The Rural Update: Development vs nature vs farming
Your weekly dose of news, views and insight from Knight Frank on the world of farming, food and landownership
9 minutes to read
Viewpoint
“Nature and the economy have both been in decline for too long. That changes today.” So said a bullish Steve Reed last week, as the Defra Minister announced the government’s response to an independent review of environmental regulations.
The government is to be applauded if it can indeed cut red tape and strike a sensible balance between economic growth, the delivery of new housing and nature restoration. However, there is mounting evidence that confidence in the rural economy is draining.
The latest worrying news is a slump in new tractor registrations, following the government’s controversial changes to Inheritance Tax as well as increases in employer National Insurance contributions, the minimum wage and the treatment of twin-cab pickups.
From a farming perspective, it will be tough for Mr Reed to make good on his promise of change. Hopefully, he will be ready to take on board any recommendations from Baroness Batters, his new “profitability” adviser and former NFU President.
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Commodity markets
Oil price pressure
Brent crude prices fell by 9% in the first week of April amid fears that Donald Trump’s latest tariffs and China’s retaliatory action will hit the world’s economy – JP Morgan has upped its odds on a global recession to 60% – and a rise in output by OPEC+ the oil-producing cartel. Brent ended last week at $65.74/barrel, its lowest level since August 2021. Traders see little chance of a substantial rebound in the near term unless military action in the Middle East ramps up significantly.
The headlines
Trump tariff risk
Donald Trump’s raft of “Liberation Day” tariffs announced last Wednesday has caused concern among the UK’s food and drink producers.
Although the UK’s trade with the US is pretty well balanced – in 2023, we exported just over £60 billion of goods and imported almost £58 billion – Mr Trump still decided to levy “reciprocal” tariffs of 10% on all our exports to America.
Aside from the EU, the US is the largest buyer of British food, snapping up £900 million of produce in 2023, according to the ONS. This included almost £3 million of fresh and frozen beef (already subject to a 26.4% tariff over a certain quota), £23 million of pork and £68 million of cheese.
Annual beverage and spirit exports total around £1.6 billion, with whisky accounting for most of that. Last year, almost £1 billion of Scotch was quaffed by American drinkers. But the US also accounts for about 15% of UK wine exports and 21% of beer exports.
The potential impact of tariffs was starkly revealed when single-malt imports to the US were hit with a 25% levy between October 2019 and March 2021 as part of a transatlantic aerospace trade spat. It is estimated that Scottish distilleries lost over £600 million of business during that period.
At the time of writing, no retaliatory tariffs had been announced by Keir Starmer, but they have not been ruled out on items such as bourbon whisky if a compromise deal cannot be struck with Mr Trump. Defra ministers have promised that any relaxation on food standards, such as accepting hormone-treated beef, is not on the table.
Aside from the direct impact of tariffs, one of the biggest threats to the UK’s farmers is if agricultural exports from other countries that have been hit by even larger tariffs (the EU rate is 20%) are priced out of the US and look for a new home here.
Environmental regs streamlined
A more streamlined approach to protecting the environment has just been announced by the government. The move comes in response to the proposals recommended by Dan Corry, who was commissioned by Defra Minister Steve Reed to review the current system of environmental regulation. This, Mr Corry concluded, was “outdated, inconsistent and highly complex”.
The review suggested 29 ways to streamline things, all of which the government is considering with nine being fast-tracked.
These include a single lead regulator for major infrastructure projects, reviewing the existing catalogue of compliance guidance to remove duplication, ambiguity, or inconsistency, and clearer guidance and measurable objectives for all Defra’s regulators, starting with Natural England and the Environment Agency.
Mr Reed said: “As part of the Plan for Change, I am rewiring Defra and its arms-length bodies to boost economic growth and unleash an era of building while also supporting nature to recover.”
While landowners and developers could benefit from Defra’s new approach, environmental groups have expressed concern that the focus on economic growth could come at the expense of nature.
News in brief
Batters to boost farming
Minette Batters, the former NFU President who now sits in the House of Lords, has been commissioned to lead a six-month profitability review of British farming by Defra Minister Steve Reed. Baroness Batters will provide short, medium and long-term recommendations and propose actions for government and industry that will support farming profitability as part of the government’s New Deal for Farmers.
