UK rural property: Defra, food and floods
The Knight Frank Rural Property and Business Update – Our weekly dose of news, views and insight from the world of farming, food and landownership
13 minutes to read
The revolving doors of government keep on spinning at Defra. Following Rishi Sunak’s recent reshuffle Steve Barclay will be the ninth minister in almost as many years. Some rural businesses won’t be shedding a tear over the off his predecessor Thérèse Coffey. But what most do want is stability and certainty. Another change at the top of Defra doesn’t instil confidence that will happen, especially with a general election looming. Barclay will be arriving at a department with a lot on its plate. Although experience of dealing with the NHS in the last year may put him in good stead, it will be no less an easy ride MT
Do get in touch if we can help you navigate through these interesting times. You can sign up to receive this weekly update direct to your email here
Andrew Shirley, Head of Rural Research; Mark Topliff, Rural Research Associate
In this week's update:
• Commodity markets – Oilseed rape pest strike again
• Defra – Coffey out, Barclay in
• Flood protection – NAO criticises gov spending forecasts
• Energy – Act finally gets royal assent
• Glyphosate – EU’s ten-year reprieve for weedkiller
• Food – First city to back local livestock farmers
• Food – Long-term health risks from ultra processed foods
• Carbon – Grain trader launches farm sustainability payments
• Energy targets – Reductions for poultry and horticultural businesses
• Tenant-landlord relations – Defra seeks industry feedback
• Floods – Scottish support will be available
• Livestock – Bluetongue found in Kent
• Out and about – Somerset soiree
• Land at Simonsbath – Rare piece of Exmoor for sale
• Development land – Prices still falling
• Country houses – Prices drop
• Farmland prices – Market at peak?
• The Rural Report – Watch the videos
Commodity markets
Oilseed rape pest strike again
At the United Oilseeds annual conference last week, it was warned that UK oilseed rape production could reach its lowest level for many years resulting in a significant increase in imports. The cooperative forecast 2024 production falling under 1 million tonnes due to recent cabbage stem flea beetle damage in many crops and a smaller planted area. Downward rape production revisions have not been confined to the UK. German forecasts have been dropped by 4-7% due to lower prices impacting the planted area.
One fall in price that has been welcomed is for red diesel. Prices have now dropped below 80p per litre – 20% lower than a year ago MT
Talking points
Defra – Coffey out, Barclay in
Rishi Sunak gave his cabinet a bit of a shake up last week moving Steve Barclay, previously health secretary, in to oversee Defra in light of Thérèse Coffey resigning. Barclay becomes the ninth Defra minister in 10 years and represents the largely rural constituency of Northeast Cambridgeshire in the Fens. However, Mark Spencer remains as farming minister, but Trudy Harrison stepped down as the environment minister to be replaced by the MP Keighley and Ilkley, Robbie Moore. Richard Benyon whose duties includes green finance stays on as Minister of State in Defra and also takes on a similar position in the Foreign, Commonwealth and Development Office MT
Flood protection – NAO criticises gov spending forecasts
Around 40% fewer properties than planned will be provided better flood protection by 2027 according to a National Audit Office (NAO) report released last week. Despite the government doubling the capital funding to £5.2 billion for protection projects, it says that “inflation alone accounts for between half and two-thirds of the reduction in the forecast.”
The government does acknowledge that building new flood defences and maintaining existing ones is no longer enough and that a wider range of interventions is now needed to build resilience against increasing flood risk. However, the NAO points out that the Environment Agency (EA) has also reduced the environmental benefits the capital programme will deliver. The NAO highlights that the EA will now create or improve 3,875 hectares of habitat by 2027, a 29% reduction on its original forecasts. The length of rivers to be enhanced is now reduced by 18% to 684 km. But, following a recent funding announcement, Defra and the EA are still forecast to achieve spending on 260 nature-based solution projects such as restoring wetlands or planting trees.
Knight Frank’s Geospatial team can look at potential flooding risks to properties downstream from estates to help identify where nature-based solutions on those estates would help communities. Get in touch if you would like to know more MT
Energy – Act finally gets royal assent
It may have taken over a year to pass through Parliament but the Energy Act 2023 is the most significant piece of legislation affecting the energy sector since 2013. The scope of the Act is vast, covering a wide range of policy areas from the licensing of carbon dioxide transport and storage to the environmental assessments system for offshore wind.
