The Knight Frank Rural Property and Business Update – 15 February

In this week’s update:

• Commodity markets – Lamb bounces back, but pork suffers
• Farm support – Lacklustre response to environmental consultation
• Soil health – Sixty-year myth busting no reason for complacency
• HS2 – Next stage approved
• International news – Farming should be bigger part of ESG investment say US farmers

Commodity markets – Lamb bounces back, but pork suffers

Lamb prices recovered all of last week’s drop, and more, as deadweight prices hit another recent high. Low supply is helping to push up values. The AHDB predicts a 7% drop in production between January and May. Pork producers, however, are seeing prices slump below the cost of production as the Chinese ban on German pig meat, Covid-19 processing delays, higher feed costs and a significant drop in exports to the EU due to post-Brexit border issues, all take their toll on the sector. Deadweight prices are down 13% on the levels seen this time last year.

Farm support – Lacklustre response to environmental consultation

Back in June 2020 this update urged its readers to take the opportunity to contribute to the government’s consultation on the new Environmental Land Management scheme (Elms) that will be its principal vehicle for agricultural support post-Brexit.

No doubt many of you responded, but the overall response from the farming community has been lukewarm. Of the 1,672 responses only 820 were classified as land managers or farmers. The rest were from consultants, individuals, academics, charities and lobby groups.

Key finding from the consultation included:

• Widespread support for the design principles and a desire to see greater ambition and more detail about how environmental land management would work in practice
• A desire to see flexibility in the way payments were calculated including different payment mechanisms, and a welcoming of blended public and private finance approach
• A clear view that the principal barrier to participating was poor previous experience and concerns over continuing complexity and the bureaucracy seen in the past.

Elms will be split into three tiers: the Sustainable farming incentive, Local nature recovery and Landscape recovery. Defra will be launching the first phase of its Sustainable farming incentive pilot this spring.

Read the full consultation discussion document

Soil health – Sixty-year myth busting no reason for complacency

New research from Oxford University busts the oft-repeated myth that the world’s soils are being denuded to the extent that they will only be able to support 60 more harvests.

The claim, made in 2014 by the United Nations’ Food and Agriculture Organisation, has been used by environmentalists, proponents of organic farming and even politicians to hammer conventional farmers.

However, a study of global soil research published on the Ourworldindata website reveals the claim is nonsensical.

But, and it is a very big but, the analysis does reveal that 16% of the world’s soils, across all continents, are extremely vulnerable with a potential lifespan of under 100 years. Conservation farming techniques like regenerative agriculture could reduce that proportion to just 7%.

“It is very helpful that this particular stick, which has often been used to beat farmers who use chemicals and artificial fertiliser, has been so decisively snapped,” says Tom Heathcote, Head of our Agri-Consultancy team.

“But the report also clearly makes the point that soil health can be actively improved by adopting different farming techniques,” adds Tom.

“Our soils in the UK are clearly not at risk of disappearing anytime soon, but that doesn’t mean we shouldn’t do our best to look after them.”

For advice on transitioning to a regenerative approach it’s worth listening to this podcast featuring Tom’s thought-provoking advice

Get in touch with Tom

HS2 – Next stage approved

The controversial HS2 project inched slightly further north last week when royal assent was granted for the 36-mile link of the route linking Birmingham to Crewe (Phase 2a).

Prime Minister Boris Johnson said: “Today is a landmark moment in our infrastructure revolution. HS2 is the most significant expansion to our national railways in a generation – transforming connectivity between our towns and cities and vastly increasing the capacity of our rail network.

HS2 is eventually planned to reach Leeds and Manchester (Phase 2b), with onward links to Scotland using existing track.

Full details of the Phase 2a route

Read our latest blog on how the Royal Assent of HS2 (West Midlands to Crewe) opens all the property schemes to applications for this section of the route.

If you are affected by HS2 or any other infrastructure projects please contact Tim Broomhead or Jonathan Scott-Smith in our compensation team

International news – Farming should be bigger part of ESG investment say US farmers

ESG and impact investors are overlooking the potential of agricultural land, according to a new report from lobby group US Farmers and Ranchers in Action.

With sufficient investment, climate-smart agriculture practices could cut agriculture's contribution to US domestic greenhouse emissions from 10% to 4%, the report - Transformative Investment in Climate-Smart Agriculture: Unlocking the potential of our soils to help the U.S. achieve a net-zero economy - explains.

Increased investments and partnerships along with new technologies could even make agriculture a carbon sink with -4% of total US emissions. So far, however, agriculture is typically not part of growing ESG portfolios, which the report calls "a huge missed opportunity”.

Read the full report