Covid 19 – Rural property and business update

Commodity prices

The collapse of crude oil prices – earlier this week they went negative in the US for the first time ever as producer storage capacity was exceeded – will help pull back fuel bills, particularly for arable farmers, in 2020. Red diesel prices fell 5% on the week and are now almost 40% down on this time last year.

A dip in the value of sterling made UK wheat more competitive on world markets with prices responding accordingly. The reopening of some French markets helped to put a floor in lamb prices, while prime beef values continued to ease.

Meanwhile the milk price farrago I mentioned last week continues for some producers. Farmers Weekly reports that some are owed almost £200,000 by their purchaser whose food-service order book has slumped due to Covid-19, while others have not been paid since February. 

The NFU estimates that 25% of the UK’s dairy producers are now unviable. Farming minister George Eustice has, however, ruled out a bailout package for the sector because he says not enough farmers have been affected.   

Shooting season prospects

The Shooting Sentiment Survey that I launched last week in this update received a record number of responses for an ad-hoc client poll. To date, the results reveal that 50% of shoots plan to carry on as usual, with only 17% cancelling all their days. This situation, of course, may change as we find out more about the government’s lockdown exit strategy. Politicians are already warning that full freedom of movement may not be restored until next year. If you’d like a copy of the full survey results please drop me an email andrew.shirley@knightfrank.com. They will be available in the next few days.

Covid-19 business support

Although chancellor Rishi Sunak – who apparently is approved of by rural types in his Yorkshire constituency after mucking in at the local Pony Club – has released a raft of measures to help businesses hit by Covid-19, loopholes are emerging that could hit some rural-based firms.

£10,000 Covid-19 Small Business Grants are available to firms whose rateable value is less than £15,000, but apparently £1 billion of help could be missed out on by firms that choose to work from serviced offices where they are not the rate payer.

Meanwhile, our rural estate management teams are helping clients whose businesses have been hit by the movement restrictions. When an entire season of wedding bookings is cancelled overnight it’s not easy to think of alternative low-cost uses for an historic tythe barn. 

Labour update – pick for Britain

A new website – pickforbritain.org.uk – has been launched by the government to get more people working on the nation’s farms. As reported previously, farmers are warning that tons of crops could go to waste due to the lack of seasonal labour from overseas. Although there was an initial surge of volunteers, recruitment agencies are reporting that for various reasons relatively few seem that keen to get their hands dirty.

Brexit transition period

Although the government is still ruling out a request to extend the UK’s Brexit transition period, the NFU and CLA are calling for a 12-month extension to the agricultural transition period, which is currently due to end at the end of 2021. After this, farmers will start to see their support payments shift from the EU’s Common Agricultural Policy area-based model to the UK’s environmental land management scheme (ELMS). This could involve year-one payment cuts of up to 25%, but the CLA and NFU says farmers need more time to prepare due to Covid-19.  

Land market hits net zero

For the first time ever since it was created (by me in a former life), the Farmers Weekly Land Tracker, which records the amount of farmland advertised in the magazine, recorded a big fat zero acres for the week. To date, the total amount of land launched in 2020 is almost 50% lower than last year. Once the market eventually gets going again, there is a good chance that the average price of land could increase due to the pent up demand my agency colleagues are seeing. 

Throw a steak on the BBQ

And finally, while the sun is still shining, if you’re a meat eater why not treat yourself to mark the 10th anniversary of Great British Beef Week. It runs from 23 to 30 April.