Egypt bread cap, Pheasant poult paucity, Rishi efficiency boost

If you have ever attended one of Andersons Prospects for UK Agricultural seminars you’ll know they provide lots of facts and figures to ponder on. As discussed below, I was at one last week and, among the barrage of stats about farm profitability (or lack of it), one number got me thinking. In terms of future government support for the agricultural sector, 90% has been allocated to various environmental schemes with just 10% earmarked for boosting productivity. Is this the right balance? We know we have to do more to help the environment and tackle climate change, but surely farms and estates would be in a better position to do that if they were more profitable, rather than joining schemes because they aren’t making money from agriculture? Would love to hear your views!

Do get in touch if we can help in any way
Andrew Shirley, Head of Rural Research

In this week’s update:

• Commodity markets – Volatility increases
• Future of farming – Consultant highlights challenges ahead
• Spring statement – Energy efficiency boost
• Shooting – Pheasant poults in short supply
• The Rural Report – Sign up to watch our ground-breaking video
• Overseas news – Egypt imposes bread price cap

Commodity markets – Volatility increases

Oilseed rape prices traded within a €100/t spread over a single day last week, highlighting just how volatile grain markets are becoming. News that the EU could relax rules on the amount of biofuel required in petrol blends pulled back prices midweek, but buyers switching from sunflower oil (Ukraine is the world’s largest exporter) to OSR helped send prices to record highs. In the cereals’ market concerns over drought conditions in Canada and a significant drop in predicted Ukrainian output saw wheat prices climb ever higher. After a temporary dip, oil once again breached the US$100/barrel a mark, cancelling out all of Chancellor Rishi Sunak’s 5p/litre cut in fuel duty.

Future of farming – Consultant highlights challenges ahead

The final instalment of Andersons’ series of spring seminars, which I attended at my alma mater the RAU last week, made for sober viewing. I’ve covered a number of their findings in previous editions of the Rural Update, but brought together in one presentation they reveal the scale of the challenges facing UK food producers, and that was before the recent spike in energy and input costs.

Some of my key takeaways: If you haven’t considered the impact of the phasing out of BPS payments do so now. Andersons estimates that support payments for its model arable farm will be down over £50,000 in 2023 even if it joins the Sustainable Farming initiative. And if your business isn’t in the top quartile of producers work out why. The gulf in profitability is huge. In England’s lowland livestock sector, for example, over three quarters of business had a negative farm income in 2020/21 or made less than £30,000.

Please speak to Tom Heathcote, our Head of Agri-Consultancy for more advice.

Spring statement – Energy efficiency boost

Unsurprisingly, given the scale of the challenge, Rishi Sunak’s mini budget last week failed to do much to assuage spiralling living costs. But there was a bit of good news for those planning to install energy efficient technologies to their dwellings. The Chancellor announced that he was removing VAT from the cost of kit and installation for the next five years.

My colleague Cate Statham, a Senior Chartered Building Surveyor who has a particular interest in renewables and sustainability, comments: “This is great news for all property owners as removing VAT doesn’t just apply to solar panels, heat pumps and wind turbines but also to home insulation products as well as boiler and heating controls. Not only will you be saving money on the VAT, but taking steps to install these measures will also help cut energy bills.

“Renewables are also an excellent option for historic or rural properties that can have large heating bills with little access to mains supplies, but possibly have land or watercourses where heat pumps can be installed.”

“Landlords can also take advantage of the VAT cut so it might be a good opportunity to upgrade rental properties to make them more energy efficient ahead of proposed energy targets for the property sector.”

For more information, please contact Cate

Shooting – Pheasant poults in short supply

Katharine Beswick, one of my Rural Consultancy colleagues, is urging shoots to order their poults for the upcoming season as soon as possible.

She told me: “The recent confirmed cases of highly pathogenic bird flu strains on commercial French game farms is causing concerns for gamebird rearing in the UK especially as many rely upon importing eggs, chicks or poults in order to meet UK demand. The presence of avian influenza in France is going to impact the number of gamebirds released into the UK in time for the upcoming season. September sport may prove challenging as a result.

“Furthermore, the current energy crisis in the UK is having impacts on the rearing of poults. A number of sporting businesses are seeing both the price of poults and feed rise and some are even seeing game farms make the decision not to rear any poults for the upcoming season.”

The Rural Report – Sign up to watch our ground-breaking video

The latest edition of The Rural Report, our unique publication for rural landowners and their advisors, was launched with a video highlighting some of its key content around the topic of ESG. If you missed it, you can sign up to watch on demand at your leisure. It was a lot of fun making it and includes a thought provoking interview on diversity, with Wilfred Emmanuel-Jones AKA The Black Farmer. I think you’ll find it both entertaining and informative.

Sign up to watch The Rural Report launch video

Overseas news – Egypt imposes bread price cap

A few weeks’ ago I highlighted the potential geo-political risks from the escalation in food prices caused by the Russia/Ukraine war. To highlight that point Egypt, which is heavily reliant on wheat imports from the Black Sea – it gets 80% of its supplies from Russia and the Ukraine - last week put a price cap on the cost of unsubsidised bread.

Even before the Russian invasion Egypt’s government was worried about the rising cost of wheat and was considering changes to a popular subsidy programme that sees 60 million less well-off families receive five loaves of bread per day for the equivalent of just US$0.5 a month. Meanwhile, Lebanon, another big Black Sea buyer, says it has just one month of wheat reserves in store.