Defective tenancies, COP27, Lamb losses

Viewing COP27 from afar it’s hard to know what to make of it. Agriculture holding centre stage for the first time sounds like it should be good news, and there are certainly plenty of significant climate change initiatives that revolve around farming being announced, some of which I discuss below. But there are still strident accusations of greenwashing and claims that the annual climate change talks have been hijacked by big business at the expense of real farmers. Personally, I always feel you should be wary of people who turn up late to a party, but shout the loudest. The UK’s farmers and landowners need to ensure they get an equitable share of the investment into agriculture and climate change that COP27 promises to unlock.

Do get in touch if we can help you navigate through these interesting times

Andrew Shirley, Head of Rural Research

In this week’s update:

• Commodity markets – Lamb prices lower
• COP27 – Farming belatedly in focus
• Development land – Greenfield values fall
• Tenancies – Defective notices court case warning
• Solar – Scots want parity with England
• The Rural Report – Jersey trustees brought up to speed
• The Farmland market – Video and podcast update
• International news – Half EU arable land faces erosion risk

Commodity markets – Lamb prices lower

While most of the agricultural commodities tracked by the Rural Update are well ahead of 12-month-ago levels, the sheep sector is underperforming. A 2% drop last week took the deadweight price of lamb to a 2022 low. Values are currently 516p/kg compared with 558p/kg this time last year, according to AHDB figures. The cost of living crisis has seen spending on higher value meat cuts fall. The total spend on lamb fell by 12.5% in the 12 weeks to 2nd October, according to Kantar data reported in Farmers Weekly. Producers are hoping that a potential shortage of turkeys at Christmas will help boost lamb sales.

COP27 – Farming belatedly in focus

Given that the food and farming sector will have to play a pivotal role if the world is to hit its climate change ambitions, agriculture’s omission from previous COPs has always been a bit of a mystery to me. Belatedly, however, there is an official food and agricultural pavilion at this year’s UN annual climate change shindig that the organisation claims “will put the transformation of agrifood systems at the heart of the COP agenda for the first time as an important part of the solution to the climate crisis”.

Last Saturday was “Adaptation and Agriculture” day at the talks, but aside from a lot of chat has anything meaningful emerged from the event yet? Perhaps the biggest announcement was that the UN’s Food and Agriculture Organisation is set to create a plan that would show how the food industry and farming can align with the world's goal of capping global warming at 1.5 degrees Celsius.

The move, which would create a roadmap similar to the one already in place for the energy sector, comes after investors managing US$14 trillion urged the UN earlier this year to create a global plan to make the agriculture sector sustainable. Food production accounts for around a third of global greenhouse gas emissions and, but only attracts around 3% of the investment targeted at climate change mitigation.

Another big announcement was a doubling in funding from US$4 billion to US$8 billion for the Agriculture Innovation Mission for Climate. AIM4C is a joint initiative by the US and UAE Emirates that “seeks to address climate change and global hunger by uniting participants to significantly increase investment in, and other support for, climate-smart agriculture and food systems innovation over five years”. However, as is often the case, the announcement didn’t go down well with everybody.

“AIM4C is the latest in a long line of big agribusiness hijacking climate action in bad faith. Despite a wealth of green buzzwords it is dominated by agri-commercial interests.

It’s crowding out the real solutions we need,” Lim Li Ching, Senior Researcher at the Third World Network, told FoodNavigator.com

Development land – Greenfield values fall

The latest results from the Knight Frank Residential Development Land Index make for interesting reading. After a period of sustained growth during the Covid-19 pandemic, greenfield development sites are falling in value – down almost 3% on average in Q3 2022 (although they are still up 5% on an annual basis). Brownfield and prime central London plots, meanwhile, saw no change in the third quarter, but have experienced lower levels of growth over the past 12 months.

Read the full update for more numbers and analysis

Tenancies – Defective notices court case warning

Legal rulings can often be quite baffling and rather arcane, but my colleague Eddie Holloway says landowners need to be aware of the outcome of Thomas v Turner. This recently resolved case revolved around a notice to quit that was sent by the landlord to the tenant. The tenant, however, had without the landlord’s knowledge reassigned the oral 1986 Agricultural Holdings Act tenancy agreement from him personally to a company, albeit one where he was the sole shareholder and director. Because the notice to quit was not served on the company the Court of Appeal ruled that it was not valid.

“This is a significant ruling and one that will have adverse consequences for landowners. At first glance, it emphasises the risks associated with unwritten Agricultural Holdings Act tenancies and the impact these can have on future plans. Beyond that, the ruling has wider implications for the process of serving notices and the reliance on previous case law in terms of defective notices – this impacts all tenancies, not just those under the Agricultural Holdings Act 1986,” points out Eddie.

Solar – Scots want parity with England

It’s not often that the Scottish want to emulate their English neighbours. But, when it comes to roof-mounted solar, renewable businesses and farm leaders are calling for equality. Currently, farmers north of the border can only install 50kW of capacity on their barns under permitted development rights whereas those in England are capped at a more generous 1MW. Thomas McMillian, chair of Solar Energy Scotland said: “Ministers have promised a solar vision document by the end of the year, but right now we cannot find out what they expect to include within it.” For advice on solar and other renewable energy options please contact our rural specialist Robert Blake.

The Rural Report – Jersey trustees brought up to speed

It was great to be part of a team of our rural consultants led by James Farrell that visited Jersey last week to share the key findings of The Rural Report with some of the island’s leading trustcos and wealth advisers. Many of the UK’s rural estates are held in trust, which places substantial obligations on their trustees. However, many of them are often not actively involved with the world of rural estate management so such updates are vital to ensure they can they discharge their roles correctly. If you are a trustee and would like an update on the latest rural issues please get in touch.

The Farmland market – Video and podcast update

As mentioned previously, our Q3 Farmland Market update, which reveals a sharp annual increase in average farmland values, is out now. If reading research reports is not your thing, I’ve packed the key findings into a 60-second video that you may find interesting. You can also listen to my colleague Jessica Waddington and me discuss the farmland market with Knight Frank’s Global Head of Research Liam Bailey in the latest edition of our Intelligence Talks podcast.

International news – Half EU arable land faces erosion risk

A new study from the European Union Joint Research Centre claims that almost half of the bloc’s 100 million hectares of arable farmland is at risk from at least one soil erosion factor. This risk of displacement by water is the most widespread, affecting 57% of the area, but agricultural tillage accounted for 37% of the total potential soil displacement. The new research will inform the EU soil strategy for 2030 enacted last year to cope with land degradation.