The Rural Update: Green investment
Your weekly dose of news, views and insight from Knight Frank on the world of farming, food and landownership.
8 minutes to read
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A lot has been said about the growing demand for agricultural land from environmentally focussed investors, but in reality, the farmland market is still dominated by lifestyle and farmer buyers.
Part of the reason has been a lack of suitable product for investors to get their teeth into. So, the launch this week by our Farms & Estates team of the stunning Far Ralia estate (see below for more details) in the Cairngorms that, with a wide variety of landscape restoration opportunities will appeal to investors as well as private owners, will be an interesting test of the market.
Although institutional ownership of land can evoke strong feelings in some, even when bought for environmental purposes, managing assets on behalf of individuals, such as pensioners and insurance holders, effectively democratises land ownership. Nature recovery is also being funded through our collective pension savings, without the need for additional financial burdens being placed on the public sector. Something policymakers will be quite keen on if Chancellor Rachel Reeves’ statement to parliament on Monday (also discussed below) was anything to go by.
In this week's update:
• Budget to cope with volatility
• Labour cans infrastructure investment
• Welsh farm minister aims high
• Crown Estate joins GB Energy
• Scottish park proposal slated
• Land management by the courts
• Cultured foie gras on the menu
• Audit Office questions SFI value
• Modern estate ownership
• Health & safety warning
• Farmland - Values hold firm
• Development land - Market stays flat
• Over-ready green investment
Commodity markets
Budget to cope with volatility
Grain and oilseed prices continued their rollercoaster ride last week, bouncing back off the back of yield and quality concerns in parts of Europe and Ukraine. “At the moment markets don’t really have any obvious direction - marketing grain at the early stages of harvest has always been a vulnerable position to take,” says Andrew Martin of Knight Frank’s Agri-consultancy team. “But knowing your costs of production, backed up by accurate budgeting and cost control, will help you make sensible marketing decisions,” he points out. Contact Andrew for help with any aspect of budgeting, forecasting or cost analysis.
Headlines
Labour cans infrastructure investment
So the blame game begins. In a brutally accusatory statement to the House of Commons on Monday (July 29th) the Chancellor Rachel Reeves said she was having to scrap a number of rural infrastructure projects and find more departmental savings because the £20 billion or so “blackhole” left by the former Conservative administration was even bigger than expected. The Stonehenge tunnel on the A303 and the A27 Arundel bypass are victims of her cuts, as is the Restoring your Railways initiative. £3 billion of departmental cuts will need to be made, which could have an impact on Defra. Reeves said she also expected departments to cut their back-office costs by 2%.
The Chancellor also announced that the autumn budget would be held on October 30th. Although she said taxes on working people – income tax, VAT and national insurance – would not be raised she said “hard decisions” would need to be made. Hopefully, this will not involve any of the tax allowances like agricultural property relief that protect farming businesses and which Labour has previously said are not under threat. However, given that Reeves unexpectedly removed the winter fuel allowance from those pensioners not receiving pension credits or other means-tested benefits, she appears unafraid of making controversial decisions.
In brief
Welsh farm minister aims high
Welsh farmers are hoping that Huw Irranca-Davies, who was recently appointed Cabinet Secretary for Climate Change and Rural Affairs, will keep his countryside brief after being confirmed as Deputy First Minister following a joint leadership bid with Health Secretary Eluned Morgan who will become Wales’ first female leader after the resignation of Vaughan Gething. One of Irranca-Davies’ first decisions was to pause the roll out of Wales’ controversial sustainable farming initiative following an outcry from producers.
Crown Estate joins GB Energy
Following The Crown Estate Bill in the King’s Speech, which we discussed last week, it has just been announced that the estate, which has a £16 billion portfolio of land and seabed, is entering into a new partnership with Great British Energy, a Labour government’s flagship project, to support the accelerated delivery of clean energy infrastructure. The government claims the initiative could unlock £60 billion of private investment into the renewable sector, while The Crown Estate estimates the partnership will lead to up to 20-30GW of new offshore wind developments reaching seabed lease stage by 2030, enough power for the equivalent of almost 20 million homes.
