The Knight Frank Rural Property and Business Update – 21 December

In this week’s update:

• Brexit trade deal – Still the politicians can’t agree
• Farming in Wales – Assembly issues roadmap for the future
• Planning – Government backtracks on housebuilding targets
• Overseas news – US leads way on regenerative agriculture

Commodity markets – Oil heading up

As 2020 draws to a close arable farmers can take solace that wheat prices are almost a third higher than they were this time last year. In the livestock sector beef and lamb prices were both up by a more modest 12% having taken a bit of a hit during the first national lockdown. On the flipside, however, oil prices also continue to firm with analyst Capital Economics expecting Brent Crude to hit $60/barrel by the end of the year.

Brexit trade deal – Still the politicians can’t agree

I vaguely recall writing in this update some months ago that the EU and UK had set a deadline of October to conclude trade talks. And here we are with under two weeks to go till the end of the Brexit transition period and still no agreement. Some are now saying talks could even go on until the New Year. To me it all points to some kind of face-saving fudge.

However, Defra minister George Eustice has just reiterated to parliament that there would be some kind of support available for the sheep industry, which is particularly dependent on exports to the EU, in the event of a no deal.
But he said he would be adopting a wait-and-see strategy based around the impact on sheep prices, rather than putting in place a scheme from day one.

Farming in Wales – Assembly issues “sustainable” roadmap for the future

Following Defra’s recently announced post-Brexit vision for English agriculture, the Welsh Assembly has just released its own white paper on creating a new sustainable farming scheme (SFS).

But unlike producers in England, those across the Severn will still receive their full area-based Basic Payment entitlements in 2022. After that they will be reduced at an as-yet-to-be-determined rate.

According to the white paper, the key aspiration of the SFS is its desire to reduce financial support for more intensive farming systems with payments based on the delivery of environmental and public goods. Rates will be published next year and will be based on income foregone, costs and outcomes.

The scheme will “place a proper value on the environmental outcomes farmers deliver (improved soils, clean air, clean water, improved biodiversity, actions to reduce global warming) alongside sustainable food production”.

New National Minimum Standards for agriculture with a new enforcement regime will also be created and consulted upon. Other proposals in the white paper include supporting wider supply chains beyond the farm gate and rewarding farmers for creating and maintaining woodland.

Photo by Ambitious Creative Co. - Rick Barrett on Unsplash

The roadmap has received mix reviews – “Unimaginative” was the verdict of the Farmers’ Union of Wales. My colleague Eddie Holloway, who helps manage a number of Welsh estates, says:

“On the face of it, this is a huge opportunity to develop a bespoke agricultural policy for Wales, recognising and rewarding the environmental stewardship farmers provide alongside sustainable food production.

“However, there are those that feel the white paper does not do enough to support Welsh farmers, especially against the backdrop of Brexit and the challenges posed by Covid-19, and that after two consultations on the topic in as many years, the proposals still fall short of the needs and aspirations of rural communities.”

Ross Murray, Chairman of our Rural Asset Management team and steward of an estate in Monmouthshire, adds: “The clues to this public policy lie in the omissions. No acreage payment by right, other than a bonus year of 2022.

Read the full white paper and respond to the consultation (open until 26 March) on a sustainable welsh agricultural sector

Please contact Eddie or Ross for Welsh land management advice 

Planning – Government backtracks on housebuilding targets

Algorithms have got a bid of a bad press in 2020. First we had the exam results fiasco and now the pesky blighters have been blamed for a bit of a U turn by the government over some of the proposals in its recent Planning for the Future white paper.

As soon as the paper was released people, in particular it seems local MPs, were complaining that the housing delivery targets for councils devised by a computer-based formula were concentrating too much future development in the south of England.

Although the white paper’s annual target of 300,000 new houses remains the same, the algorithm has been tweaked to focus more on cities and urban areas in the north and Midlands. Cash for brownfield sites would also be distributed more fairly outside London and the southeast, the government says.

How landowners view the changes will depend on whether or not they have potential development schemes to promote. But as one of our rural planning experts Roland Brass points out councils across the country will still have growth targets to achieve and in many cases new land will be required for future development.

“An important factor going into next year is that due to Covid-19 many local plans have stalled this year and therefore we expect a lot to be published next year for consultation, meaning there will be more opportunities to engage in the planning process with councils. If you don’t engage you are a lot less unlikely to get development,” warns Roland.

For advice on your development options please get in touch with Roland

Overseas news – US leads way on regenerative agriculture

If you believe the headlines US farming is all about hormone-treated cattle and chlorine-washed chicken, but the country’s livestock and arable producers actually pioneered regenerative agriculture - which is only now becoming something of a buzz phrase in the UK - decades ago.

Gabe Brown, who farms in North Dakota, is one of the movement’s gurus – Google his name for a host of inspiring videos about his holistic approach to farming – but an article in this week’s Farmers Weekly about a 5,000-acre farming business in Georgia on the East Coast caught my eye.

Since switching to a regenerative system in the 1990s White Oak Pastures has boosted its soil organic matter with the use of livestock from just 0.5% to 5% and customers are prepared to pay more for its meat and crops. Costs, however, have also increased sharply.

Our own holistic farming guru Tom Heathcote, who already provides regenerative agricultural consultancy to a growing number of our clients, says: “Regenerative agriculture is fundamentally about farming in conjunction with the natural environment and not working against it.

However, if regenerative agriculture is to become more widely adopted, Defra’s new Environmental Land Management Scheme (Elms) will need to offer farmers considering the switch more confidence that it makes long-term sense. More education for retailers and consumers on its benefits will also be needed.

To find out how regenerative agriculture could benefit your farm or estate please contact Tom. He’d love to come and say hello