The Knight Frank Rural Property and Business Update – 18 January
Our weekly dose of news, views and insight from the world of farming, food and landownership
Commodity prices continue to rise and a Supreme Court ruling could benefit rural businesses hit by Covid-19. But Brexit niggles remain and the outlook for broadband connectivity in the countryside - something that will become ever more crucial - is less positive. Poor broadband is certainly the bane of my working-from-home life so it seems timely that an important new survey aims to identify how the complex challenges of running a rural business are impacting people’s physical and mental wellbeing.
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
5 minutes to read
In this week’s update:
• Commodity prices – Lamb markets surge
• Brexit update – Post-EU issues emerge
• Insurance claims – Supreme court backs Covid claimants
• Sustainable farming – Go green and feed the country
• Broadband – Government U-turn could hurt rural businesses
• The Big Faming Survey – Have your say on wellbeing in agriculture
• International news – Tech baron becomes biggest farmer
Commodity markets – Lamb markets surge
Lamb prices have broken through the 500p/kg barrier for the first time in recent memory. Lamb exports would have been one of the farming sectors hardest hit by a no-deal Brexit so there is relief within the industry that a last-minute deal was eventually achieved. Many producers had also rushed stock to market pre-Christmas in case EU and UK negotiators failed to reach agreement. Ironically, the surge in prices at some livestock markets effectively equates to the tariffs that would have been charged on exports to the EU if no deal had been struck. How long prices can remain at these levels is open to question, but further volatility is expected.
The same applies to grain markets with May 2021 London wheat futures climbing to their highest level since January 2013. A surprise eight million-tonne cut to the USDA’s US corn harvest forecast helped push up prices and means traders are likely to become increasingly sensitive to pricing triggers such as unforeseen weather events and political influences like tariffs and quotas.
Brexit update – Post-EU issues emerge
Although parts of the media seemed somewhat disappointed that Kent wasn’t turned into a lorry park on 1 January, the end of the Brexit transition period has led to some issues for the food & farming sector despite the last-minute trade deal. Some of the current talking points are discussed below.
Seed potatoes – as mentioned in a previous update the export of these to the EU is no longer allowed. Defra Minster George Eustace and Scottish Cabinet Secretary for Rural Affairs Fergus Ewing have teamed up to lobby Brussels to lift the ban. The trade is worth £13.5 million a year with Scotland accounting for 80% of the 30,000 tonnes shipped annually.
"Northern Ireland – Additional paperwork and checks on goods travelling to the province have led to empty shelves in some supermarkets, and livestock farmers are being urged to order animal medicines in good time to account for delays at the border."
Gene-editing – Last week I said George Eustice had taken a positive step by looking to lift the EU ban on crops created using gene editing techniques. Not everybody agrees. Some environmental groups are protesting, while Fergus Ewing claimed it could affect access to European markets if the UK acted unilaterally.
Livestock transport – One of the very first things the government did on leaving the EU was to propose restrictions on the transport of live animals. Writing in Farmers Weekly Iain Macdonald of Quality Meat Scotland said Scottish Farmers, particularly those on the islands, could be badly affected by limits on journey times.
Insurance claims – Supreme Court backs Covid claimants
A court ruling last Friday could help rural businesses hit by losses relating to the Covid-19 pandemic. Firms have previously seen claims they hoped would be covered by their business interruption insurance policies rejected.
A test case was brought by the City regulator last year after thousands of businesses complained about being unable to claim during the first lockdown. It asked judges to rule on whether the wording in a selection of common insurance policies meant that they should cover losses caused by coronavirus restrictions.
A key issue was whether insurers should pay out to cover losses caused by businesses being ordered to shut under coronavirus restrictions. The Supreme Court ruled that disease clauses do apply to coronavirus closures. Those with valid cover may be able to claim for multiple periods over the past 10 months during which they have had to close.
Sustainable farming – Go green and feed the country
One of the criticisms of more environmentally friendly farming methods is that they produce less food at a time when more mouths need feeding. However a new report Farming for Change from the Food, Farming and Countryside Commission challenges that view.
"It claims data from research institute IDDRI shows agro-ecology can produce enough healthy food for a future UK population and explores how this new technical modelling challenges and develops our thinking about a new food and farming system."
I’ve had a quick read and there are no easy wins, but some of the findings will clearly resonate with the growing number of UK farmers considering regenerative agriculture. While acknowledging the contribution of livestock to climate change it also emphasises the valuable role they play in sustainable farming systems.
Read the full Farming for Change report
For more information on regenerative agriculture and agro-ecology please contact our own expert Tom Heathcote
Broadband – Government U-turn could hurt rural businesses
A new report from the House of Commons Public Accounts Committee has lambasted the government for backtracking on its manifesto pledge to deliver nationwide gigabit (1000Mbps) broadband connectivity by 2025. Its revised target is to achieve 85% coverage. Currently 1.6 million UK premises, mainly in rural areas, cannot yet access superfast speeds.
The committee said: “We are concerned that the Department (for Digital, Culture, Media & Sports) has yet to make any meaningful progress in delivering the policy and legislative changes deemed essential by industry if it is to achieve rapid roll-out. We remain unconvinced that, if and when rural users finally do get gigabit broadband, they will enjoy the same choice of service provider and the same protections as their urban counterparts.”
Read the committee’s full report
Rural health – New survey to diagnose wellbeing issues launched
RABI, the Royal Agricultural Benevolent Institution, which is farming’s oldest and largest charity has just launched its Big Farming Survey. The survey aims to identify how increasingly complex challenges within the sector are impacting people’s physical and mental wellbeing, as well as the health of farming businesses.
Take part in the survey
International news – Tech baron becomes largest farmer
Bill and Melinda Gates are now reportedly the biggest private landowners in the US. According to The Land Report magazine the couple have amassed a 268,984-acre portfolio across 19 states including 242,000 acres of agricultural land. The Gates are said to be supportive of sustainable farming practices.
Photo by Gemma Evans on Unsplash