The Rural Update: The future for nature-based solutions
Your weekly dose of news, views and insight from Knight Frank on the world of farming, food and landownership
9 minutes to read
Viewpoint
The anticipated surge of corporate investment into nature-based solutions in the UK has yet to materialise, much to the chagrin of a cash-strapped government that is desperate for private money to do some of the heavy lifting required to deliver green finance initiatives at scale. It is helpful, therefore, that the British Standards Institution has just released details of its green investment standard, which should go some way towards mitigating industry greenwashing concerns. However, it seems to make little sense that Defra has also just decided to close the Countryside Stewardship Facilitation Fund, which has helped farming clusters deliver significant environmental benefits across hundreds of thousands of acres of farmland. Now, more than ever, with farming confidence at an all-time low and investment being put on hold, we need joined-up thinking from policymakers.
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Commodity markets
OSR hike amid tariff confusion
Although US and Chinese import tariffs on Canadian oilseed rape (canola) were predicted to bring down prices as more stock found its way onto European markets, the reality seems more nuanced, highlighting how complex the implications of a trade war can be. Last week, European rapeseed markets actually bounced back strongly from their recent six-month lows, reports agricultural commodity business Frontier. “The rebound comes as traders work out the real impact of the recent implementation of tariffs and what effect Chinese tariffs have on Canada, where rapeseed meal and oil are affected by the tariffs, but seed is not. Other considerations are that Europe only has limited capacity for genetically modified seed, which ends up in biofuels, and the demand for seed for human consumption must not be genetically modified,” it explains.
Wheat weakens
Feed wheat prices, meanwhile, continue to slide as Russia and Ukraine both appear willing to allow free passage of cargo ships in the Black Sea. Despite the sanctions imposed on it, Russian grain exports have reached such a volume that the government has just imposed export restrictions to protect domestic supplies and mitigate the risk of food-price inflation.
Milk moves up
But there was good news for dairy farmers. According to the latest government statistics, the average farm-gate price paid for milk in February by processors was 46.05p/litre. Although this was just a slight jump on January’s figure, it is 19% more than producers were receiving for the same month in 2024.
The headline
Countryside Stewardship deadline approaches
The application process for revenue claims for 2025 Countryside (CS) and Environmental Stewardship Claims is now open. However, applications need to be submitted by 15 May to avoid incurring any deductions. The final deadline is 1 September, but claims made after 1 July will be trimmed by 25%.
Henry Clemons of our Agri-consultancy team advises: “With ongoing uncertainties and increasing pressures on cash flow, it’s more important than ever to ensure that CS revenue claims are submitted on time. Missing the deadline could result in unnecessary reductions in payments—something no farming business needs right now.
“To avoid any issues, make sure to complete your annual declaration and declare any rotational option changes,” adds Henry. If you need any help with your submissions please get in touch.
Small businesses under threat
The potential impact on small businesses of the government’s Inheritance Tax (IHT) raid has been highlighted by new research from Family Business UK.
A study conducted for the lobby group shows that the changes to Agricultural (APR) and Business Property Relief (BPR) announced in Rachel Reeves’ Autumn Budget could lead to over 200,000 job losses and a drop of almost £2 billion in net fiscal revenue for the government by the end of this parliament.
The findings reveal that 55% of family-owned businesses and just below half of family farms have paused or cancelled planned investments since the budget and will continue to cut both investment and jobs before April 2026, when the changes to BPR and APR come into force.
Defra Minister Steve Reed has been accused of failing to fully grasp the impact of the tax changes and other government actions, which have included cutting the Basic Payment Scheme harder and quicker than expected and closing the Sustainable Farming Incentive (SFI) with no notice. Since taking office, it has been revealed that the minister has visited just four farms.
News in brief
Peat burning ban proposed
The government announced yesterday (31 March) that it is planning to widen its ban on the burning of peat moorlands in England. Proposed changes to the Heather and Grass Burning Regulations 2021, which include revising the definition of deep peat from 40cm to 30cm, will increase the area currently protected from 222,000 to over 368,000 hectares of England’s 677,250 hectares of deep peat, says Defra. A consultation on the proposals closes on 25 May.
Green investment standard launched
The British Standards Institution (BSI) has just published details of its requirements for suppliers and intermediaries wanting to operate in high-integrity UK nature markets by generating, trading and storing nature credits. The BSI says the new voluntary overarching principles, which were created with the help of Defra funding, will provide a clear framework for the design and operation of UK nature markets and encourage investment while deterring greenwashing.
