The Rural Update: Welcome to 2025
Your weekly dose of news, views and insight from Knight Frank on the world of farming, food and landownership
8 minutes to read
Viewpoint
Happy New Year. However, judging by the results of the Farmers Weekly annual Sentiment Survey, many rural property owners are not feeling particularly optimistic about 2025.
Given the wet start to the year, the ongoing ramifications of the Autumn Budget, and the government’s delayed rollout of some environmental support schemes, such feelings are understandable. But farmers and landowners are nothing if not resilient, and most will adapt.
Many of the challenges facing the UK as a whole, such as the sharp increase in flooding risks discussed below, nature restoration, bolstering food security, public health issues and carbon mitigation, will need their help. This will require a change of mindsets on two fronts.
Farmers should no longer view themselves as just food producers, but the government must also acknowledge that alienating rural communities will not help it solve the issues discussed above.
In isolation, things like increasing the cost of shotgun licences and backtracking on rights of way deadlines may seem minor irritations. Taken together, however, they all add to a growing sense that rural businesses are, at best, being taken for granted.
Commodity markets
Mixed commodities picture
In terms of farmgate commodity prices, 2024 was a mixed year. Wheat farmers suffered badly. Not only did production fall by 20% compared with 2023 to just over 11 million tonnes, but prices were also down on the year. Oilseed rape prices were well up, but output was down by a third. Strong demand and a drop in supply, however, saw beef and lamb prices climb throughout the year.
Looking ahead to 2025, global cereal markets remain potentially volatile, with events in the Black Sea region and Donald Trump’s tariff policy likely to dominate. A continued drop in herd numbers will lend further support to beef and lamb markets in the UK.
The headline
Budget shatters farmer confidence
The results of the annual Farmers Weekly Sentiment Survey make for interesting reading. Even before Chancellor Rachel Reeves dropped her Inheritance Tax bombshell as part of Labour’s Autumn Budget, confidence was low, with 44% of respondents saying they were pessimistic or very pessimistic about the prospects for their business. However, after the Budget that figure soared to 61%.
Arable farmers were, unsurprisingly given the commodity price outlook discussed above, the gloomiest. Only 11% claimed to be optimistic about the coming year.
Government policy was listed as the number one concern by the survey’s respondents. Meanwhile, farmers are planning to ratchet up the pressure on the government with a mass rally of tractors on London’s North and South Circulars planned for 3 February.
News in brief
Rights of way U-turn
Defra slipped out a Boxing Day Christmas present for ramblers by announcing that it was scrapping the 2031 deadline imposed by the Conservatives for recording historic rights of way. The government claims the deadline is unfair to local authorities that “have struggled under the burden of recording historic rights of way, which are estimated to stretch over 40,000 miles”. The CLA, however, points out that “campaigners have had decades to record rights of way”.
Flood risk rise
Around eight million homes in England, approximately a quarter of the total stock, could be at risk from all types of flooding by the middle of the century, according to a new report from the Environment Agency (EA). Currently, it estimates 6.3 million homes are at risk. The number of properties with a “high” risk of flooding from rivers and the sea is 367,900 – an 88% increase from the EA’s previous assessment. Climate change could boost that figure by almost 75% to 637,600 between 2036 and 2069, the agency warns.
Gun licencing hike
Shooting organisations have criticised the Home Office’s plans to increase gun licensing fees to cover the full costs incurred by police forces. The move could see the cost of a shotgun licence rise from £88 to £400. A statement from BASC said: “It would be outrageous for fees to be increased while firearms licensing remains a postcode lottery across large parts of the country. The Policing Minister would be well advised to deal with inefficiency before increasing fees or risk this government alienating yet another constituency.”
£1m carbon fund opens
A new fund managed by the Soil Association Exchange and backed by £1m of cash from several supermarkets, Lloyds Bank and the Church Commissioners opens for applications today (7 January). Unlike other carbon emission mitigation schemes, the Exchange Market operates as an insetting fund, paying farmers to reduce emissions directly within their supply chains and, therefore, there are no sales of carbon credits. Exchange farmers can get paid £60 per tonne of CO2e reduced.