Scottish park proposal slated
After a nationwide search, Scottish government ministers have decided that the country’s third National Park should be located somewhere in Galloway and potentially include parts of Dumfries and Ayrshire. If approved, the new park will join the Cairngorms and Loch Lomond & the Trossachs. Eco quango NatureScot will now undertake a consultation process and report back to ministers by the end of April 2025. NFU Scotland, however, has criticised the plan claiming it would have a significant impact on the farming economy in such an agriculturally productive region.
Land management by the courts
The Rural Update has previously touched on how the courts are increasingly being used by campaigners to drive government policy. The latest example is a potential move by environmental legal group Wild Justice to force Dartmoor commoners to reduce stocking rates in the National Park. The organisation has written to the Dartmoor Commoners’ Council (DCC) and says if it doesn’t receive a satisfactory response, it will apply for a judicial review of DCC’s failure to maintain and enhance protected sites on Dartmoor’s commons.
Cultured foie gras on the menu
The idea of cultured meat grown in a lab is a big turn off for many people - it’s even been pre-emptively banned in Italy. But if it helps mitigate animal welfare concerns it might find some more friends. Gourmey, a French food startup, has become the first company to apply for EU market access for “lab-grown” meat submitting an application for a cell-based duck product to the European Commission last week. The novel food would be used for foie gras, traditionally, and somewhat controversially, made from the bloated liver of a force-fed duck or goose.
Audit Office questions SFI value
A National Audit Office value-for-money review of the government’s Farming and Countryside programme published last week has raised concerns about elements of the programme, including the Sustainable Farming Initiative (SFI). It says Defra’s iterative approach to the SFI has made it harder for farmers to plan and it says the evidence is inconclusive as to whether the programme is delivering the productivity benefits that will be needed to make up for the phasing out of the Basic Payment Scheme.
Knowledge exchange
Modern estate ownership
If you’ve ever wondered how Knight Frank’s Rural Consultancy team helps its clients to make the most of their estates in the 21st Century this article offers a small glimpse. Focusing on the stunning Ingleborough Estate in the Yorkshire Dales and Squerryes, an entrepreneurial 2,500-acre estate and vineyard on the Kent Downs, it shows how innovative rural estates are providing visitors with experiences that are both inspiring and educational.
Health & safety warning
Farming and forestry remains Britain’s most dangerous industry accounting for 20% of workplace deaths, despite only employing 1% of workers, according to new figures from the Health & Safety Executive. In the 12 months to the end of March 2024, 27 people died on farms, including four members of the public, two of whom were children. As a reminder of the risks associated with farms, it’s probably worth a rewatch of the public information film Apaches, which was staple viewing during summer camps in the 1980s and recounts the increasingly gruesome deaths of a gang of six children playing on a farm.
Research
Farmland - Values hold firm
The farmland market in England and Wales shrugged off the potential impact of the recent general election to register another quarterly price increase, according to the latest results from the Knight Frank Farmland Index. Average values nudged up by almost 1% in the second quarter of the year to hit £9,335/acre. For more insight and data please download the full report.
Development land - Market stays flat
The value of greenfield development sites remained static in the second quarter of the year, according to the latest results of the Knight Frank Residential Development Land Index. Over the past 12 months the index is down 2%. According to Anna Ward, who compiles the index, developers have welcomed Labour’s commitment to reinstate local housing targets and recruit more planning officers. But with interest rates failing to shift and build costs increasing, homebuilders still face significant headwinds, she adds. Download the full report for more insight and data.
Property of the week
Over-ready green investment
Plenty of stunning farms and estates have graced The Rural Update, but this week’s property is genuinely unique and is set to be an intriguing test of the market for land-based green investments. Far Ralia, a 3,668-acre block of land in Scotland’s Cairngorm’s National Park, offers one of the largest quantified forestry and peatland carbon sequestration opportunities in the UK. It includes a fully funded and approved 2,103-acre tree-planting programme of close to 1.5 million trees. Planting is already underway, with 75% of the trees now planted with four of the five planting compartments complete. It is a unique opportunity to become involved in a significant nature restoration project that will transform the landscape and with potential to sequester 350,000t of carbon, will help in the battle to tackle climate change and habitat degradation. The guide price is £12 million. Watch the video to be inspired and for more information please contact Claire Whitfield.