The Rural Update: Look for opportunities
Your weekly dose of news, views and insight from Knight Frank on the world of farming, food and landownership
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The latest issue of The Rural Report, our thought-leadership publication for the countryside, has just been released and includes a wealth of information, insight, advice and thought-provoking interviews to help businesses take advantage of those opportunities. If you haven’t already received a copy please get in touch to request one. To whet your appetite, this week’s update includes links to a selection of new articles from the report.
This update, by its news-led nature, often includes details of new challenges facing rural landowners, especially in an era of political change. But that’s not to say there aren’t many opportunities available to forward-looking farms and estates, whether from nature-based solutions, delivering social value or using new technology to help businesses run more efficiently and sustainably.
Commodity markets
Oil nudges up
Crude oil and diesel prices rose slightly last week amid fears that Iran could be drawn into the fighting between its proxy Lebanon-based terror group Hezbollah and Israel. However, weak global demand means the rises so far have been more muted than some might have expected.
Inputs down, outputs up
The average price of agricultural inputs fell by 3.2% in the 12 months ending July, according to Defra’s latest Agricultural Price Index. Seven of the 12 inputs tracked dropped, with compound feeds (-1.7%) the biggest faller. Building materials, however, were up 0.4%. On average, output prices increased by 4.5% over the same period. Potatoes (+2.9%) and milk (+1.8%) were the biggest gainers. But wheat dropped 0.3%.
Alternative land use figures revealed
For the first time, Defra’s annual agricultural land-use survey includes figures for how much of England’s 8.7 million hectares of farmland has been taken out of production for environmental schemes and how much is being used to generate renewable energy.
As of 1st June 2024, 3,600 hectares were being used for combined solar panels and grazing, while 3,700 hectares were solely devoted to solar panels. These figures pale in comparison to the area left uncropped.
In total, 581,000 hectares were left uncropped during the year. About half of this was bare fallow because bad weather meant many farmers were unable to plant as many crops as they had planned.
Just over 300,000 hectares were being used to deliver environmental benefits, although this includes field margins and other areas of less productive land.
The Rural Report: Delivering multiple income streams
News in brief
Budget stalls ag progress
Farming and environmental groups attending last week’s Labour Party conference have complained that progress on delivering a sustainable future for farming and the countryside seems to have ground to a halt in the run-up to the Budget on 30th October when it is feared departmental budgets will be cut. So far, for example, only 600 2024 Sustainable Farming Incentive (SFI) applications are currently live, despite many more farmers applying.
The Rural Report: What a Labour government means for the countryside
The Report Report: Six post-election tax takeaways
Conservation covenants
The number of organisations designated as “responsible bodies” able to enter into conservation covenant agreements with landowners in England has been boosted to 10 by Defra following the addition last week of the Staffordshire Wildlife Trust, The Land Trust and the Westcountry Rivers Trust.
The Rural Report: Helping landowners and corporates work with nature
Making carbon credits equitable
A new report is calling for voluntary carbon markets to do more to help local communities in the Global South. The report, written by Terraspect, says many carbon credit schemes lack transparency and do little to foster sustainable development in local communities. Even in the UK, the methodology of some voluntary carbon schemes has been questioned. However, as discussed in The Rural Report, high-integrity carbon credit schemes mean it is possible to be involved in the carbon market and create a greener future without accusations of greenwashing.
Clarkson blacklisted
One suspects he won’t be too concerned, having endured a fair few controversies over the years, but celebrity farmer Jeremy Clarkson’s new pub The Farmer’s Dog has been added to a public list of 272 venues that have been declared "blood businesses" by Protect The Wild. The animal rights group is angry over Mr Clarkson’s support for his local hunt.
Bluetongue update
Beef and sheep farmers now have access to a bluetongue vaccine following emergency approval by Defra of jabs produced by three companies. 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.
The Rural Report: Find out what Labour’s proposed changes to the National Planning Policy Framework mean for landowners
Property of the week
Opportunity down under
This week we’re taking a trip to New South Wales, Australia, to visit Niloc, a 6,153-acre arable and livestock opportunity near Tottenham. Water security is paramount and the property includes 19 dams. Over 60km of new livestock fencing has recently been installed and there is a comfortable three-bed house on the property. Niloc is being sold by Knight Frank’s specialist rural team in Australia. The guide price is A$5,500,000. Please contact Georgie Veale for more information. In addition to an update on the UK farmland market, the latest edition of The Rural Report includes a special focus on Australia and New Zealand.