UK rural: carbon equity in the food chain

Opinion

As the debate about the Red Tractor farm assurance scheme’s new environmental module that I covered in this update two weeks’ ago continues to rage, Arla - the UK’s largest milk processor - has launched a potentially exciting new scheme (see article below) that could offer farmers a more profitable way to tap into the growing requirement for big business to reduce its scope 3 emissions in order to hit ambitious net zero targets. Linking up the food chain to deliver net zero sounds a very sensible proposition, but as I’ve said consistently here the rewards need to be shared equitably. For a global corporate titan like Starbucks, hitting its net zero targets will safeguard billions of dollars of profit. If that equates to just fractions of a pence per litre or kilo on the price it pays for milk, coffee and chocolate, farmers will feel very short changed AS

Do get in touch if we can help you navigate through these interesting times. You can sign up to receive this weekly update directly to your email here.

Andrew Shirley, Head of Rural Research; Mark Topliff, Rural Research Associate

In this week's update:

• Commodity markets – Pork pressure
• Net zero – Milk processor launches Scope 3 initiative
• Public access – Labour ditches England right to roam
• Conservation – Jersey zoo takes over Scottish estate
• Farming for the environment – Rural Report farmers win award
• International news – US Cornbelt values flatten
• Residential lettings – No fault eviction ban delayed
• Ag-chems – Seed treatment approval extended
• Healthy & safety – Working at height
• Warwickshire – Rolling arable block launch
• Country houses – Prices drop
• Farmland prices – Market at peak?
• Development land – Market tumbles
• The Rural Report – Watch the videos

Commodity markets

Pork pressure

Aside from a small uptick in lamb prices the sentiment was on the downside last week. There will be relief that fuel prices fell, despite the ongoing crisis in the Middle East, and grain markets remain volatile so wheat and oilseed rape prices could easily bounce back again, but the gradual erosion of pork prices, which peaked at almost 226p/kg, will be a worry to pig producers. Margins are thin in the sector – average production costs currently sit at around 200p/kg - and pennies per kilo can make a big difference to profits. Historically, when prices head in one direction they tend not to reverse very quickly, either. A drop in consumer demand and weakening prices on the continent are behind the fall, reports Farmers Weekly AS

Talking points

Net zero – Milk processor launches Scope 3 initiative

Scandi dairy co-op Arla has launched a new initiative that will reward UK farmer suppliers who undertake measures to help cut the carbon footprint of the milk processor’s retail and foodservice customers. The co-op says more and more of its customers are getting their climate ambitions approved by The Science Based Targets Initiative, which means an increasing focus on reducing their scope 3 emissions. For many of its customers, dairy constitutes a significant part of their scope 3 emissions. Arla’s Sustainability Customer Programme will be launched in the UK where the first contracts with Aldi, Asda, Morrisons and Starbucks, covering more than one billion kilos of milk, are already in place. The business has earmarked up to €500 million annually until 2030 to reward and incentivise climate initiatives on farm via a new points-based supplement to the monthly milk price AS

Public access – Labour ditches England right to roam

The Labour party has rowed back from a pledge to introduce a Scottish-style assumed right-to-roam scheme in England if it wins the next general election. Instead, it says it will work with farmers and landowners to create more access to the countryside – currently 8% of England is open to the public – possibly by extending the Countryside and Rights of Way (Crow) Act.

Shadow minister for Nature and Rural Affairs, Toby Perkins, said: “We absolutely want to see access extended. Do we need to tread very carefully on this? Absolutely. We want to increase access to nature but we also need to look at it in terms of farmers and working collectively with them rather than a top-down approach.” AS

Conservation – Jersey zoo takes over Scottish estate

The Durrell Wildlife Conservation Trust has taken over the management of the 18,500-acre Dalnacardoch Estate in Perthshire. The estate in the Cairngorms National Park was bought earlier this year by a family foundation with charitable aims, specifically with the intent to lease it to the trust for the 100-year rewilding project, moving towards a diversified range of activities that will provide economic, social, and environmental benefits.

