD rules to be reviewed

Although I think it’s a bit unfair to call Groundswell the Glastonbury of farming, pop-up campsites have certainly been a boon to many farm businesses following the Covid-driven staycation movement. During the pandemic the number of days farmers could allow camping on their land each year without seeking planning permission was temporarily increased from 28 to 56. Now, the government is apparently planning to consult on permanently extending permitted development rights for temporary campsites to keep the momentum going.

Overseas news – Bill Gates spud spat

North Dakotan farmers are apparently up in arms following the news that one of Bill Gates’ investment funds has bought a 2,100-acre potato farm in the state for US$13.5 million. A Depression-era rule bars companies, LLCs, and trusts from farming and ranching activities in North Dakota. Pre their divorce, the tech entrepreneur and his wife Melinda were already the largest landowners in the US with around 250,000 acres of farmland. It is not known how the portfolio has been allocated since the split last year.