UK rural: making a plan the right way

Opinion

Now you see it, now you don’t, now you see it…. The nutrient neutrality saga rumbles on with the House of Lords scotching the government’s plan to scrap the rules requiring developers to offset the phosphate and nitrate emissions from the houses they build. Environmentalists and those landowners set to provide the offsets are happy, developers who say the rules are holding up the delivery of over 100,000 much-needed new homes less so. It’s all a bit of a shambles and highlights why policymakers should engage stakeholders before creating these schemes. I was glad, therefore, to hear that my colleague Simon Britton is helping to inform a parliamentary initiative (see below) looking at ways to make jobs in the rural sector more valued by young people starting their careers. Insight from professionals on the ground should never be overlooked.
AS

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 – Wheat production declines
• Farming – Government’s raft of support
• Regen ag – McCain pushes government
• Out and about 1 – Influencing politicians
• Out and about 2 – Encouraging peatland flowers
• International news – UK food imports vulnerable
• SFI – Defra bends to advanced payment pressure
• Nutrient neutrality – What's next?
• Manx magic – Island’s “best” estate for sale
• Equine paradise – Surrey training yard available
• Development land – market tumbles
• The Rural Report – Watch the videos
• Countryhouses – Prices weaken
• Farmland values – Price growth slows

Commodity markets

Wheat production declines

New estimates from the US Department of Agricultural suggest that the world’s 2023/2024 wheat harvest could decline for the first time in five years. The USDA’s latest supply and demand report has lowered its expected output for Australia, Canada, Argentina and the EU putting production at just over one billion tonnes. While the data provided some support for prices, global consumption estimates were also pegged back AS

Talking points

Back British Farming – Government’s raft of support

Last week (13 September) saw many in the Commons and the Lords wear the Wheatsheaf to support Back British Farming Day. Meanwhile, the government used the day to put out a number of commitments to support the food and farming sectors further.

Small Abattoir Fund - A package of £4 million, to be available by the end of 2023, aims to improve productivity, enhance animal health and welfare, and encourage investment in new technologies. The fund will be open to red meat and poultry businesses with an annual throughput of up to 10,000 livestock units, including beef, pork, lamb, and/or 500,000 birds a year. The number of small abattoirs has been declining in the UK for many years, yet for many parts of the country, they are crucial for small holdings and farms in areas far from larger slaughterhouses. Hopefully, this fund will provide the investment needed to keep these small businesses operating and with the latest technology.

Rooftop solar funding – Another of the announcements was an exciting confirmation that farmers will be able to bid for up to £100,000 from a pot of £15 million to install rooftop solar equipment when the second round of the Improving Farm Productivity Grant opens later this year. This is in addition to a further £15 million on offer to farmers to invest in automation and robotics under the Farming Transformation Fund.

Promoting British produce - In line with its pledge made during the Farm to Fork Summit, Defra has initiated a recruitment campaign to appoint an additional five agri-food attachés. This strategic move is intended to enhance the UK's agri-food exports, thereby increasing the total count of dedicated UK agri-food attachés to 16. These newly appointed attachés will be responsible for overseeing agri-food matters in northern Europe, southern Europe, Australia/New Zealand, South Korea, and Africa MT

Regen ag – McCain pushes government to help farmers

A growing number of retailers and food manufacturers have been jumping on the bandwagon to back regenerative agriculture and encourage their suppliers to adopt the approach. Now chip business McCain Foods - committed to 100% regenerative farming by 2030 – has called for the government to support farmers in embracing regen ag practices. It backed a report that says that regen ag could improve food security, help tackle climate, boost biodiversity and help farming profits. The report, Sowing Resilience: A Policy Framework to Expend Regenerative Farming, from think tank Demos, outlined three key barriers to expanding regenerative methods faced by farmers across the country: poor financial incentives to transition, caution about shifting methods and difficulties in implementation. The report highlights the vulnerability of UK food security, exacerbated by global events, climate change, and biodiversity loss. It recommends providing increased financial support to farmers for transitioning, primarily through higher Sustainable Farming Incentive management payments, which, the report authors suggest, should be guaranteed for at least seven years to accommodate the time needed for regenerative farming to become profitable MT

Out and about 1 – Influencing politicians

My Agri-consultancy colleague Simon Britton was at the House of Lords last week in his capacity as Chairman of the British Institute of Agricultural Consultants. Simon was sharing his insight and views with a high-powered Lords’ committee that is examining ways to make the farming industry a more valued profession that young people want to be involved in. The ultimate aim being to improve food security and sustainability while managing the environment AS

Out and about 2 – Encouraging wildflowers on peatland 

You may think peat is mainly found in upland areas, but last week, I spent a day on the last remnant of a lowland peatland moor located at Maulden in Bedfordshire. I joined a volunteering group which was working at the nature reserve, cutting and removing grass. Why, you may ask? The local ranger is trying to encourage the wildflower plots to take over more areas of the reserve. Cutting and carting off the grass helps reduce the competition and the fertility of the ground for the wildflowers, thereby increasing the nature reserve's biodiversity. It is a difficult task when the topsoil is peat. The agriculturalist in me wonder about how much hay we could have made with the cut grass MT

International news – UK food imports vulnerable to climate change

Nearly 25% of the UK’s food imports including staples such as bananas grapes, avocados, coffee and tea are from countries whose farming systems are vulnerable to climate change, according to a new report produced by Christian Aid. The charity warns that unless the countries are better supported to adapt to changing climatic conditions the UK’s shoppers will increasingly face empty shelves and higher food bills. Read the Rural Report to discover how one NGO, Hand In Hand, is helping Kenya’s small-scale farmers adapt by adopting regenerative farming methods AS

Need to know

SFI – Defra bends to pressure for advanced payments

An accelerated payment will now be made to those with a live Sustainable Farming Incentive (SFI) agreement before the end of the year. The payment is expected within a month of entering into the agreement and is worth 25% of the annual amount. There was concern from farming and landowner groups that 2023 approved applications wouldn't see any payments this year, impacting cashflows, following the announced delays to the scheme.