To find out more about how Scottish sporting estates are evolving, read my interview with Paul Lister, the owner of the ground-breaking Alladale Estate, north of Inverness AS

Farming for the environment – Rural Report farmers win award 

It was fascinating to visit Nonington Farms in Kent earlier this year with my research colleague Mark Topliff to meet the business’s owners James and Emma Loder-Symonds. James and Emma are leading proponents of regenerative agriculture and it was fantastic to see them crowned Environmental Champion of the Year in the recent Farmers Weekly awards. To find out more about what they have achieved and their farming philosophy read Mark’s interview with them in the latest edition of The Rural Report AS

International news – US Cornbelt values flatten

New figures coming out of Iowa, one of the US’s breadbasket states, show that the farmland market there, like in the UK (see article below), could also be starting to flatten after a period of strong growth. Average values rose 43% in 2021 and 10% in 2022, to hit US$13,742/acre, but as of last month were up by only 0.6% on an annual basis. Rents, meanwhile, have risen 17% since 2020 to average US$269/acre. Last year saw record profits for Iowa farmers, but farm incomes are predicted to fall by 23% this year. What I find staggering is the size of the market. Around 150,000 acres were traded in both 2022 and 2023, more than the whole of the UK AS

Need to Know

Residential lettings – No fault eviction ban delayed

The government has effectively delayed indefinitely the introduction of a ban on no-fault evictions by residential landlords. Following the second reading of the Renters Reform Bill last week it said it was still committed to its manifesto pledge to implement the ban, but in a report to parliament stated: “We will align the abolition of section 21 and new possession grounds with court improvements, including end-to-end digitisation of the process.” There appears to be no timetable for the proposed court improvements.

Tenants’ groups have reacted furiously, claiming the legislation is needed to stop rogue landlords unfairly kicking vulnerable people on to the streets. Landlord lobbyists, however, insist that the move would have undermined confidence in the already fragile sector and reduced the number of houses available to rent. Please contact my colleague Jess Waddington if you need help with any landlord/tenant issues AS

Agricultural-chemicals – seed treatment approval extended

Defra has confirmed that EU approved treated seeds can continue to be imported until mid-2027. The cut-off was set to be end of 2023, which would have been a significant blow for arable farmers and maize-growing livestock producers AS

Health & safety – Working at height

As pointed out by Phase Consultants’ James Bridgland in the latest of his regular and highly informative briefings, the Health & Safety Executive has said that its farm inspection programme for winter 2023 and spring 2024 will focus on higher risk activities such as working from height. The latest HSE guidance is available here AS

On the market

Warwickshire – Rolling arable block launch 

Our London and Stratford upon Avon teams have just launched Kingston Farm, near Leamington Spa. Guided at £4.25 million, the 370-acre predominantly arable unit includes 40 acres of pasture and woodland and a four-bedroom agriculturally tied cottage with a lifetime tenant. The arable land is contract farmed. The property is available in five lot. Please contact Georgie Veale for more information AS

Yorkshire gold – Compact farm for sale

Following a series of new releases from our London-based Farms & Estates team, my Yorkshire colleagues Zoe Coulson and Claire Whitfield have got into the act with the launch of Woodlands Farm near Ripon. The 165-acre – split roughly three ways between grass, arable and woodland – unit includes an attractive modern four-bed house with an agricultural occupancy condition and a range of modern buildings. Contact Claire or Zoe for more information. The guide price is £2.5 million AS

Our latest property research

Country houses – prices drop

The value of a home in the countryside is falling at the fastest rate since the global financial crisis, according to the latest instalment of the Knight Frank Prime Country House Index compiled by my colleague Chris Druce. In Q3 2023 average prices dropped by just over 2% taking the 12-month slide to over 8%. Despite the slump, values are still 12% higher than they were in June 2020. Chris says there is a bit of stalemate in the market as sellers cling to last year’s prices, while purchasers are angling for big discounts. Read the full report AS

Farmland prices – Market at peak?

The latest edition of The Knight Frank Farmland Index has now been published. The average value of bare agricultural land rose by 1% in the third quarter of the year to just shy of £9,000/acre. Annual growth was 8%, which outperformed a number of other asset classes (see chart). Our research suggests values may remain flat into 2024. Read the full report for more insight and analysis AS

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