The Knight Frank Rural Property and Business Update – 14 June

The ongoing farrago between the UK and the EU over the Northern Ireland Protocol, one of the major complications of Brexit, doesn’t cover politicians from either side of the argument in much glory. The UK is right to say that it makes no sense to restrict the import of certain food products like fresh sausages that EU consumers were safely munching on pre-Brexit. But then again, this was always going to be a potential consequence of the deal that Boris Johnson agreed to. A more pragmatic approach is needed from both side because nobody is really winning at the moment.

Please do get in touch with me or my colleagues mentioned below if you’d like to discuss any of the issues covered. We’d love to hear from you

Andrew Shirley, Head of Rural Research

In this week’s update:

• Commodity markets – The farmer’s perspective
• Brexit – Sausage war escalates
• Farm profits – Lowland returns set to bounce back
• The Rural Report – Sign up to watch our launch video
• Overseas news – Chip giant goes 100% regenerative

Commodity markets – The farmer’s perspective

I was lucky enough to enjoy a day’s cricket last week watching England play New Zealand at Edgbaston in the company of a farming friend. He’d already taken 60 lambs to market and was delighted with the prices he achieved, hardly surprising as average values are over 25% higher than this time last year. With the festival of Eid approaching, the market should remain strong as we head into the summer. Oilseed rape markets are even more buoyant – up over 60% on the year – but my friend wasn’t over excited. The neonicotinoid ban has hits yields so hard even the price hike can’t compensate. It just goes to show that headline numbers don’t tell the whole story.

Brexit – Sausage war escalates

EU minister David Frost met Maros Sefkovic, vice head of the European Commission, last week to try and resolve differences over post-Brexit trading arrangements for Northern Ireland.

As part of the Brexit deal Northern Ireland remained inside the EU single market for goods, meaning paperwork and checks are required on certain products arriving from mainland Britain, to prevent it becoming a backdoor to the EU.

From a food and farming perspective chilled meat products like sausages, which are banned coming from a third country under EU food safety rules, are a key area of concern. The UK has upset the EU by arbitrarily extending the grace period for export health certificates to show that animal products meet EU rules. The grace period for sausages travelling across the Irish Sea currently expires on 1 July.

The EU says Britain should just align with its food safety rules, but Britain says this is a non-starter, given that a major reason for Brexit was to free itself from Brussels’ rules.

If no agreement can be reached the UK can either flout the rules and risk the EU slapping tariffs or restrictions on imports, or supermarket shelves in Norther Ireland will be a little emptier.

Farm profits – Lowland returns set to bounce back

New numbers for the Andersons Centre’s model mixed lowland farm predict a healthy boost in arable and livestock gross margins this year. This takes the farm’s total gross margin to £732/ha, up from £626/ha in 2019/2020. However, the margin from production before subsidy and environmental payments are taken into account is still negative at -£87/ha.

The Rural Report – Sign up to watch our launch video

This year’s edition of The Rural Report, our unique publication for rural landowners and their advisors, launces this week. We’d be delighted if you could join us for the launch video on 17 June. It’s been a lot of fun making it and I think you’ll find it both entertaining and informative.

Sign up to watch The Rural Report launch video

Overseas news – Chip giant goes 100% regenerative

Canadian spud processor McCain has announced that by 2030 all of the potatoes going into its products will be grown on land farmed regeneratively. The chip giant is the biggest buyer of potatoes in the UK, snapping up about 15% of the harvest each year.

The move is the latest sign that food processors and retailers will be driving farm sustainability changes as much as governments.

To find out more about regenerative agriculture get in touch with Tom Heathcote, who heads up our Agri-consultancy team.