There will be a controlled rollout of the 2023 SFI scheme when it opens for applications on Monday, 18 September. Defra will initially invite a few farmers from those who expressed an interest in SFI and will get their feedback and suggestions for improvements before inviting further farmers and repeating the process. Once the scheme is successfully up and running, it will be opened more widely. You can read my article on ideas on how to make the most of SFI here MT

Nutrient neutrality – What's next?

Last week (13 September), the government was defeated in its attempt to scrap nutrient neutrality requirements for new developments. The Levelling Up and Regeneration Bill (LURB) was in the final stages of passing through the House of Lords, with the amendments rejected by 203 votes to 156, a majority of 47.

Ministers argued that watering down the requirement would have a negligible impact on pollution, but opponents said the rule change would actually increase river pollution.

So, what does the vote mean for Nutrient Neutrality? In the immediate term, the rules of nutrient neutrality will continue to apply and be enforced by the local planning authorities. The government, however, won't be able to resubmit the bill to the House of Commons as it was going through the final stages of the House of Lords. And so, the scrapping of the rules won't be included in the LURB when it receives royal assent. One option for the government could be to introduce new legislation that includes their proposals. Given the humiliation of losing the Lords’ vote, the government may decide to tweak their plans.

Labour has proposed developers should be allowed to start building homes that are stuck in the planning pipeline but would require them to put in place measures to counteract any environmental harm before those homes are occupied. The onus of alleviating nutrient pollution levels would still fall on agriculture and the water companies. Still, this approach would give time to Natural England to roll out its Nutrient Mitigation Scheme.

We will wait and see where the government decide to take the next step, but don't rule out a revised proposal in a new bill MT

On the market

Manx magic – Island’s “best” estate for sale

The scenic Ballamanaugh Estate (see main picture) on the Isle of Man has just been launched with a guide price of £17.75 million. The 932-acre property includes a main five-bed house with indoor swimming pool and eight modern and traditional secondary dwellings, as well as barns with conversion potential. All the farmland, which comprises pasture, arable soil, hill grazing and forestry, is let under a number of farm business tenancies. For more information please contact Will Matthews AS

Equine paradise – Surrey training yard available

The equine residents of the internationally renowned Robins Farm training yard at Chiddingfold, Surrey, enjoy a sumptuous range of facilities. The 48-acre property includes 52 stables, three all-weather gallops, two horse walkers, treadmill, solarium and even a vibrating floor stable. Humans get a pretty five-bed farmhouse, office and staff accommodation. The guide price is £2.7 million. Please contact Georgie Veale for more information AS

Our Latest Property Research

Development land – market tumbles

The outlook for the UK economy weighed on the residential development land market in the second quarter of this year, leading to a slowdown in activity and a decline in land prices across the board, according to the latest instalment of Knight Frank’s Residential Development Land Index.

My research colleague Oliver Knight says: “We’ve noted previously how the economics of developing new homes in England is challenging. A slower sales market, issues related to nutrient neutrality, biodiversity net gain, higher build costs and local plan failures have all forced housebuilders to rein in construction expectations. The result? Downward pressure on land values.”

Average greenfield land prices fell by 6% on the quarter, taking the annual decline to almost 15%. Prices for brownfield land showed a similar trajectory, dropping 6% on a quarterly basis and 18% annually 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

Country houses – Prices weaken

Country house prices came under pressure in the second quarter of the year, as the ‘escape to the country’ trend reset, and buyers re-calculated their budgets due to higher borrowing costs.

The average price of a property fell 2.6% in the second quarter, according to the Knight Frank Prime Country House Index (PCHI), compiled by my colleague Chris Druce. It was the largest quarterly fall since the global financial crisis in Q2 2008. It follows a decline of 0.5% in Q1.

It left country house prices down 4.2% since their peak in June 2022, although the average property is still worth 15% more than before the pandemic, which supported a surge in prices as people upgraded their homes and took advantage of a period of stamp duty savings.

Download the full report or contact Chris for more information AS

Farmland values – Price growth slows

According to the latest instalment of the Knight Frank Farmland Index, the average value of bare agricultural land in England and Wales rose during the second quarter of the year at the slowest rate since March 2021. Prices increased by just over 1% to £8,845/acre. Annual growth at 8% also slipped into single figures for the first time since the final three months of 2021.

Farmland, however, has outperformed the FTSE 100 equities index, gold, prime central London houses and mainstream house prices over three and 12-month periods. Over five years, only gold has seen stronger capital appreciation.

For more data and insight, please read the full report AS