Opinion

The UK’s target of hitting net zero by 2050 is a something of a political hot potato at the moment. Politicians claim they still believe in it, but don’t seem brave, creative or joined up enough to enact or stick with the policies required to deliver it. They certainly aren’t embracing the saying: “A society grows great when old men plant trees in whose shade they know they shall never sit under.” But, as yet another land-use study, this time from the RSPB, shows, the countryside and those who manage it are still expected to do an awful lot of the heavy lifting, potentially going beyond even net zero. Too often, farmland is talked about in the abstract as if it is something that can be moulded to the will of politicians and environmentalists with little consequence. People often seem to forget it fulfils the most crucial and basic of functions – feeding society. If that role is to change, the custodians of the land need to be properly rewarded and maybe, just maybe, as suggested to me by the Holkham Estate’s inspirational Jake Fiennes, policymakers need to focus on meaningful incremental change they can be held to account for, rather than a distant line in the sand they take no responsibility for AS

Do get in touch if we can help you navigate through these interesting times. You can sign up to receive this weekly update directly to your email here.

Andrew Shirley, Head of Rural Research; Mark Topliff, Rural Research Associate

In this week's update:

• Commodity markets – Wheat up, oil nervy
• Land use – UK not big enough to hit net zero
• Natural capital – Stop-gap market principles released
• Grain trade – AHDB to review import standards
• Food - Suffolk Council keeps with meat and dairy
• Alternative crops – Welsh tea?
• International news – Kiwi farmers cheer election win
• Scottish moorland – Bracken control ban
• Wales – Emergency cuts to rural budget
• Native breeds – Survey reveals lower cost opportunity
• HS2 – What does the scrapping of the Northern leg mean?
• Warwickshire – Rolling arable block launch
• Country houses – Prices drop
• Farmland prices – Market at peak?
• Development land – Market tumbles
• The Rural Report – Watch the videos

Commodity markets

Wheat up, oil nervy

Feed wheat prices nudged back to the £180/t level last week as analysts shaved a few million tonnes off the estimated global wheat harvest. Oil markets, meanwhile, remain on a war footing with crude prices nudging up to US$93/barrel in the immediate aftermath of the bombing of a hospital in Gaza. Although the terrorist attacks by Hamas on Israel currently pose no threat to oil supplies, traders worry that any escalation of the conflict involving other Middle Eastern countries and militant groups could soon change that AS

Talking points

Land use – UK not big enough to hit net zero

A new scientific paper released by the RSPB last week, which examines nine land-based scenarios that could help the UK achieve its net zero aspirations, has concluded that the country isn’t big enough to deliver them by 2050 without a significant change in our farming and food systems. Wildlife species associated with farmland could also decline.

The scenarios were based on a combination of 10 mitigation measures, such as peatland restoration, organic farming and agro-forestry, adopted at various levels of ambition. The option that maximized the deployment of nature-based solutions reduced greenhouse gas emissions from the land sector by over 100% by 2050 but resulted in a 21% decline in food production.

All mitigation scenarios delivered aggregate increases in habitat availability for 109 bird species (including 61 species of conservation concern), although farmland-associated species lost habitat.

To make up for the drop in food production, the report follows the recommendations of other previous studies by suggesting consumers in the UK will need to eat less meat to free up land currently used for the production of animal feed.

It also notes: “If the UK economy is to reach net zero by 2050, negative emissions are likely to be required to “net out” residual emissions. The land sector is the only sector currently capable of offering negative emissions at scale, so should ideally be providing a net sink by mid-century. For the land sector then, a target of net zero is arguably inadequate.”

The paper is a bit of a numbers and jargon fest, but the Financial Times has created a handy summary if you happen to have a subscription AS

Natural capital – Stop-gap market principles released

Finance Earth, alongside the National Trust, the RSPB, The Wildlife Trusts, the Woodland Trust and Federated Hermes, has developed a set of principles to help underpin the voluntary nature-based markets. Currently, the voluntary market for carbon credits, biodiversity units and nutrient credits has no widely accepted codes or standards, meaning that low quality and poor practice are potential risks. The consortium has produced seven supply-side principles, including science-based nature recovery, environmental and social safeguarding, additionality, permanence and financial prudence, seeking co-benefits, verifiability and transparency. On the demand side, there are two principles: buyer screening criteria and commitment to best practices.

