ELMs details, Real farming conference, German bin-diving

I kicked off 2023 by attending the Oxford Real Farming Conference for the first time. Speaker after speaker at the world’s largest agroecology gathering talked about the health benefits of nutritionally dense food and lamented the government’s lack of support for small-scale farmers. It didn’t go unnoticed that Rishi Sunak’s five big policy pledges, announced on the eve of the conference, didn’t mention food or farming despite growing evidence that the quality of our soils has a direct impact on the nutritional content of our food that, in turn, affects our health. With the NHS stretched to the limit, my overriding takeaway from the conference was that the UK desperately needs a coherent food policy that joins the dots between farming, education, health and the environment.

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Andrew Shirley Head of Rural Research

In this week’s update:

• Commodity markets – 2023 kicks off in bearish mood
• Farm support – ELMs details announced
• Farming for the environment – Livestock vital
• Land values – Farmland 2022’s top-performing asset
• Energy costs – Business support watered down
• Staff salaries - New benchmark report released
• International news – Germany reconsiders bin-diving

Commodity markets – 2023 kicks off in bearish mood

Grain and oilseed markets rallied over the Christmas period as traders reacted bullishly to China’s relaxation of its notoriously strict Covid-19 lockdowns. However, much of those gains were lost in the New Year off the back of economic concerns and ample stocks of wheat and oilseed rape. Australia is set for a second record wheat harvest in a row with a predicted crop of 42 million tonnes and exports from Russia and Ukraine keep flowing.

Overall, traders seem to have a bearish view of the year ahead.

Farm support – More ELMs details announced

While I was attending the Oxford REAL Farming Conference, the great and the good of the agricultural industry down the road at the Oxford Farming Conference heard Farming Minister Mark Spencer, standing in for DEFRA Secretary of State Thérèse Coffey, at long last reveal a few more details about the government’s Environmental Land Management Scheme (ELMs). The headline grabber was a £20 per hectare one-off sweetener (limited to the first 50 hectares) for anybody applying to join the scheme, including those who have already signed up. In addition, those in new or existing Countryside Stewardship Scheme (CSS) agreements will receive a 10% uplift to any management payments, backdated until the beginning of the year. Meanwhile, CSS capital grant rates will increase by around 50% on average. Hedgerow creation payments, for example, will increase to £22.97 per metre, up from £11.60 – a rise of 98%. Capital and annual maintenance payments for the England Woodland Creation Offer (EWCO) and Tree Health Pilot (THP) will also be updated this year, helping to incentivise farmers to incorporate more trees as a valuable natural resource on farms.

For more details on how you could benefit from environmental grant schemes please contact our expert Henry Clemons.

Farming for the environment – Livestock vital

The Exeter City councillors who took the decision just before Christmas to ban meat and dairy products from council meetings would have done well to attend the Oxford Real Farming Conference last week. A multitude of speakers, including Patrick Holden of the Sustainable Food Trust, which released an updated edition of its Feeding Britain from the Ground Up report at the conference, highlighted how traditional mixed farming systems benefit the environment and that many of the plant-based meat alternatives are in fact far more damaging to nature due to the way they are produced.

Land values – Farmland 2022’s top-performing asset

As predicted, the latest results of the Knight Frank Farmland Index show that agricultural land as an investment beat inflation in 2022 and outperformed other asset classes, including mainstream house prices, luxury London house prices, the FTSE 100 share index and even gold. According to our index the average value of farmland rose by 13% over the year to hit over £21,000/ha, a record high. A shortage of supply and continued strong demand from a wide range of buyers underpinned the market. Download the full report for more facts and figures.

You can also hear some thoughts from my colleagues and me on the outlook for property markets in 2023 in the latest edition of Intelligence Talks, our research podcast.

Energy costs – Business support watered down

Businesses have expressed concern over the government’s latest plans to mitigate the impact of energy costs that remain sky high almost a year after Russia’s invasion of Ukraine.

Expected to be announced this week, according to the Financial Times, the new package will provide businesses with a discount on their gas and electricity bills. Although significantly less generous than the current price cap that ends at the end of March, it at least represents a U-turn by Chancellor Jeremy Hunt, who said last November that most businesses would not receive further support from April because the subsidies were “not sustainable”.

To provide some kind of certainty it might be worth it for rural businesses with fixed-term deals ending shortly to consider another fixed-term deal if the lock-in period is not too long, says my Rural Consultancy colleague John Williams who has just reviewed a client’s energy contract. “It can pay to shop around.”

Staff salaries - New benchmark report released

Just a reminder that the latest edition of the Knight Frank Estate Staff Salary Survey has recently been published. The report reveals the average salaries paid for a wide range of rural estate and farming roles and level of wage increases being offered by rural businesses. Also highlighted are the key employment issues facing the rural economy. Download your copy here or get in touch with Chris Terrett for more details.

International news – Germany reconsiders bin-diving

Food waste was a hot topic at the Oxford Real Farming Conference so the recent call by Agriculture Minister Cem Özdemir for the legalization of "bin-diving" - recovering food discarded by supermarkets while it is still edible - to reduce waste and feed the hungry is timely. The habit has become increasingly popular in many countries, but remains a criminal offense in Germany where litter in bins is still considered the property of the dumper. Germany throws away around 11 million tonnes of food waste each year.