Green Defra, Beetles and birds, Welsh farming

I used to sign off on this update on Friday afternoon, but given the febrile geo-political times we are living through I’ve taken to wrapping it up on Monday mornings - just in case something noteworthy happens over the weekend. I’m not sure when the Damascene moment actually came for Kwazi Kwarteng, but given the Prime Minister was still defending the scrapping of the 45% tax rate for higher earners - a key part of his barely week-old “mini-budget” - on Sunday, it must have been pretty late in the day. But with a raft of Tory grandees lining up to slate the plan, not to mention most economists, he finally saw the light and hit the airwaves this morning to reverse the move. The big question is what comes next. Apparently eight big sector-specific announcements are due out this month regarding the government’s 2.5% productivity target; and agriculture is on the list. Given that Defra, following a surprisingly vicious outcry discussed below, has already had to firefight speculation than it plans to water down its environmental commitments, let’s hope the plans for farming are a little more sustainable than Mr Kwarteng’s fiscal policy.

Do get in touch if we can help you navigate through these interesting times

Andrew Shirley, Head of Rural Research

In this week’s update:

• Commodity markets – Grain prices gain as flea beetle guzzles
• Politics – Defra reconfirms green commitment
• Wales – Farming bill hits Senedd
• Bird flu – Restrictions are back
• International news – Drax and the Canadian forest

Commodity markets – Grain prices gain as flea beetle guzzles

Political events helped to support grain markets last week with May 2023 London feed wheat futures breaking the £300/t barrier for the first time since June. The tanking of sterling following Kwazi Kwarteng’s ill-received mini-budget made UK grain more attractive on global markets, while Vladimir Putin’s increasingly desperate sabre rattling is raising concerns over the longevity of the Black Sea grain export corridor. Oilseed rape also climbed, but Andrew Martin of our Agri-consultancy team warns that anybody thinking of selling next year’s crop forward needs to be very sure they can deliver it. According to some reports, Cabbage stem flea beetle is already wreaking havoc with up to 20% of this year’s planted area under threat. The drop in the value of the pound is also unfortunately masking downward pressure on the dollar-denominated market for oil. Red diesel nudged up slightly last week.

Politics – Defra reconfirms green commitment

Defra’s spin machine was forced to leap into action last week following allegations that the department was planning to cut spending on its fledgling Environmental Land Management Scheme (Elms) and potentially reintroduce area-based payments for farmers.

In a press release and via a video hosted on Twitter, new Defra Secretary Ranil Jayawardena insisted: “We are not scrapping our reforms. The environment, farming and economic growth go hand-in-hand and we are committed to our schemes that will support our farmers to produce high-quality food and enhance our natural environment. We are committed to halting the decline of nature by 2030 and will not undermine our obligations to the environment in pursuit of growth.”

Despite the minister’s protestations, Defra will surely come under pressure to deliver costs savings following the damning reaction of markets and economists to last week’s so-called mini budget that has sharply pushed up the cost of government borrowing.

Wales – Farming bill hits Senedd

While Defra tries to get its messaging straight, the Welsh Parliament has just launched the first ever Welsh Agriculture Bill, which Rural Affairs Minister Lesley Griffiths says will pave the way for “ambitious and transformational legislation to support farmers, sustainable food production, and to conserve and enhance the Welsh countryside, culture and language.”

As ever, much of the bill is enabling legislation. The details of how its aspirations will be achieved are set to be revealed later. However, there were some points of note including proposals to amend tenancy legislation to make it harder for landlords to block their tenants from joining new environmental schemes. The use of snares and glue traps will also be outlawed from next September.

Edward Holloway of our Bristol-based Rural Consultancy team, who manages a number of Welsh estates, had this to say on the proposals: “Following a series of consultations since the 2016 Brexit vote, it is encouraging to see the Welsh government finally put forward its proposals for the reform of the agricultural sector.

“This legislation has the potential to change the face of farming in Wales by rewarding farmers for their environmental work and for using sustainable methods of food production. While this is certainly a landmark piece of legislation for the Welsh farming industry, there are some who will feel the bill does not do enough to benefit all those living and working in Wales – it will be essential for farmers, land managers and landowners to closely monitor progress and work with industry bodies to ensure the bill delivers for all.”

Bird flu – Restrictions are back

Regional Avian Influenza Prevention Zones (AIPZ) for poultry and captive birds have been introduced in Devon, Cornwall, Suffolk, Norfolk and parts of Somerset and Essex to help stop the spread of avian influenza. This means it is a legal requirement for all bird keepers in these areas to follow strict biosecurity measures to help protect their flocks, of whatever type or size.

International news – Drax and the Canadian forest

Only last week I was chatting to a colleague who queried the logic of the heavily tax-payer subsidised Drax power station shipping huge volumes of biomass all the way from North America to create so-called renewable electricity. Well, it seems he’s not the only one who’s been asking questions. Following an investigation by Panorama it has just been alleged that the generator is chopping down ecologically important primary forests in Canada. Drax says many of the trees in question had died and the felling will help prevent wildfires, but the controversy comes at a critical time. The UK government is due to publish a new biomass strategy later this year, which will set out its policy for natural fuels like wood and could have significant implications for farms and estates.

Photo by Joseph Reeder on Unsplash