Defra reshuffle, Bird flu, Carbon credits

Rewind, rewind. I go away for a week’s holiday and come back to discover that what I wrote just before I left is already out of date. We have yet another Prime Minister and a new Defra head honcho - let’s see how long this new lot lasts. They certainly aren’t finding favour with the environmental lobby whose #attackonnature media campaign isn’t likely to go away soon, particularly given the UN’s latest gloomy climate change report and Rishi Sunak’s reluctance to attend the COP27 talks in Egypt. Thérèse Coffey has a tightrope to walk at Defra: she needs to reassure people that this government hasn’t really abandoned the environment, but must also provide some proper leadership for the embattled agricultural sector, which, as a new report on voluntary carbon markets shows, has a big role to play in the battle against climate change if given the opportunity and some much-needed clarity on the future direction of the government’s environmental land management schemes.

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 – Buy fert and check for slugs
• Politics – All change at Defra, again
• Energy – On-shore wind and fracking out of favour, again
• Climate change – Voluntary carbon credit markets need support
• Bird flu – Sporting estates need to be vigilant
• Woodland – Flood mitigation guide launched
• The Farmland market – Video and podcast update
• On the market – Oxfordshire farming and equestrian business
• Staff salaries – Take our survey and win wine
• Expansion – Rural Consultancy opens new office
• International news – Climate catastrophe on its way, says UN

Commodity markets – Buy fert and check for slugs

Growers yet to secure their final loads of fertiliser for the spring would be well advised to secure tonnage before the winter in the Northern Hemisphere sets in, advises Andrew Martin of our Agri-consultancy team who says stockpiling and the obvious queue of full LNG vessels off European ports has seen a recent easing in nitrogen prices. Damp conditions also mean arable farmers need to be on the lookout for slugs in newly sown crops, he warns. Meanwhile, wheat markets remain volatile with avian flu, recession worries, the post-Truss/Kwarteng strengthening of sterling and further Chinese Covid-19 lockdowns all weighing on prices.

However, Russia’s threat to shut the Black Sea shipping corridor could quickly send values the other way. The UK potato acreage also looks set to fall as many producers struggle with rising costs.

Politics – All change at Defra, again

The ministerial roundabout at Defra keeps spinning. Top dog Ranil Jayawardena, appointed by Liz Truss and only in post for 49 days, resigned once it became clear that Rishi Sunak was set to become the next Prime Minister. Some had expected a comeback from former incumbent and Sunak supporter George Eustice, but instead – in a move clearly designed to engender some much-needed party unity - it was Truss supporter Thérèse Coffey who landed the job. Rebecca Pow, who resigned as a Defra minister during the Boris Johnson debacle, is also back looking after the environmental brief.

Although environmentalists such as George Monbiot were aghast at the move - Dr Coffey has previously spoken out in support of banned neonicotinoid sprays and has voted the “wrong way” on a number of environmental issues - she represents a rural constituency, has already spent a number of years at Defra (2016 to 2019) as a junior minister and is apparently close to the International Environment minister Richard Benyon.

So hopefully she should have a decent grasp of her portfolio and defend the department against the looming spectre of Austerity 2.0, not to mention bringing some much-needed clarity regarding the future of the Environmental Land Management Scheme (Elms).

The horticultural sector will probably be more concerned with the somewhat controversial reappointment of Suella Braverman as Home Secretary. As discussed previously in this update, Ms Braverman has somewhat optimistically suggested that more Brits should be encouraged to pick fruit and vegetables rather than relying on the seasonal migrant labour from the EU that has been in short supply since Brexit.

Energy – On-shore wind and fracking out of favour, again

It was just a few weeks ago that I was writing about Liz Truss’s policy U-turn on fracking and on-shore wind farms. Rishi Sunak has now reverted back to the Conservative’s manifesto position of opposing fracking and continuing the virtual moratorium on on-shore wind developments. While this makes sense from a political perspective for a Prime Minister who many claim has no electoral mandate to govern, the stance on wind will probably be reviewed at some point given the need to reduce our reliance on fossil fuels and cut electricity bills.

Mr Sunak has also previously expressed his opposition to siting solar farms on productive agricultural land, but, as yet, there has been no confirmation that the definition of land considered “best and most versatile” and off limits for solar farms will be expanded to include fields classified as 3b – a move that would pretty much stymy all solar developments.

Climate change – Voluntary carbon credit markets need support

A new and very interesting report published by the UK’s Climate Change Committee says that the global market for voluntary carbon credits, estimated to be worth around US$2 billion, is not working. It claims offsets, often used by firms as part of their net-zero strategies, can mask insufficient efforts to cut emissions and may push out other environmental objectives in the rush to capture carbon.