Green collaboration grant cut
However, Defra has confirmed that it will not be offering a new round of the Countryside Stewardship Facilitation Fund. The closure of the fund, which helps farmers and landowners collaborate to deliver environmental and nature benefits, will come as a blow to groups such as the North East Cotswold Farmer Cluster. The organisation has 150 members managing over 40,000 hectares of farmland. Existing agreements will continue to be funded.
Court orders climate rethink
Last week, the government was ordered by the High Court to publish an updated carbon delivery plan by the end of October. This will need to meet the requirements of the Fourth and Sixth Carbon Budgets after a ruling that a previous plan introduced by the Conservative Government was unlawful due to its overreliance on ‘risky technologies’ and lack of clarity on how it will meet its net-zero emissions targets by 2050. Meanwhile, in the US, the Securities and Exchange Commission looks set to ditch its requirements for firms to report climate-related financial risks and greenhouse gas emissions.
US trade deal warning
All four of the UK’s farming unions have urged the government not to sell farmers down the river as it bids to get on the right side of Donald Trump before his latest import tariffs come into effect tomorrow (2 April). The US has long been pushing for greater access to the UK’s agricultural market, including the removal of restrictions on meat produced using methods such as the chlorine washing of chicken that are not permitted here.
Drainage board boost
Defra has committed an extra £16 million of funding to help England’s internal drainage boards (IDBs). The extra cash will assist with operational expenses following the devastating winter storms of 2023/4, including bankrolling the repair of pumping stations. IDBs are public bodies that manage water levels for agricultural and environmental needs across 1.2 million hectares of land.
Foot-and-mouth ban widened
The government has banned the commercial import of livestock and untreated meat and dairy products from Austria following a further outbreak of foot-and-mouth disease (FMD) in Hungary close to the Austrian border. Restrictions are already in place on imports from Germany, Hungary and Slovakia. An outbreak of FMD devastated the UK’s livestock sector in 2001.
Bird flu in sheep
Meanwhile, Defra has revealed that the H5N1 avian influenza virus has been detected in a sheep in the UK for the first time. It says there is no evidence that this presents a risk to the nation’s livestock population.
Property of the week
Essex vineyard estate opportunity
Budding winemakers looking for a cracking country estate will want to take a look at the Stokes Hall Estate in Essex’s Crouch Valley, which is fast becoming a viticultural hotspot. Much of the 327-acre estate, which includes an imposing classically inspired nine-bedroom house, is suitable for planting vines. There are five further dwellings, and planning consent to build another five. The guide price for the whole is £19.9 million, but the sale is split into 10 lots with options for those just looking for blocks of land to establish vines. Please get in touch with Georgie Veale for more information.
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Property markets
Development land Q4 2024 – Housing delivery down
Only 2% of the 50 housebuilders recently surveyed by Knight Frank believe that the sector will deliver the 300,000 new homes that the government is targeting for 2025. The gloomy prognosis is contained in the latest instalment of our Residential Development Land Index report, compiled by researcher Anna Ward, which reveals that the price of green and brownfield development land remained flat in the final quarter of the year, despite Labour’s ambitious housebuilding targets and planning reforms. Download the full report for more insight and data.
Country houses Q4 2024 – Market weakens
The price of houses in rural areas slipped by 0.3% in the final quarter of 2024, according to the latest results from the Knight Frank Prime Country House Index. Overall, values fell by 0.9% during the year. Demand for homes in the countryside has continued to fall since the Covid-19 pandemic, points out Head of UK Residential Research Tom Bill. Exchanges in 2024 were down 20% on the five-year average, he says. However, prices are expected to rebound by almost 18% over the next five years, Tom predicts.
Farmland Q4 2024 – Prices resilient
The farmland market edged up slightly during 2024, according to the latest results from the Knight Frank Farmland Index, which tracks the value of bare agricultural land in England and Wales. Average values started the year at £9,152/acre and, heading into 2025, stood at £9,164/acre, a slight rise of 0.1%. Given the challenges that the farming industry has faced over the past 12 months, this shows the inherent resilience of agricultural land as a multi-functional asset class. Prices, however, did dip in Q4 after Inheritance Tax reforms on farmland were announced as part of the Autumn Budget. For more insight and data please download the full report.