Tractor sales slump
Baroness Batters’ advice is sorely needed. According to the latest figures from the Agricultural Engineers Association, new tractor registrations in the first quarter of the year have fallen to their lowest level since 2001. Just 1,466 units were registered in March 2025 – a fall of over 24% on the same month in 2024. The figures lend weight to a survey discussed in last week’s Rural Update that revealed worries about Inheritance Tax, cuts to support payments and other economic pressures are forcing many farm businesses to freeze investment.
Milling wheat strike
Meanwhile, the organisers of the recent farming protests in London have unveiled their latest tactic to persuade the government to reverse its changes to Agricultural and Business Property Relief on Inheritance Tax. Arable farmers are being urged to withhold deliveries of milling wheat for the next few weeks in a bid to create empty shelves in the bread aisles of supermarkets. But, given few farmers have been selling at the current low prices anyway, some analysts expect the boycott to have a limited impact.
UK food chain at risk
However, even more existential threats to the UK’s food chain are being ignored, according to a whistle-blowing public memo penned anonymously by senior employees of some of the country’s biggest food companies. They accuse the firms of paying lip service to, rather than acting on, the findings of regulations like TNFD that measure the exposure of businesses to environmental and nature risks like climate change and biodiversity loss. The memo stated: “We have reached a moment of threat to food security like none other we have seen. Yield, quality, and predictability of supply from many of our most critical sourcing regions is not something we will be able to rely upon over the coming years.”
EU delays sustainability reporting
Across the Channel, environmentalists are also angry that the European Parliament has voted to delay the implementation of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Policymakers say the hiatus will allow the directives to be streamlined to reduce compliance costs for businesses, particularly smaller ones, that are struggling with wider economic issues.
Non-woodland trees mapped
Some good news though for tree-spotters as a free map of every non-woodland tree in England has just been published by the government. The analysis by the Forest Research Agency reveals that 30% of England’s tree cover is made up of non-woodland trees. Forestry Minister Mary Creagh said: “This groundbreaking new tree census will not only help us better understand our current tree canopy cover but allow us to identify areas where we can create more nature-rich habitats for wildlife and people to enjoy as part of our Plan for Change.”
Property of the week
Essex vineyard estate opportunity
Budding winemakers looking for a cracking country estate will want to take a look at the Stokes Hall Estate in Essex’s Crouch Valley, which is fast becoming a viticultural hotspot. Much of the 327-acre estate, which includes an imposing classically inspired nine-bedroom house, is suitable for planting vines. There are five further dwellings, and planning consent to build another five. The guide price for the whole is £19.9 million, but the sale is split into 10 lots with options for those just looking for blocks of land to establish vines. Please get in touch with Georgie Veale for more information.
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Property markets
Development land Q4 2024 – Housing delivery down
Only 2% of the 50 housebuilders recently surveyed by Knight Frank believe that the sector will deliver the 300,000 new homes that the government is targeting for 2025. The gloomy prognosis is contained in the latest instalment of our Residential Development Land Index report, compiled by researcher Anna Ward, which reveals that the price of green and brownfield development land remained flat in the final quarter of the year, despite Labour’s ambitious housebuilding targets and planning reforms. Download the full report for more insight and data.
Country houses Q4 2024 – Market weakens
The price of houses in rural areas slipped by 0.3% in the final quarter of 2024, according to the latest results from the Knight Frank Prime Country House Index. Overall, values fell by 0.9% during the year. Demand for homes in the countryside has continued to fall since the Covid-19 pandemic, points out Head of UK Residential Research Tom Bill. Exchanges in 2024 were down 20% on the five-year average, he says. However, prices are expected to rebound by almost 18% over the next five years, Tom predicts.
Farmland Q4 2024 – Prices resilient
The farmland market edged up slightly during 2024, according to the latest results from the Knight Frank Farmland Index, which tracks the value of bare agricultural land in England and Wales. Average values started the year at £9,152/acre and, heading into 2025, stood at £9,164/acre, a slight rise of 0.1%. Given the challenges that the farming industry has faced over the past 12 months, this shows the inherent resilience of agricultural land as a multi-functional asset class. Prices, however, did dip in Q4 after Inheritance Tax reforms on farmland were announced as part of the Autumn Budget. For more insight and data please download the full report.