Of interest to rural landlords, estates and farms will be: extension of powers around the rollout of smart meters, clarity of definition around electricity storage for regulatory purposes and encourage adoption, provisions to regulate the energy efficiency of premises and powers to regulate local heat networks. The latter may be of particular interest for rural properties that are ‘off-grid’. But many sections of the Act are about laying the groundwork for future legislation MT
Glyphosate – EU’s ten-year reprieve for weedkiller
After much deliberation, the European Commission has opted to reauthorise the herbicide glyphosate for another decade across the European Union, albeit with stricter regulations and limitations. This decision has sparked mixed reactions, with proponents hailing it as a science-based approach and opponents voicing concerns over potential health and environmental risks. The reauthorisation comes with several new stipulations, including a ban on pre-harvest use as a desiccant and measures to safeguard non-target organisms. This aligns with the European Food Safety Authority's (EFSA) recent assessment deeming glyphosate unlikely to pose a carcinogenic threat to humans.
Despite the EFSA's findings, public sentiment remains divided. An IPSOS poll revealed that only 14% of citizens across six EU countries support glyphosate's continued use, with 62% favouring a ban due to health concerns. The reauthorization of glyphosate highlights the intricate balancing act between agricultural productivity, environmental protection, and public health concerns. While the science-based approach has prevailed, the debate surrounding glyphosate's long-term impact is likely to continue MT
Food – First city to back local livestock farmers
We recently reported the move by Suffolk Council to support the sourcing of meat and dairy for its catered events. Well hot on its heels, Portsmouth City Council has unanimously passed a motion to support local farmers. The council has committed to sourcing all catering at its events from local producers, including meat, dairy, and plant-based options, aiming to reduce food miles to tables. Additionally, they plan to encourage residents to 'shop local' and explore the possibility of local businesses selling products near Portsmouth Cruise Terminal. This decision stands in contrast to the trend of councils banning meat and dairy MT
Food – Long-term health risks from ultra processed foods
Following on from Andrew’s coverage last week of a recent FAO report revealing unhealthy diets are costing society trillions of dollars a year, it was interesting to read a new study into the impact of ultra-processed foods (UPFs). The Lancet-published study by 35 scientists across Europe reveals that heightened consumption of UPFs elevates the risk of cancer and multiple chronic heart conditions. The research, involving 266,666 participants from seven European countries, highlights associations between UPFs and chronic morbidity and multi-morbidity. Associations were most notable for animal-based products, and artificially and sugar-sweetened beverages. Other subgroups such as ultra-processed breads and cereals or plant-based alternatives were not associated with risk MT
Carbon – Grain trader launches farm sustainability payments
Cefetra has launched a ground-breaking sustainability initiative, Ecosystem Services, in collaboration with independent agronomy firm Soil Capital. The programme aims to connect Cefetra customers seeking sustainable suppliers with farmers seeking financial returns from sustainable practices. Said to be the first of its kind, Ecosystem Services sets high standards for climate-positive supply chains and rewards growers for adopting sustainability. Available for 2024 crops in the UK and Ireland, the initiative assists farmers in reducing carbon emissions and link those to the sustainability payments. The Cefetra and Soil Capital partnership offers a toolkit based on individual farm data, enhancing the sustainable appeal of farmers' supplies to align with buyers' environmental goals through the certified programme MT
Energy targets – Reductions for poultry and horticultural businesses
Horticulture and poultry industries will benefit from an extended Climate Change Agreement (CCA) scheme following successful negotiations on new targets. Initially proposed by the Department for Energy Security and Net Zero, the challenging 40.9% energy efficiency target for horticulture and 12% for poultry raised concerns.
Climate change agreements are voluntary agreements made between UK industry and the Environment Agency to reduce energy use and carbon dioxide (CO2) emissions. In return, operators receive a discount on the CCL (Climate Change Levy), a tax added to electricity and fuel bills.
NFU Energy and the NFU advocated for more realistic goals, prompting an extension of the CCA scheme until March 2027.