However, it also concludes that with the right governance and higher standards voluntary carbon markets can make a difference in the fight against climate change. It points out that the UK already has some of the leading examples of good governance with the Woodland Carbon Code and the Peatland Code.

In its recommendations the report says a business or organisation should only be considered to be Net Zero when it has reduced its emissions as far as possible to be at or close to zero and permanently removed CO2 from the atmosphere to compensate for any remaining emissions.

It would be interesting to see how many of the current crop of voluntary schemes being pushed to farmers would stand up to closer scrutiny if the government takes on board the report’s suggestions.

Ultimately, says the report, if voluntary carbon markets are genuinely to complement the transition to Net Zero, businesses must be supported to directly decarbonise their operations and supply chains. The role of a carbon credit should be to support, not discourage the reduction of actual emissions.

Bird flu – Sporting estates need to be vigilant

Following an increase in the number of detections of avian flu in wild birds and on commercial premises, the Chief Veterinary Officers from England, Scotland and Wales have declared an Avian Influenza Prevention Zone (AIPZ) across Great Britain to mitigate the risk of the disease spreading among poultry and captive birds. As of midday Monday 17th October, it became a legal requirement for all bird keepers in Great Britain to follow strict biosecurity measures to help protect their flocks from the threat of avian flu.

Compensation is available for flocks destroyed as part of an official Defra cull, but any prior deaths are not covered, adding a further financial burden to businesses already struggling with feed and energy cost rises.

However, it is not just poultry owners and businesses that should be concerned, points out Katharine Beswick of our Rural Consultancy team. “Much of the attention around avian flu has understandably been focused on poultry businesses, but rural estates, particularly those with shoots and public access, also need to be extremely vigilant and take advice on the optimal biosecurity measures they should be putting in place in order to protect themselves and others around them.”

Please contact Katharine for more advice.

Woodland – Flood mitigation guide launched

Tree planting and better woodland management can be a crucial tool to mitigate flooding, which is becoming increasingly common and costs billions of pounds in damaged homes and infrastructure each year. A new government guide has just been published that offers advice to landowners, forest and woodland managers, planners, practitioners and flooding authorities, on how forests, forest management and woodland creation can affect flood flows and flood water storage.

To help better understand the risks and opportunities on your farm or estate, our geo-spatial team can use powerful mapping and data techniques to model surface water runoff under a variety of scenarios. Get in touch to find out more.

The Farmland market – Video and podcast update 

As mentioned previously, our Q3 Farmland Market update, which reveals a sharp annual increase in average farmland values, is out now. If reading research reports is not your thing, I’ve packed the key findings into a 60-second video that you may find interesting. You can also listen to my colleague Jessica Waddington and me discuss the farmland market with Knight Frank’s Global Head of Research Liam Bailey in the latest edition of our Intelligence Talks podcast.

On the market – Oxfordshire farming and equestrian business

If the above encourages you to buy a rural property, The Woodyard, near Faringdon, could appeal to those looking for a farm with a strong equine angle. Pictured above, it includes 340 acres of arable fields and grassland, a five-bed house with views over the Berkshire Downs completed this year and a wide range of equestrian facilities including 20 stables. The guide price is £6.25 million. Please contact Alice Keith for more details.

Staff salaries – Take our survey and win wine

In an inflationary world setting the right salaries is crucial to retain and motivate staff. If you are a rural business, taking part in the 2022 instalment of the Knight Frank Estate Staff Salary Survey will not only allow you to benchmark your staff’s wages, but you’ll also have the chance to win two cases of Chapel Down English wine.

Expansion – Rural Consultancy opens new office

It’s always more fun and challenging to be helping an expanding and ambitious team, so I’m pleased to report that we now have a new office in Horsham led by three freshly recruited partners to the Knight Frank business.

Find out more about my new colleagues here.

International news – Climate catastrophe on its way, says UN

The voluntary carbon credit article above seems even more pertinent following the release of a new report from the UN that warns of catastrophic consequences if countries don’t revaluate their climate change strategies.

Although many commitments were made at last year’s COP26 event in Glasgow to put in place measures to restrict the increase in average global temperatures to 1.5 degrees by the end of the century, the UN says few countries have followed up with meaningful action. As a result, it claims the world is likely to warm by at least 2.5 degrees, a level deemed catastrophic by scientists at the Intergovernmental Panel on Climate Change.