The consortium says: "They are designed as a stopgap, to influence market practice today and to contribute to emerging government policy and regulation." It will be interesting to see how much the nature-based markets take up these principles while they wait for the government-funded development of principles via the British Standards Institute. But what is clear is that both on the demand and supply side, there is a need to ensure these markets operate with high integrity and quality MT

Grain trade – AHDB to review import standards

UK growers have long lamented how they feel the grain trade seems to have double standards when it comes to sourcing UK-grown and imported grain. Many growers complain that what they have to comply with under the UK assurance schemes isn't being replicated by overseas farms supplying the UK market. Well now, the levy body, Agriculture and Horticulture Development Board (AHDB) has commissioned an independent review of assurance in the combinable crops supply chain. The review will examine the "transparency and clarity on the quality, traceability, testing requirements and process for grain to enter all end markets, outside of the existing UK assurance schemes." The review is due to report back by Spring 2024 MT

Food - Suffolk Council keeps with meat and dairy

Suffolk County Council has broken away from the vegan trend by throwing its weight behind livestock farmers. In a resounding show of support, the council passed a motion to always offer locally sourced meat and dairy options alongside plant-based choices at its catered events. Following the lead of Cornwall and North Northamptonshire councils, Suffolk is the third to stand up for traditional agriculture. The motion also encourages residents to shop locally, emphasising the importance of supporting homegrown produce. With unanimous backing from 59 councillors, it aims to bolster the local economy, reduce food miles, and celebrate the vital role Suffolk farmers play in the region MT

Alternative crops – Welsh tea?

Darjeeling? Assam? Keemun? Nope, if you’re looking for the most expensive tea on sale at Fortnum & Mason it’s from Scotland. Now Wales could be jostling for that position after a Powys hill farmer planted 140 Camellia sinensis tea bushes around her farm to see if they have the potential to offer a new income stream. The funding for the project came from the Farming Connect “Try out” programme that offers farmers up to £5,000 to investigate new business opportunities AS

For more details of more innovation-encouraging grants please contact our expert Henry Clemons.

International news – Kiwi farmers cheer election win

New Zealand’s farmers worried about a raft of new environmental legislation have helped end six years of Labour rule. The right-leaning National Party scored the most MPs at the country’s recent general election and will lead a coalition government. The powershift may eventually open New Zealand’s farmland market to overseas investors again. Currently, non-domestic buyers must satisfy a number of strict tests AS

Need to Know

Scottish moorland – Bracken control ban

The use of the herbicide Asulox in Scotland to control bracken has now been effectively banned after its manufacturer UPI said it would not be seeking to support the product for that use. NFU Scotland has warned that Scottish hillsides could now become “tick-laden bracken monocultures.” AS

Wales – Emergency cuts to rural budget

The Welsh government's announcement of a £37.5 million reduction in the rural budget has raised serious concerns within the farming sector. Minister for Finance Rebecca Evans revealed the budget cut is an effort to address financial shortfalls. The rural affairs revenue budget is set to decrease by £17.3 million, while the rural affairs capital budget faces a £20.2 million cut. The entire rural budget, including agriculture, comprises only 2% of government spending.

This comes as funding for farmers has effectively fallen by 30% in the last decade due to inflation. NFU Cymru expressed worries about the financial burden this places on farms already serving Welsh communities amidst various pressing demands. Detailed allocations within the rural budget are expected to be confirmed in February, with the Rural Investment Programme anticipated to bear the brunt of the cuts, impacting investments in environmental and climate change initiatives MT

Native breeds – Survey reveals lower cost opportunity

Advocates argue that opting for native breed livestock can shield farmers from rising feed and supplement expenses. A recent survey by the Rare Breeds Survival Trust (RBST) reveals that native breeds prove more cost-effective for 69% of respondents than continental breeds. Notably, 59% of farmers find that feed and supplement costs are lower with native breeds. The cost-saving benefits extend to land and veterinary expenses, with 62% experiencing lower land-related costs and 53% seeing reduced veterinary expenses.

