The Knight Frank Rural Property and Business Update – 31 May

Newly released farm income figures from Defra should dispel any complacency about the sharp reductions set to hit farmers’ Basic Payment Scheme (BPS) claims. Although still provisional, the new Total Income from Farming (TIFF) accounts for 2020 show how dependent the UK’s farming sector is on financial support. Of the total TIFF figure of £4.1 billion, a meaty £3.2 billion was accounted for by subsidy payments. With commodity prices far higher this year, the 2021 results should be much improved, but that shouldn’t be an excuse for delaying action to wean businesses of their subsidy dependence.

The Rural Update will be taking a half-term break next week. Enjoy the predicted sunshine.

Please do get in touch with me or my colleagues mentioned below if you’d like to discuss any of the issues covered. We’d love to hear from you

Andrew Shirley, Head of Rural Research

In this week’s update:

• Commodity markets – Nitrogen prices higher than expected
• Farm profits – Incomes tumble in 2020
• The Rural Report – Sign up to watch our launch video
• Brexit – Meat processors lament staff shortages
• Woodland – New tree planting grant scheme set to open
• Overseas news – Mice overrun Australian farms

Commodity markets – Nitrogen prices higher than expected

Typically, grain prices look like they are easing slightly just when farmers will need to start thinking about securing their new-season fertiliser requirements. As reported in Farmers Weekly on Friday, the first tranche of ammonium nitrate prices for June/July delivery have been set at around £280/t delivered, around £75/t higher than this time last year. Strong global demand and high gas prices is behind the rise.

Farm profits – Incomes tumble in 2020

Bad weather and the Covid-19 pandemic saw the UK’s Total Income from Farming (TIFF) fall by £768m last year, according to the first estimates for 2020, which were released by Defra last week. The 16% drop on 2019’s figures meant TIFF was just £4.1bn, of which £3.2bn was accounted for by subsidy payments.
Crop output fell by almost £1bn, while Covid wiped off £310 million of diversified income. The results would have been even direr if the livestock sector hadn’t managed to increase output by £490m.

Read the full accounts

The Rural Report – Sign up to watch our launch video

This year’s edition of The Rural Report, our unique publication for rural landowners and their advisors, is just about to hit the presses. We’d be delighted if you could join us for the launch video on 1 July. It’s been a lot of fun making it and I think you’ll find it both entertaining and informative.

Sign up to watch The Rural Report launch video

Brexit – Meat processors lament staff shortages

The UK’s meat sector is calling on the government to add butchery to its list of occupations that are considered short of staff. Meat processors say they are facing a significant labour shortfall as many workers have yet to apply for settled status to remain in the UK and Brexit means no employees will be able to come from mainland Europe seeking work.

Woodland – New tree planting grant scheme set to open

The England Woodland Creation Offer (EWCO), funded through the Nature for Climate Fund and designed to support the creation of over 10,000 hectares of new woodland over its lifetime, is due to open to soon.

EWCO, which will cover capital costs, replaces the Woodland Carbon Fund, which closed for applications in March 2021. It includes extra incentives for the creation of new broadleaved woodlands, especially those that extend existing priority woodlands, benefit water habitats, mitigate flooding or provide access to the public.

Find out more

Overseas news – Mice overrun Australian farms

Last week I noted the huge losses faced by Africa’s farmers due to invasive species. This time it’s Australia’s turn to be hit by a plague of biblical proportions. Watching the news the other evening I was staggered to see footage showing farmyards and grain stores in New South Wales covered with carpets of mice. Apparently the rains that followed a long drought have assisted the population explosion.

Watch a video of the plague

Photo by Nick Fewings on Unsplash