Green recovery, Wot no milk? Canadian land boom

Given the current crisis in the Ukraine and a renewed focus on food security, the government will no doubt be lambasted from some quarters for the timing of its new green paper on nature recovery. Anticipating such criticism, Tony Juniper, Chair of Natural England - the government’s environmental advisory body - states in his introduction to the paper: “Environmental security is every bit as vital as energy and food security and failing to take steps now, while there is still a window of opportunity to avoid the worst impacts of the nature and climate change emergencies, will ramp up huge costs later on.” Just to reiterate what I said last week, the government needs to take a properly holistic view of agriculture and the countryside. Given the diversity of England’s farming landscape, the right policies should be able to deliver both food security and environmental recovery.

Do get in touch if we can help in any way

Andrew Shirley, Head of Rural Research

In this week’s update:

•       Commodity markets – Oil down, but grains up
•       Nature recovery 1 – Natural England launches green paper
•       Nature recovery 2 – Government releases new targets
•       Dairy farming – Cost crisis could see empty shelves
•       The Rural Report – Sign up to watch our ground-breaking video
•       Brexit – Trade department needs to be transparent on deals
•       Overseas news – Canadian farmland boom

Commodity markets – Oil down, but grains up

Two big themes saw oil prices retreat back below the US$100/barrel mark last week. Markets are more hopeful that Vladimir Putin will have to sign a peace deal in the Ukraine given the somewhat humiliating performance of his armed forces in the country, while the worsening Covid-19 outbreak in China is pegging back the country’s growth prospects, and hence forecast demand for oil. Grain and oilseed prices, however, continued to rise, putting further pressure on feed intensive livestock and dairy businesses (see article below).

Nature recovery 1 – Natural England launches green paper

The government has just released a far-reaching green paper that sets out a plan for how it will achieve its environmental ambitions in England, such as protecting 30% of the country’s land and sea by 2030 (‘30 by 30’) and hitting net zero emissions by 2050.

Aspects of the plan include rationalising the many regulations and designations used to protect the environment, “designating for recovery” as well as “protecting what is already there”, and placing science above process in determining conservation outcomes.

To help deliver it, the government also aims to facilitate marketplaces for ecosystem services and encourage £500 million of private funding to support nature recovery by 2027 and £1 billion by 2030.

Claire Whitfield of our Rural Consultancy team believes the goals “are ambitious yet exciting”, but to be achievable “there has to be a melting of the inertia between the rural and urban economies”.

“Through collaboration both sectors must work together to repair the degradation of the past and importantly safeguard and enhance our landscape and environment for the future. But this has to be a team effort.

“Connecting these two previously divergent economies through collaborative arrangements to provide the resource and funding for this recovery is going to be key to unlocking the environmental gain possible and thus achieving the goals proposed.”

A consultation on the green paper closes on 11 May.

Nature recovery 2 – Government releases new targets

In addition to the green paper discussed above, the government has just announced a series of targets linked to last year’s Environment Act that cover water and air quality and wildlife diversity. These will drive government policy affecting farmers and landowners. The targets will be open for consultation for the next eight weeks.

The targets include:
• Reducing exposure to the most harmful air pollutant to human health – PM2.5 – by over a third compared to 2018 levels
• A legally binding requirement to increase species populations by 10% by 2042.
• Halving the waste that ends up at landfill or incineration by 2042
• Increasing total tree cover by 3% by 2050
• Significant improvements in the condition of Marine Protected Areas by 2042

Dairy farming – Cost crisis could see empty shelves

Last week I touched on the impact of rising feed and energy costs on the pig sector. This week it is milk. As mentioned in Farmers Weekly, dairy specialist Kite Consulting says farm-gate milk prices need to hit 40p/litre just to cover the increased costs of production.

Farmers are already producing less milk and Ash Amirahmadi the boss of Arla Foods, the UK’s biggest dairy, even claimed last week that supermarkets could run out of the white stuff if they don’t up their prices for producers.

“We are likely to have supply problems in May or June of this year. If retailers are willing to stump up what’s required, we won’t have supply issues. But if that doesn’t happen, we may be looking at a 4 to 5% shortfall. Shops could run out of milk.”

Brexit – Trade department needs to be transparent on deals

A new report from the House of Commons Public Accounts Committee has warned that the economic benefits of post-Brexit trade deals have not been made clear by the government.

It said it was also unlikely the government would hit its target of ensuring 80% of UK trade was covered by a free trade deal by the end of the year and urged it to be more transparent by consulting better with parliament, industry and special interest groups about the shape of future deals.
Sir Geoffrey Clifton-Brown, Deputy Chair of the committee, said the Department for International Trade was “really struggling to point to tangible wins” for business, consumers or the British agriculture sector.

Nick von Westenholz, Director of Trade at the NFU, said: “Hopefully this report is a wake-up call that we need far better co-ordination between domestic and trade policy, and we need to properly monitor the impact of trade deals as they come online, to better design and adapt policy to ensure farm businesses benefit,” he said.

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 – Canadian farmland boom

Canada’s farmland continued to rise in value last year despite harsh weather conditions and supply chain issues, according to the latest report from Farm Credit Canada.
The average price of land across the country rose by 8.3% in 2021, compared with 5.4% in 2020. The largest increases were recorded in Ontario and British Columbia (22.2 and 18.1%, respectively), followed by Prince Edward Island (15.2%), Nova Scotia (12.3%) and Quebec (10%).

“The low interest rate environment and favourable commodity prices seem to have offset some of the many challenges that could have been expected to restrain the demand for farmland and the price producers are willing to pay for land,” said J P Gervais, FCC’s chief economist.