The Rural Update: Food security and the economy
Your weekly dose of news, views and insight from Knight Frank on the world of farming, food and landownership
7 minutes to read
Viewpoint
There are valid reasons why people might be wary of too many ground-mounted solar farms in the countryside. For starters, it is hard to argue they are more aesthetically pleasing than open fields. But Defra’s latest planting figures show why food security isn’t really one of them. Last autumn’s rotten weather meant hundreds of thousands of hectares of land went undrilled, contributing to England’s lowest planted area of grains and oilseeds in decades.
Adverse climatic conditions are potentially going to have far more impact on food security or self-sufficiency in the UK than alternative land uses like renewable energy or environmental schemes. The best farmland is already protected under UK planning regulations and, even if the government’s solar aspirations were delivered in full, the total acreage under panels would account for a fraction of the country’s farmland. Food security is a complex and emotive issue and, as a new Policy Exchange report discussed below highlights, just focusing on agriculture is not the answer.
Commodity markets
Cereal area down
A hike in the acreage of spring-sown crops was not enough to stop the area of farmland in England under grains and oilseeds slumping to a 20-year low in 2024, according to Defra’s final planting estimates. Last year’s wet autumn saw the area of wheat planted drop by 11% to 1.4 million hectares. Oilseed rape fell by almost 30% to 244,000 hectares. The total area of barley, however, increased, as farmers managed to drill just over half a million hectares during the spring.
Inheritance tax plea
The Chancellor Rachel Reeves has vowed not to increase income tax, national insurance and VAT as part of her first budget on 30th October. But given she has repeatedly claimed she has a £22 billion financial black hole (see article below) to fill, something else will have to give.
Even though Defra minister Steve Reed said, before the general election, they were not in the firing line, there are increasing worries that Agricultural Property Relief (APR) and Business Property Relief (BPR) could be under threat.
The reliefs allow the current generation of farming businesses to make long-term plans, which could benefit the UK’s food security and their local economy, knowing that their successors will not be faced with punitive death duties that could force farms to be split up or even sold. A recent CLA survey found 86% of its members would expect some of their land to be sold off after their death if APR was abolished.
Unlike other capital reliefs, APR also applies to let property, providing an important boost to the UK’s tenanted farming sector. The CLA is advising all rural businesses worried about the potential scrapping of APR and BPR to write to their MPs.
News in brief
Defra budget cuts
Last week we warned that government support schemes for agriculture could be under pressure as Labour looks for savings to plug its now infamous £22 billion black hole. Since then, it has emerged that the Defra budget could be cut by £100 million. According to media reports, Defra officials have offered up the money – which the previous government had allocated to environmental schemes but never spent – to prevent more vicious cuts being imposed on the department. As reported in Farmers Weekly, some environmental payments that are currently universally available could also become competitive.
Tenancy changes kick in
Agricultural landlords and tenants with Agricultural Holdings Act 1986 tenancies need to be aware of changes to succession rules that kicked in from the beginning of September. Alastair Paul comments: “There are two fundamental changes, and, in my opinion, both are beneficial. The commercial unit test was a useful tool for landlords to gain vacant possession but in truth, it made no sense to drive larger and more entrepreneurial farmers out of the tenanted sector. A strengthened suitability test for potential successors with a higher bar of environmental standards is vital to ensure a focus on more sustainable farming.” Contact Alastair for more information and advice.
Food security suggestions
A new report from the think tank Policy Exchange says the government should develop a national food security strategy that encompasses the entire food ecosystem rather than focusing too narrowly on agriculture. Strengthening the UK’s Food Security: Innovation and Investment in the Food Manufacturing Sector argues that food security should lie at the heart of industrial strategy and plans for growth.
Green prescription success
An academic review of a £5.8 million government trial scheme to assess the effectiveness of tackling mental ill health through green social prescribing has shown it helped patients and delivered value for money. The happiness, life satisfaction and anxiety scores for the 8,500 people prescribed with access to nature-based activities improved significantly. Financially, every £1 spent delivered £2.42 of benefits.
EU farming vision
A new report on the future of farming in the EU has called for a new culture of cooperation, trust and multi-stakeholder participation. The pithily titled Strategic Dialogue for the Future of EU Agriculture was commissioned by European Commission President Ursula von der Leyen in the wake of widespread protests by farmers who claimed the EU’s focus on the environment and climate change was being delivered at their expense. The report includes 14 recommendations for EU policymakers.
Bluetongue update
As of Sunday, 34 cases of bluetongue virus had been reported in the restricted livestock movement zone, which now covers part of Greater London as well as Norfolk, Suffolk and Essex. You can find the latest updates on the spread of the disease and what measures stock farmers are being advised to take here.
Research
Country houses - Dipping but outlook brighter
The average value of country houses nudged down by a further 0.6% in the second quarter of the year taking the 12-month fall to 3%, according to the latest results from the Knight Frank Prime Country House Index. Homes priced between £1 million and £2 million recorded the biggest annual fall of almost 4%, while those worth between £4 million and £5 million dipped by just 0.4% - potential buyers at this level are less dependent on mortgage funding, points out Head of UK Residential Research Tom Bill. He predicts a total average price slide of 2% this year, with values bouncing back by 3% in 2025 as interest rate cuts boost market confidence.
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
Warwickshire arable block
This week’s property will appeal to farmers and investors looking for a handy block of arable land in the Midlands unencumbered by too much residential value. Kingston Farm, at Chesterton, near Leamington Spa, is a 255-acre ring-fenced parcel of predominantly arable soil with 10 acres of pasture and woodland. All the arable land is currently farmed under a contract farming agreement. An agriculturally tied farm cottage occupied under a lifetime tenancy is included. The guide price is £3,000,000. Please contact Georgie Veale for more information.