Developers not keeping eco promises
A report by campaign group Wild Justice, produced by researchers at the University of Sheffield, has revealed that housebuilders are not keeping legally binding promises to help wildlife on their developments. A survey of nearly 6,000 houses across 42 developments found that only half of the promises to mitigate harm to nature had been kept. Many ecological enhancements had not materialised, with 83% of hedgehog highways, 100% of bug boxes, and 75% of both bat and bird boxes found to be missing from new developments. Almost 40% of the trees detailed on planting plans were missing or dead, while nearly half of the native hedges that were supposed to be laid did not exist.
Local authorities missing nature targets
Meanwhile, another report says local authorities in England are also failing in their legal duties to protect nature. According to a survey by Wildlife and Countryside Link, 59% of authorities (172 out of 294 surveyed) have failed to consider the actions they need to take for nature restoration and/or to deliver nature restoration policies and objectives. Both of these are legal requirements under the 2021 Environment Act.
Total neonic ban proposed
Defra has set out its plans to completely ban neonicotinoid sprays that environmental campaigners say are devastating pollinator populations, in particular bees. General use of such sprays is banned already, but emergency authorisation in specific circumstances has been granted over the past few years. Defra said: “We will identify and assess potential legislative options that would stop the use of emergency authorisations for products containing clothianidin, imidacloprid or thiamethoxam.”
Protected area powers beefed up
Marking the 75th anniversary of the National Parks and Access to the Countryside Act, Defra Minister Steve Reed has announced that new powers will be granted to England’s National Parks and National Landscapes to “boost nature’s recovery and access to the outdoors”.
New legislation and guidance will give National Parks and National Landscapes “a clear mandate to widen the public’s access to nature through strengthened purposes and make changes to improve their governance that will allow for greater innovation and collaboration to prepare them for the future”.
Avian flu update
Poultry keepers in much of East Anglia, the East Midlands and East Yorkshire have been told to keep their flocks indoors as part of measures to prevent the spread of avian flu. Check here for the latest restrictions.
The Rural Report – Out now
The latest edition of The Rural Report, our flagship publication for farm and estate owners, looks at the numerous opportunities and challenges arising in the countryside following the election of the new government. Find out more or request a copy
Property of the week
Equestrian opportunity
Our first farm of the New Year will appeal to keen equestrians. Cropredy Lawn, at Cropredy, near Banbury, Oxfordshire, is a 236-acre mixed unit with Grade 2 and 3 soils of which 134 acres are arable, 71 acres pasture, and 17 acres woodland. Extensive equestrian facilities include a 6.5-furlong uphill gallop with a Eurotrack surface. There is a seven-bed farmhouse and three additional properties. The guide price is £6.5 million. Please contact Georgie Veale for more information.
Property markets
Country houses Q3 – Market waits
Discretionary buyers held back from a new country house purchase pending Labour’s first budget on 30 October. Offers from potential buyers were down 10% in the three months to August, according to the latest results from the Knight Frank Prime Country House Index. However, the slide in average values has slowed, with prices dropping by just 1.2% in the 12 months to the end of September - the lowest annual fall since Q1 2023 - points out Head of UK Residential Research Tom Bill. He predicts a total average price slide of 2% in 2024, dependent on the outcome of the Budget.
Farmland Q3 – Prices flatline
The farmland market in England and Wales was also on budget alert, judging by the latest results from the Knight Frank Farmland Index. Average values for bare land nudged up by just 0.2% in the third quarter of the year to £9,351/acre. This was the smallest increase for several years. For more insight and data please download the full report.
Development land Q3 – Greenfield sites up
The average value of greenfield land values in England rose 3% in the third quarter of 2024, according to the latest instalment of our Residential Development Land Index. However, brownfield and prime central London prices stayed flat due to thin activity, with some market participants taking a “wait-and-see” approach ahead of the Budget, says the report’s author, Anna Ward. Housebuilders are also sceptical that it will be possible to deliver the 1.5 million new homes pledged by Labour over the next five years. Download the full report for more insight and data.