However, one significant obstacle for farmers choosing native breeds is the lack of suitable abattoirs, which 35% of respondents highlighted. RBST's CEO, Christopher Price, sees native breeds as a robust path to commercial success, especially as input costs continue to surge. He also welcomed Defra’s Small Abattoir Fund as a step toward addressing this issue MT

HS2 – What does the scrapping of the Northern leg mean?

For those who are in the “safeguarding” zone of the Northern leg of HS2, or have even had their homes or parts of their farming businesses already compulsorily purchased, Rishi Sunak’s announcement that HS2 will no longer go further than Birmingham will have opened up a whole can of questions. Luckily, my colleague Mark, in conjunction with our compensation experts Jonathan Scott-Smith and Tim Broomhead, has produced a handy Q&A guide. Do get in touch if you’d like a copy AS

On the market

Warwickshire – Rolling arable block launch 

Our London and Stratford upon Avon teams have just launched Kingston Farm, near Leamington Spa. Guided at £4.25 million, the 370-acre predominantly arable unit includes 40 acres of pasture and woodland and a four-bedroom agriculturally tied cottage with a lifetime tenant. The arable land is contract farmed. The property is available in five lot. Please contact Georgie Veale for more information AS

Yorkshire gold – Compact farm for sale

Following a series of new releases from our London-based Farms & Estates team, my Yorkshire colleagues Zoe Coulson and Claire Whitfield have got into the act with the launch of Woodlands Farm near Ripon. The 165-acre – split roughly three ways between grass, arable and woodland – unit includes an attractive modern four-bed house with an agricultural occupancy condition and a range of modern buildings. Contact Claire or Zoe for more information. The guide price is £2.5 million AS

Our latest property research

Country houses – prices drop

The value of a home in the countryside is falling at the fastest rate since the global financial crisis, according to the latest instalment of the Knight Frank Prime Country House Index compiled by my colleague Chris Druce. In Q3 2023 average prices dropped by just over 2% taking the 12-month slide to over 8%. Despite the slump, values are still 12% higher than they were in June 2020. Chris says there is a bit of stalemate in the market as sellers cling to last year’s prices, while purchasers are angling for big discounts. Read the full report AS

Farmland prices – Market at peak?

The latest edition of The Knight Frank Farmland Index has now been published. The average value of bare agricultural land rose by 1% in the third quarter of the year to just shy of £9,000/acre. Annual growth was 8%, which outperformed a number of other asset classes (see chart). Our research suggests values may remain flat into 2024. Read the full report for more insight and analysis AS

Development land – Market tumbles

The outlook for the UK economy weighed on the residential development land market in the second quarter of this year, leading to a slowdown in activity and a decline in land prices across the board, according to the latest instalment of Knight Frank's Residential Development Land Index.

My research colleague Oliver Knight says: "We've noted previously how the economics of developing new homes in England is challenging. A slower sales market, issues related to nutrient neutrality, biodiversity net gain, higher build costs and local plan failures have all forced housebuilders to rein in construction expectations. The result? Downward pressure on land values."

Average greenfield land prices fell by 6% on the quarter, taking the annual decline to almost 15%. Prices for brownfield land showed a similar trajectory, dropping 6% on a quarterly basis and 18% annually AS

The Rural Report – Watch the videos!

You've read the book, now watch the videos! To complement the thought-provoking articles contained within this year's edition of The Rural Report our whizzy Marketing team has also created a series of videos featuring many of the report's contributors. Head to our very own YouTube channel to discover more about biodiversity net gain and regenerative farming; find out how we are helping Guy Ritchie's Ashcombe Estate on its diversification journey; and read about the travails of an entrepreneurial Zimbabwean searching for a farm for his family. Plus, lots more AS