Revised targets now stand at 13% for horticulture and 10% for poultry, acknowledging the sectors' unique challenges. This change is hailed as a significant victory for participating businesses, ensuring more achievable and sector-appropriate reduction targets MT
Need to Know
Tenant-landlord relations – Defra seeks industry feedback
The Department for Environment, Food and Rural Affairs (Defra) has launched a call for evidence to gather insights on the prevalence of poor practices in the tenanted farming sector. This initiative aligns with the recent Rock Review's recommendations to enhance tenant-landlord relations and promote industry-wide best practices. Defra seeks feedback on the effectiveness of existing complaint mechanisms and the potential role of a Tenant Farming Commissioner to oversee conduct and advocate for responsible practices. The call also explores the need for improved communication and collaboration between landlords, tenants, and advisors on crucial business matters like tenancy renewals and rent reviews.
Farming Minister Mark Spencer encouraged farmers, landlords, and advisors to engage in the consultation process, which will run until 8 February 2024. This call for evidence is one of several other initiatives undertaken by Defra to implement key Rock Review recommendations. These include establishing the Farm Tenancy Forum, enhancing tenant access to post-Brexit Environmental Land Management schemes, and developing a new code of practice for responsible conduct in tenancy agreements. Read Alastair Paul’s article on why landlord-tenant relationships need to change MT
Floods – Scottish support will be available
Scottish farming businesses grappling with the aftermath of Storm Babet-induced flooding will be able to seek relief through government grants. The Scottish government has unveiled a support package to aid recovery in the wake of the storm, marked by an uncommon 'danger to life' red weather warning. Particularly impacting rural communities primarily in Angus and Aberdeenshire, individuals and businesses affected by Storm Babet can apply for grants from two newly established funds. Individuals facing property damages due to flooding can receive £1,500, while businesses demonstrating a significant trading setback can access £3,000. Local authorities will administer the grants, and the Scottish government promises to provide details on accessing the funds soon MT
Livestock – Bluetongue found in Kent
Farmers situated within the 10km temporary control zone (TCZ) established in response to a bluetongue outbreak in Kent are urged to adhere to legislation and guidelines, according to Defra. The TCZ was implemented around a Canterbury farm following the confirmation of a single case of bluetongue virus 3 (BTV 3), a notifiable exotic disease, in a cow. The Animal and Plant Health Agency (APHA) is actively investigating the November 11 outbreak.
Dr Joseph Henry, chair of the Ruminant Health & Welfare bluetongue working group, emphasises continued compliance within the TCZ, where animal movements are restricted pending APHA's disease assessment. Specific licenses for urgent movements due to welfare needs can be sought. Farmers are advised to anticipate surveillance testing by APHA and ensure they have up-to-date documentation. The emergence of the new BTV 3 strain is lacking a current vaccine MT
Out and about – Somerset soiree
It was great to head back to the Southwest for the first time in a while last week. I was in the Mendips as a guest of the North Somerset Rural Business Forum talking to a group of 70 farmers and rural businesses over dinner about my thoughts on the farmland market and the challenges and opportunities facing agriculture at the moment. It was clear that many of the issues, such as natural capital, potential tax and political changes, not to mention succession concerns, were on the minds of many of the audience. Do get in touch if we can help in any way AS
On the market
Land at Simonsbath – Rare piece of Exmoor for sale
Our Farms and Estates team, in conjunction with our Bristol office, is selling 390 acres of pasture, improvable grazing land and moorland on Exmoor near Simonsbath, Somerset. The land is in a private location, and offers opportunities for existing traditional farming as well as for natural capital and nature recovery. The guide price is £1.77 million. Contact Will Matthews or John Williams for further information MT
Our Latest Property Research
Development land – Prices still falling
The latest findings from our Residential Development Land Index show values are continuing to fall. “UK greenfield and urban brownfield values fell on average by 2.4% and 2% respectively in Q3 2023. In prime central London, land prices were flat during the quarter,” writes my colleague Anna Ward. “Average urban brownfield land values across England have now fallen by 20% since the most recent peak of the market in the first quarter of 2022 up to Q3 this year, with greenfield values down 17% during this period. But this quarter we have seen price falls start to moderate in nearly all areas,” adds Anna AS
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
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
Photo by Dean Xavier on Unsplash